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BlogUnpacking the Tenets of Cloud Trust

Unpacking the Tenets of Cloud Trust

Unclouded Blog | Linode

When choosing a cloud provider, most businesses opt for the one (or two) they trust to get the job done. But what does it mean to truly “trust” a cloud provider?  

Trust has historically referred to qualities like uptime and reliability. But how people think about trust is changing. Core cloud features are increasingly becoming commoditized. Providers—from the biggest hyperscalers like Amazon and Microsoft, to alternative clouds like Linode and DigitalOcean— now deliver comparable capabilities across the products and services their customers need (and some smaller players even deliver better price performance than the larger cloud providers). Old measures of trust that once differentiated providers are now the baseline.

From knowing what to expect on a monthly bill, to getting quality support and attention, to safeguarding a business against competing interests, providers are expanding the scope and definition of trust. The result? Businesses now have alternative options that not only meet their cloud needs, but also align with their values. 

I recently spoke with Structure Research analyst Phil Shih about this topic. Listen below as we unpack the many layers of cloud trust and discuss its growing importance. 

The following transcript has been slightly edited.

Mike Maney: When industry opponents talk about trusting a cloud provider, they often mean one thing: uptime. But there’s so much more to it than that, from knowing exactly what to expect when it comes to cost to being able to count on your vendor for support, to knowing that your provider won’t compete directly with your business. There are many elements of cloud trust today, we’ll unpack these multiple layers with structured research analyst Phil Shih. 

Phil, glad to have you on the call today. 

Phil Shih: Hey, glad to connect virtually. 

Mike Maney: The pandemic has driven massive cloud growth. And with the growth has come a lot of a lot of increased scrutiny seen some analysts predictions might not have, you know, everybody looks at Gartner on on sort of the large the large scale stuff, that the cloud market will grow exponentially over the next few years to something like $365 billion by I think it’s by next year by 2022. And then growing at a compound annual growth rate of nearly 15%, 84% of small business owners report that cloud services are essential for operating their business. And 74% say their core business wouldn’t operate without the cloud. 

So it begs a couple of questions, and then this is gonna be the fun part of the conversation we have today is why are users getting more selective about their cloud partners?

Phil Shih: I think fundamentally, these projections speak to larger trends that are in motion and accelerating. But I think why people, end users, especially at the SMB level are becoming more selective is, is because fundamentally, they’re running more of their critical business online, right. So they rely on internet infrastructure on cloud infrastructure services, to run their business, to generate revenue, and to pay their bills, to pay their employees and pay their bills. 

And so the criticality has just reached a level where, wow, people look and say, Hey, this is something that I rely on. And I should probably get to know it better. ask more questions. And make sure that what I’m doing, which is very different from any other type of business service, they may have many at least that were weren’t born in a cloud environment, their businesses may have dealt with other types of services that were much more say interactive over the phone in person. 

And translating that to a virtual medium is probably fair and fairly, a bit of a step. And a reason why I think people are getting a little bit more picky because they rely on it, they realize how much is at stake in terms of their business, and, frankly, their health in this type of environment. And so that’s why they’re asking the question is why they’re being more selective. I think

Mike Maney: You brought up SMBs, because that’s such a, that’s such an important market. Well, often when we talk when people hear about cloud, we always hear about the absolute biggest enterprises in the biggest use cases for users of cloud. And much like we saw with the advent of the web, a lot of that growth happens with small and medium sized businesses, the mom and pops people on Main Street, the people that don’t know, or don’t necessarily operate at a massive enterprise level. 

Is there anything that they’re looking for or considering now that they weren’t in the past? Right? So we know that the cloud is absolutely critical to them? Right? We’ve made that shift, right, where we’re at, we’re past the Do you cloud or don’t you cloud thing? And what sort of considerations are they looking at now? What’s changed? 

Phil Shih: I think a lot of the end users just are looking for more transparency at a very high level. They want to know how the service works, they want to know, when they can reach out to their service provider, how they can interact with that service provider, and to what extent they can help them with their problems, whether that’s related to their their website, the application, their ecommerce, storefront. 

And I think that that is one of the big things is that what’s changing is that people are not just responding. I think cloud services have generally been a reactive and break fix type of customer support relationship. A lot of the heavy lifting is done at the beginning, you get your website up and running. Everything’s fine and dandy and you basically don’t call your provider until something goes wrong, or you have a really perplexing question. Or the internet just crashes. But I think that that’s not how it works. 

