Sramana Mitra: Let’s talk about the SaaS and PaaS market. What is the positioning? Who are the competitors? What are the dynamics of that business?
Steve Knipple: Once you’re in the SaaS and the e-commerce space, then you’re competing against the hyperscalers such as Amazon, Azure, Google, and traditional managed services providers. In that space, you’re actually talking to people who are writing the code. Where we win and where we differentiate ourselves in that SaaS and e-commerce market is we have developers on staff as well. It’s developers talking to developers. We get an edge because these are people who want a much more transparent look into their cloud infrastructure versus what they’re able to get from a hyperscaler.
Also, the same kind of consultative approach and the same kind of systems engineering helps differentiates us. Only this time, they’re talking to developers on the EasyStreet side. It allows us to connect closer with what they’re trying to do and understand their problems and help solve them.
One of the things that we say about both of our customer segments is that we meet you where you want to be met. We understand that every customer is slightly different. Every customer has slightly different skill sets and everybody wants different levels of services. While our services are standardized, we are very flexible in where we meet our customers and what we’re willing to do for them versus what they want to do for themselves.
Sramana Mitra: Specifically, can you pinpoint why a medium-sized ISB would choose to use you as their managed service provider versus an Amazon AWS?
Steve Knipple: When someone goes to Amazon or Google, there’s an implication that they have infrastructure people on their own staff that know how to self-provision and operate. It is increasingly straightforward to provision a single virtual machine but when you have hundreds of virtual machines, that’s a little more of a challenging task. By the way, by the end of this year, we will be managing instances for our customers in both Amazon and Azure as well.
Sramana Mitra: I was just about to ask you if you are a value-added reseller for those providers.
Steve Knipple: Yes. In five years, we’re predicting a third of IT will be on-prem, which is inclusive of colocation. A third will be at the hyperscalers. That’s going to be the Azures and the Amazons. We think a third will be at a traditional managed services company. It’s more of a sourcing play where they need a deeper set of skill. There’s an implication. You have to have certain staff if you’re going to Amazon. Some companies have that and some companies don’t.
Sramana Mitra: What would also be interesting in this context is pricing. Let’s say an average customer of yours, how much are they spending with you to avail of this managed infrastructure service?
Steve Knipple: We have customers that range anywhere from one or two virtual machines, which is the sub-$1000 a month range. We also have customers that are well above the $60,000 a month of spend with us. It’s a wide range.