Alibaba Cloud expands in Europe as it aims to change the rules

Profile picture for user mbanks By Martin Banks October 29, 2018
Summary:
Companies that need to sell `X’ but don’t have the expertise or desire to work out what that task takes as cloud resources may find the approach of Alibaba a welcome alternative

Alibaba-Group-IPO-HK
Alibaba

The opening of a new data centre and a cloud service provision operation is pretty much an 'and in other news' type of story, but there are some points to observe about the arrival of Alibaba Cloud and its opening of data centre services in the UK. This expands its footprint in Europe, following the opening of similar facilities in Frankfurt.

Those points concern the obvious fact that this is Alibaba, China’s big rival to Amazon as an online retail services operation. It is already big across most of Asia, but is now making serious efforts to be a global operator.

The second point is the way the business operates, for its business-first focus – rather than the more technology-first focus of most western service providers – could make it an interesting option for not just the SME community, but also much larger businesses that just see the transition to the cloud as a move loaded with technical risk.

Alibaba Cloud is one of six core businesses the group has. The other five make up the core functions of the business: Sell, Buy, Pay, Deliver, and Fun – and the key task of the cloud business is to manage all aspects of the information flow between these operations on behalf of the group’s customers that actually makes a `holistic trading’ service work across them. This capability is then sold on to customers as an end-to-end business support service so that they can carry on with their trading.

At the last count it clocked up $547bn in annual income and, as measure of its capabilities and, according to Yeming Wang, Alibaba Cloud’s General Manager in the EMEA region, has a record single day trading figure, during a major Chinese Festival, of $25.3bn.

The objective is to provide businesses with the full data management piece of buying the necessary input to a trade, coupled with its corollary of selling the finished products or services on to customers. There is also a banking service available to manage the finance aspects, so that the money can follow the trades as appropriate.

The company also has close relationships with major banks in all its markets, and there has to be some doubt in the short term as to how quickly the Alibaba banking operation might get established in the UK:

We are fully aware that we really need to be on top of what fintech can offer in any form whichever country we operate in.

It is already doing consulting work with some users in the UK and Europe, and also developing additional tools aimed at providing an easier level of service for non-technical business users. Latest amongst these is a single sign-on service for users that operate across a number of the Alibaba service sectors.

Business first

But Yeming Wang is keen to point out that its operations are far less to do with its technology in play and much more about the business services it can provide. He sees the first customers for the UK operation to be businesses looking to exploit the direct connection possible between China and the UK. So he expects this to cover both UK companies with existing operations in China, or looking to create them, and Chinese companies looking to trade in the opposite direction.

He also expects to see much of its business coming from the SME business in the UK, not least because the company is deliberately approaching the market from a business perspective rather than a technology one. SMEs are less like to have in-depth dedicated cloud-based services for buying stock and materials, selling to their markets online, or quite possibly managing online, real-time, financial management. They may well have relationships with existing courier service providers, but may find managing the data needed for the logistics of dispatch, shipment and fulfilment daunting.

This is where having a partner channel will undoubtedly be helpful and building this up is expected to be one of the first tasks on his 'to do' list:

They will be able to define the vertical, business-led `sales units’ that will make sense to their vertical market customers.

This will hinge on selling the services on a business-need basis. Currently, it is most common that cloud services are sold on a resource-led basis, where someone in a business has to translate the business tasks into the number of processor cores, memory capacity, and volume and type of disk storage those tasks will require. The service is then specified and ordered on the basis of those technical requirements.

Yeming Wang confirmed that the Alibaba channel partners will provide resources based on business terminology, for example `sufficient resource to stock/sell/transact/deliver N quantities of products A, B and C to Y customers per day/week/month.’

My take

It seems to me that the users of cloud services – end user businesses just looking to conduct their business rather than build an expertise in a technology they often see as being only marginal to their business – could find the Alibaba approach resonates with their actual needs.

In much the same way that very few car buyers make their choice on the basis of the dimensions, materials specification or manufacturer of the piston rings in the vehicle, or even something serious like the depth of its frontal crumple zone, why should a business making wimwoms for church steeples need to understand the intricacies of IT and cloud resource management specification in order to trade online?

If Alibaba puts some weight behind this approach to marketing, it may well force other service providers to sharpen up their act – the benefit of the user community.