Recently, that’s not our customers think of their provider. Yes, that is, of course, kind of the core foundation of the service. And they know they can still rely on their provider for things like that. But they also, these days are just asking just more questions around how to optimize their infrastructure, and asking what other things they can do online and frankly, asking more business oriented questions, not just around cloud infrastructure, because I think they’re increasingly the lines kind of blurred, and they’re, they’re more intertwined. If you’re selling services, or booking clients through your website, your online app, your mobile app. 

And so, yeah, I think that the scope of questions and the nature is not as reactive, it’s a little more proactive, it’s a little more of an advisor slash consultative type of interaction. And I think that’s changing just the way again, how service providers deal with their customers, and in turn, how customers end up choosing their service providers, if they want that kind of relationship. You know, they’re going to, they’re going to try and find it. And that’s the amazing thing about the cloud infrastructure services is that each provider is different in unique and the way they serve customers, and the way they interact with them. And I think that’s becoming increasingly clear, and customers are smart enough to figure that out. And they’ll choose the last questions and then choose and select accordingly.

Mike Maney: The assumption is it’s always been infrastructure, out of sight, out of mind. And it’s not anymore, it’s become so critical. And so embedded into not just the technology part of a business, but the business part of a, of a business. And as somebody who’s grown up in the new in the New York City area, to quote the great Billy Joel, it comes down to a matter of trust. 

In a lot of cases, which never used to be a big focus, and we’re starting to see people starting to start to talk about it, I’ve seen some stats that say, upwards of 60% of developers, saying that trust has had a has had an impact on their preference for smaller providers. 

And then something like, what it was, 71%, I forget what it was, say it has had an impact on their preference for the big three providers, of which I’ve lost, somebody just came out with one of the one of the big firms just came out with a study that said, Microsoft is currently considered the most trusted provider, despite having a somewhat smaller market share. So knowing that his is that cloud and infrastructure have become so interwoven into into a business, and then the fact that trust actually does come into play in this in sort of who you work with, right. And I think that goes for us as humans in general, but also becomes more important in a business environment. 

What does trust mean, when it comes to a cloud provider? Right? Is it as this definition evolved? Or what’s what you sort of see when you’re talking to other companies that are out there in infrastructure research? community? 

Phil Shih: Trust is just in general has become more multifaceted, right. I described just now the scenario where customers interact with their provider more proactively, rather than reactively. It’s not that infrastructure out of mind, at a site kind of, kind of situation. It’s more that the end user is spending more time interacting with the service using the service, updating their service, asking questions about the service. And so there’s just more, because of the more points of interaction and because of the increased criticality of the service. 

They’re just more areas where providers have to not just perform and deliver a good service, but build trust. If you have a relationship that’s a little more advisory and consultative in nature, there’s got to be a level of trust between the provider and the customer, the customer, that don’t trust what if the provider recommends or suggests a course of action, and that because of course of action produces a positive outcome. 

There’s a level of trust there if that, if that outcome not just ends up generating revenue. that trust kind of climbs another level. The end user will see the service writer, not just as an infrastructure provider but an enabler of its business. And that’s value that I think you could translate into trust as well, because the service providers proved that they are an expert in what they do and that they Can I recommend a course of action that, again, turns into a positive outcome? 

I really do think that this extends to other areas, I mean, we can get into them in more detail, but just to throw another one out there, cost being one of the things. We’ve talked about a lot of customers in the early days of cloud, and even now talk about how they get a bit of a surprise when it comes to the bill. Because they don’t quite understand how the service works. 

Now, that doesn’t mean necessarily, that the public cloud providers is nefarious, or, or ill in how it’s done it, it’s just that it’s been up to the customer to understand, read the fine print, understand how everything works, and, and behave accordingly. And so other providers have tried to close that gap. And I think that trust is kind of the endgame there, right? They’re saying, Listen, we are going to hold your hand and explain to you and be clear and transparent about how this works. And what happens if we know how this can affect what you pay, and there’s a level of trust there. Because even if that scenario where the provider wasn’t necessarily doing anything wrong, they’ve not built any trust, and customers will definitely respond accordingly.

Mike Maney:  And it also gets into, right, when you when you talk about pricing and cost that gets into the challenge of complexity. And as a provider, as their offerings get bigger, it looks more enticing, right? It’s like, oh, I’ve got the entire Cheesecake Factory menu here. And then you realize, like, wow, I’m into this for a lot of money. I didn’t realize I bought five appetizers and two sodas, and then I also bought the dessert with it. 

And all of a sudden it’s like, wow, how did they? How did they do it? How did they suck me into all of this? I didn’t even realize. And worse, there’s a direct relation in that trust of, are you? Are you selling me what I need? Or what you can sell me? 

