Who's Really Behind Your Cloud Service?

It is becoming more and more popular for cloud computing companies to not actually provide a cloud at all but resell for another cloud.

As TechTarget describes it:
“A white label cloud service is a cloud provider that sells customers resources that they can, in turn, offer to their own customers under their own brand. Such a service enables third-party company branding with control over appearance, policy, support and etc. along with access to infrastructure.” For more of their definition click here.

In a B2C example, there is a company many of us have heard of called DropBox. While DropBox is providing the User Interface (UI) and driving other integration aspects, they are actually not the company behind the storage being used when you save a file to DropBox – Amazon is.

This has crept into the B2B space as well, where a cloud provider sells a private (or white) label option to other, usually smaller, IT services companies that then market the cloud service as their own. The implications from these arrangements make for interesting discussion points across the board. In some respects, this could be great news to an accounting firm looking to build their IT practice around a recurring revenue service but lower their capital investment in the process. However, it could have far more negative implications for firms looking to make a move to the cloud and wonder who is actually behind their cloud.

Some of the implications to think through when choosing a cloud provider who is actually a cloud reseller are:

You now must do diligence on two companies, your vendor and the other vendor behind the vendor
What happens if one piece of the puzzle goes out of business? How does that impact the other vendor and you?
How does this impact service? If you are having an issue, does one vendor have to work through another to get the job done?
Who do you trust? While you may be best friends with your IT company, do you trust/know the people behind the other solution?
Who’s got your data? And where is it going? Who’s looking at it? Where do liabilities fall?

This is a short list, and if you let your mind wander much further, you will find that the implications of a private label cloud are quite vast and worthy of diligence, should you be looking to go cloud.

Some companies who provide a white label cloud that vendors can resell are:

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Roy Keely is the VP of Market Strategy at Xcentric and is charged with articulating Xcentric’s value proposition to the accounting community through industry partnerships, content development, and other strategic initiatives. Roy offers a broad range of experience in sales, marketing, and consulting and was recognized in The CPA Practice Advisor “40 Under 40″ for 2012.