Vertical clouds symbol orange

Vertical Clouds: Slow Progress but the Future Remains Bright

The growth of vertical clouds has been slow so far - but their time is still to come

Back in October 2012 I wrote an article about whether it was time for vertical clouds to start to establish themselves. Eighteen months later, what has happened to the concept of the vertical cloud?

To recap: vertical clouds can cover business, consumer and jurisdictional needs and I envisaged there would be some very specific cloud offerings for areas such as pharmaceuticals, finance, health care, as well as more generalised offerings around areas such as law firms, manufacturing and retail.

I also mentioned the increasing importance and need for specific data residency based cloud offerings that catered for these requirements across multiple jurisdictions. I predicted that we would see smaller, niche players coming into the market to fulfil these needs as the large cloud players were, and many still are, focusing only on the general cloud space.

It’s fair to say that the build-out of business-specific verticals has largely been slow to date but, where there has been growth, it’s interesting that it’s not been the small players but some of larger players have decided to focus on vertical cloud services. However, these have predominately focused mainly in the government and health care space. Government agencies around the world have been rushing to take advantage of benefits that cloud offers but these areas, as you might expect, are highly regulated. As such it has created two sets of suppliers: the really big guys who have hived off a section of their infrastructures to meet these regulatory requirements and the medium-to-large sized dedicated providers, who are delivering services only for the specific vertical they are focused on.

These aren’t the only areas that are regulated; more business sectors are seeing regulation increase and it’s now even more difficult for the “one size fits all” offerings to compete. The big change, however, has been in where your data resides, who has access to it and the rise of jurisdictionally based vertical clouds.

If you read my blogs regularly you will know I’ve been discussing the issues of data residency and protection in the cloud and that governments have been collecting data on us all for several years. However, with revelations from Edward Snowden coming out last year it has raised the awareness to a whole new level not, least in the US itself. My own organisation has been contacted numerous times over the last few months from people and organisations that want to have their data stored in a jurisdiction where data privacy is protected and the service offerings are protected against “fishing trips” and data capture without due processes being followed.

More business sectors are seeing regulation increase and it's now even more difficult for the "one size fits all" offerings to compete

This new awareness has propelled the need for vertical clouds based on their location to new heights. Businesses and individuals are now demanding their data is stored in their own country or a jurisdiction that meets their data privacy and protection needs, plus have the right commercial and legal frameworks.

Along with this, more and more countries are now reviewing their current privacy and protection laws or are about to implement new data protection laws.

This is not an issue that’s going to go away any time now. The EU is leading the way and many people see the organisation as the gold standard when it comes to privacy. The one location where this doesn’t seem to be happening though is the US; what impact that is going to have will be discussed in one of my next blogs.

So, even though the term vertical clouds has really taken off, there is definitely a trend of cloud services being built to service a specific need, like the UK G-Cloud or HIPAA approved platforms in the US. Cloud providers have to deliver their services from within more jurisdictions – which is a paradox really, when you consider that most people saw cloud and the location of data as irrelevant to the service.

But like other areas of the internet, there are many people and governments around the world that want to be able control and capture all aspects of what we access, what we store/share and say on the internet.

To counter this, cloud-based services are becoming more vertically focused, particularly services that are based on their location and I only see this becoming more prevalent and vertical clouds become the standard.

By Julian Box, Posted 2nd April 2014.