I just saw Amazon announce something yesterday, where they’re trying to do what amounts to looks like subscription billing for cloud pay in advance for your cloud. I don’t know how they are. I don’t know how the finances work on that. But to me, it means Yeah, well, there’s gonna be a whole lot of stuff that you’re going to do. And we don’t want you to see how that sausage is made? Is there? Is it different? Right, just trust me the same thing for a large enterprise? Or and, you know, and it versus an SMB, for small business?

Phil Shih: I mean, I think the fundamentals are similar. But obviously, you’re just operating n most situations, obviously, at a higher level of scale and complexity. But I think that fundamental question of asking the end user, whether it be a large business or small business that, you are going to use this, you can use the service, and the outcomes or the outcomes, or you can trust us to help guide you, whether you look to that, that service provider for help. 

Yeah, I mean, I think the fundamentals are similar, I just think at some level, of course, when it’s a large organization, the impact of that can be much greater. So, if things go wrong, there’s a, just to put it in, I don’t know, in dollar terms, you could be talking hundreds of 1000s or millions of dollars of impact. And so in that, in that sense, trust Yeah, absolutely. It’s critical, but that’s not to say that for the small business it doesn’t have to be a million dollars even a smaller amount is, of course, is similarly impactful. 

So, yeah, I think that this just plays out. Because they’re a small business or a fortune 500 can use the same public cloud service, right? Yeah. So yeah, there’s parrot, there’s parody most of that base level? Yeah. All the technology, all the products and services and features are there. for everybody to use, it’s just a matter of do you have the resources to understand them and use them and to what extent you rely on the service provider?

Mike Maney: And then how much is too much, and how much is just enough. You see that without drawing parallels to the advent of the web. But, it’s how much I interact, how much interaction I need and how advanced my site needs to be versus do I just need to, to replicate what I had as the from the Yellow Pages and for anybody out there that is of a certain age. The yellow pages were a book, the original internet. My dad owned a photo studio. And when the internet was first coming out, it was one of those things.

I’m like, Dad, you need to get on here. And you need to be a website and all of this. And then as a father will do, he showed me the stats that he was tracking. And he’s like, no, all of my business still comes in through this big yellow book that we have. I’m like, No, so you only need the basics then. And that’s, and that’s just sort of where I think people are with cloud as well. 

When we were talking about, the requirements for the cloud requirements or the trust requirements for an enterprise or for an SMB, right. And enterprise needs that they need to go beyond those yellow paid geographical Yellow Pages, they need that global reach. Whereas an SMB might just need to be within a certain geographic area, and be able to hit unless they have grand plans to grow, to keep growing and get and get and get bigger. But yeah, that’s, it was a learning process. 

As much of that is the other thing, the only thing that comes into, into the concept of trust is the issue of red red flags that come in, right. So you think about it right? What are the elements of trust? on that? Right? What would make me lose trust in a or question, the, my trust in a provider? The first thing that always comes to mind, I think, for a lot of people, and we saw this yesterday where Amazon acquired a podcasting technology, a podcast, podcasting app, are they going to put me out of business, right? Or is my provider? a cloud provider? Or do they have designed to be something bigger? That’s going to compete with me? Are there other potential red flags that you would see? Or that you do? See when you’re talking to people?

Phil Shih: Yeah, I mean, on the concept of trust, I think definitely the areas that I think about, and I hear from customers, end users of cloud services, is, it always comes back to transparency, and accountability. Right? I think you run into problems, if you’re using a service that that is not transparent in how they serve you in what your terms and services agreement is going to look like, and how they price and cost, price their services and what you get when you when you decide to buy a certain product or service. 

And when things go wrong, I think customers are kind of moving into transparency and accountability. I think customers are quite understanding and forgiving, when things go wrong. But those service providers that are successful, are transparent, they buck up and they’re accountable. 

And of course, they’ll try to rectify in any way they can, the customer, and that, again, translates into goodwill and levels of trust that are sometimes difficult to quantify. And so, yeah, I think those are the big things, I think that the providers that do right by the customer, provide them a kind of clear picture of what the service is going to deliver and how they’re going to work together. 

And then respond and are accountable when things go well and bad. And I think that, that, that fairness, and that honesty and integrity, all ties into this concept of trust. And I think, again, it is much more important these days as the internet continues to grow and to be a part of everybody’s daily and personal and business life. That’s critically important. You’re not just putting something up and forgetting about it, you’re dealing with it. This is a service. This is also in many ways, it’s a relationship, maybe one that’s not a daily one, but one that’s become more frequent. And so yeah, there has to be trust, and it’s multifaceted.

