System Integrators’ Cloud Strategies – React or Lead?

“A leader takes people where they want to go. A great leader takes people where they don’t necessarily want to go, but ought to be.” (Rosalynn Carter)

Recently a number of medium-sized System Integrators (SIs) have approached me to help them either define their SaaS/Cloud strategy, validate their strategy or help them with the realization of their strategy.
It seems that, the shoe has dropped. It took two years of relentless Cloud hype for the System Integrators to finally understand that major changes are occurring which will impact their customers and therefore – them.

New Breed of System Integrators
There is a new breed of Cloud System Integrators (up to a year ago they were called “SaaS System Integrators”) including companies such as Appirio, Astadia, Bluewolf & Model Metrics, that are dedicated to providing SaaS based services. Being newcomers, they are quite small compared to the large players, but their growth rates are phenomenal (e.g. Appirio has been growing in triple digits since 2008). So far they are have not been big enough to pose a visible threat to the old timers, but I suspect that the Dinosaurs are starting to feel a bit uncomfortable with the quick mammals that are infiltrating their territories.

Lack of Strategy – Tactical Approach
Having studied approaches of the major players in the market I have come to some interesting observations:

1. There are around 15 Cloud services that SIs could offer their customers. Examples are: billing/integration/SSO services, PaaS development (Azure, Google Apps Engine, Force.com), SaaS-oriented testing, training, 24X7 NOC, etc. 
2. Judging by my engagement with some of the SIs, most are not even aware of what those services are, and are therefore concentrating on a few obvious choices.
3. Most of the SIs are offering only one or two Cloud services from the list, and therefore:
4. Most large SIs do not have a SaaS/Cloud strategy, or, their strategy is to wait and see how the market develops.

A number of large players have chosen to become a single application integrator. Examples are:
Accenture is a Salesforce.com partner.  Ernst & Young are helping implement EmployU and HumanWave. Deloitte is with Workday and Genpact is a Netsuite implementor.
Capgemini is working with AWS to provide a Cloud Computing COE.

Considering the size and nature of the business of these players, it seems that these services are not high on the priority lists of the big SIs. It is quite obvious (to me) that these giants have not defined a SaaS strategy, rather they are reacting in an opportunistic manner to the market - akin to a “me too” tactic, just to have something 'Cloudy' or 'SaaSy' on their web site.

Cloud Strategy – React or Lead
As mentioned, many SIs have adopted tactical approaches, at the Cloud Service level, rather than a strategic approach. Further analysis led us to the conclusion that by zooming out, grouping and mapping the above Cloud Services. we can define five Cloud Strategies for System Integrators:

1. SaaS Aggregator – Provide Applications on the cloud
2. SaaS One-stop-Shop for Software Vendors
3. Cloud/SaaS Adoption for IT
4. Private cloud technologies
5. BPasS - Could Integration

Note that Strategies 4 and 5 are "smaller" in scope and could either be included in one of the first three. Each Strategy includes between four to twelve of the above mentioned Cloud Services.

Using this prism, we could say that a number of players have chosen a strategic path:
IBM’s GBS and Wipro are offering services that we define as SaaS One-stop-shop for ISVs (strategy 3).  KPMG is offering Roadmap for SaaS Adoption (strategy 5) while Infosys is acting as a SaaS Aggregator for enterprise IT (strategy 1).  Smaller players such as iProcess are offering BpassS (Strategy 2)

Even though adoption rates are growing very fast, the hype of Cloud Computing is a couple of years ahead of reality, especially in the larger organizations that are the natural customers of the leading SIs. Some SIs have chosen to play it safe: not invest up front in new technologies and methodologies and watch the market carefully. Since they will still be milking many fat cows for a few years to come, the decision not to decide could be considered a smart, conservative strategy.

Others, though, have taken leadership positions, risking investments without a clear date on the ROI. They have the advantage of defining the market trends and have a better chance of emerging as the de-facto leaders in a few years when all the players, that are currently sitting on the fence, will have to define their strategy and see what bones are left to pick.