Mike Maney: And support is another area. I know from my personal experience last night support is a matter of an element of trust, as well, as I potentially screwed up my parents last night, so I don’t know how much they still trust their eldest son. But I’ll try and recover that this after this call, but it’s an IT support scenario where different different providers can differentiate themselves on the on things there are scale issues and scale challenges for a lot of companies that are in specially especially small and medium sized businesses that might not have the volume or spend that gets them the cost, the support that they need. 

From some of the larger providers, I know, it’s where some of the alternative providers do very well, because cloud support doesn’t come cheap for a lot of companies, right? Google, I think Google’s Google support costs a minimum of 1212, five a month, $12,500 per month, depending on how many instances or user runs, I’ve seen reports on that. Amazon also charges users a percentage of their total cloud cost or support, which for even the smallest business could run in the 1000s of dollars per month. And then the alternative to all of that is, hey, you’re on your own, go search through the docs and figure this out yourself. 

So then we get into those the skills gap, which is a, which is a huge, looming issue for us, we thought COBOL was bad. Where do we get into some of the cloud skills gaps? How do you see support playing into it, playing into this concept of trust?

Phil Shih: No, I mean, it’s part and parcel, and it’s a big part of it, just just because people I think you’ve framed a great picture, there are certain services, where it’s a different cost structure, and you have to decide ahead of time, what it is, how you’re going to consume support, how much you want to pay for it, what the frequency is, etc. 

And those are probably things that smaller organizations, the broader SMB space, don’t just are not equipped and don’t spend a lot of time thinking about, they want someone that’s, that’s there they want they want well, and not so much, that is that they just want a different framework for how they handle support you mentioned, like reading a lot of self serve, you may be talking to bots, reading through reference guides, that’s fine for certain people, for certain level of cloud skill or certain age category, let’s say, but when you look at the SMB space, a lot of people are not comfortable with that. 

And so if there’s not a type of service available, that is kind of amenable to what they’re used to how they deal with other kind of vendors in their life, they like to get on the phone, they don’t like talking to a bot, if they’re gonna text, they want to text to a human being on the other side with the option to potentially call and or maybe zoom with them. A lot of SMB users don’t necessarily feel comfortable reading through user guides, or don’t have the patience for it, or maybe don’t even have the time, because they’re the business owner as well as the IT guy at the same time. 

And so if so, that, yeah, the the mode of support, the level of support, the the way that they interact, is something that they select, and that’s part of this conversation, making a choice or selecting between providers, which is often selecting a different at the end of the day selecting a different user experience with customer support experience. And so, if that’s a positive one for the customer. Yeah, absolutely. I think it reinforces trust. And if it’s bad, yeah, it’s not probably not a good fit, and certainly doesn’t contribute to more trust between the service provider and the end user.

Mike Maney: Yeah, that was one of the things that shocked me, I was gonna say, surprise, but I was just going to go with shock on this one. When I first started working here at Linode there was the idea that a, a cloud infrastructure provider in this market still does 100% human, no teared, free support. And it was like, that’s not real. There’s no way and then I walk in the building and the first thing you see is the support team. 

And it is so different than what we’ve come to it we’ve come to expect in in the technology in the technology world that somebody has a problem, whether they are an individual developer or a larger enterprise, that they can pick up the phone, and they’re treated the exact same, because as I said yesterday, in a thread on Twitter, a customer is a customer, no matter what the size, which I think is what that was a Winnie the Pooh quote, I think it’s just different, right? It’s, it’s just so it runs, it runs counter to everything that we have been taught to expect in technology. 

So, a little more of a trickier question, which is that, as a society, as humans, we know that users are increasingly interested in, people are increasingly interested in social good, right. And a belief if you only watch when we watch what happens on Twitter, and in the general market, that people want to work with vendors that have good values. 

But when you look at some of the research that’s coming out, you realize that it’s sort of flipped, right? I’ve seen stats that 73% of people will choose a vendor that will meet their needs, and 14% choose a vendor that matches their values. So while we state that we want to work with people, with companies that match our values, the reality is, the first thing that people really look at is, do you meet my needs? And I guess that that sort of makes sense, right. 

So the question is, are users prone to making the easy choice in choosing a vendor opting for the most popular one, versus or versus the one that aligns with their needs? And the values? I’m just wondering, where do you see some of this as well?

Phil Shih: Yeah, I think we’re probably at the former and moving towards the latter, ever, so slowly, I think it’s probably no, because this stuff is still in the big picture is newer, these types of servers only been around 2020 odd years, this pandemic accelerated it, but that was of very recent vintage, we can, we’re also still kind of in the midst of this pandemic. So absolutely. 

I think that because of the newness, because of the unfamiliarity of so many users out there, and then the ones that are still just just getting familiar with what the internet can do. Yeah, I mean, that’s going to mean that I think it’s kind of almost a natural byproduct of that kind of context and environment, that people are going to gravitate to the somewhat easier decision, hey, this takes care of my needs, I don’t have the time to really think too much about this, I certainly don’t have the knowledge to go out there and do more deep research and try to find something else, I’m going to go with that. And worry about that stuff, maybe a little later, as I get more comfortable, my business scales online, the way I want it to, and everything is working fine. And so. 

And just to add to that, I think that in selecting cloud providers, a lot of people have taken the recommendation of their, like, you seem to be the tech guy at home. So everybody’s going to default to you. Whether that’s the best idea or not, there’s not the best. I didn’t say that you did. But in other environments, yeah, you’re gonna call your cousin, you know, the guy on your team who took a computer science course. I mean, it could be as random as that. And if somebody says, a business, that you have a friend who runs a business who said, Hey, I had a great experience with Linode. Yeah, that’s, that’s going to go a long way for that person to take a deeper look at that service, rather than, say, Oh, hey, you know, my friend said, Linode is a good service. And I trust my friend to make good decisions if businesses are successful. His website hasn’t blown up this week, I’m gonna go take a look, rather than go into Google and not even know what I searched to type out. So, cloud Hosting cloud computing, cloud infrastructure, I mean, being around the sector, we’ve changed names of products and services quite frequently. 

And you can’t expect the typical SMB end user to, to have kept up with that. So, yeah, I think values are always important. But I think that we’re probably moving towards that, I think, especially when it talks to people or when we’re thinking about people that are new to this medium or newer. They’re probably going to offer the easier decision, whether that’s, that’s good or bad. I think that’s a reality on the ground.

Mike Maney: And the other the other reality is we’ve hit a point in infrastructure where we’re users, companies, you actually have choice now, which they wish they didn’t necessarily have huge choice over, you know, for a while, and some of the smaller providers Linode, DigitalOcean, Hetzner they started to to catch up. Are there are different levels of hyperscale? Absolutely, right, there’s the big three, the big three big four, at that, at that very, at that very top end, and that don’t look like an SMB at all. 

And then there are other providers like, like Linode, and Hetzner. DO and others, OVH, that are still part of that hype, the push still part of the hyperscale club, just serving a different slice of the market. And as Matt at AWS has always said, I always, always get the paraphrase wrong, but I know I include the word pie, because he loves pie in this is, that it’s just a bigger pie, right and a bigger pie it better for everybody here. And I just love that quote on this. 

So, where do you think the market is headed from a trust standpoint? Is it going to become more of a deciding factor in cloud selection? And with more choices, does it make it easier to opt for a cloud that does align with somebody’s values and social mores?

Phil Shih: Yeah, I mean, I think it’s only going to increase in terms of importance. I think that, as the saying goes, right takes time to build trust, right. And so, if you’re an existing, you’re already using a cloud service, and you’re not building trust, you may be liable to move, or to try out, or at least explore another service, if you’re a little newer, to the Internet, it’s something that you’re going to factor in. 

But again, it’s gonna take time to build that trust as an end note. Time to build trust, you can also look at it from an industry perspective. Like you mentioned, right? The services are now you know, the industry is older, there are companies that have raised the profile, rising tide lifts all boats, you see, commercials, traditional advertising, now advertising for cloud computing services, there’s more public companies, like a DigitalOcean. And so the profile, the legitimacy, the street credit, so to speak, of the industry has only built is only accelerated, and, again to, I think it’s a common viewpoint that this pandemic has definitely done nothing but accelerate that. 

And so, yeah, I think the importance is only going to increase, and as, you know, businesses become more reliant on the internet, as the complexity of what you do online just expands, then naturally, trust is tied in with all that in the many multifaceted ways that we’ve discussed. So yeah, I think it’s a, I think it’s the providers that are going to be successful are the ones who understand that, and who articulate and deliver that to customers in their unique ways. 

And over time, it will only be reinforced because this is kind of a very much a process rather than a kind of transactional thing. It is something that’s that’s developed, improved, and has to be repeated that because another thing that’s important to stress is that you can build trust, but you can also lose it if you don’t perform and if you don’t stick to your guns and deliver the deliver the kind of service your customers demand and do right by the customer, every day, every hour for that matter.

Mike Maney:  Very well said very, very well said. So just want to say thanks, Phil, for joining us on this call. And having just a great conversation on this. I think it’s an important topic and as you said, one that is only going to grow in importance as this industry moves forward. So thank you very much, and I look forward to talking to you again. Hey, thanks for having me. It’s been a pleasure.


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