Graduating From the Cloud: Sociocast's Move Reflects Emerging Trend

What happens when cloud isn't good enough? Sociocast is one example of a customer that started out purely on cloud, but migrated to a service provider when its needs weren't met by public cloud. Sociocast specializes in big data analytics, parsing large data sets to identify patterns that can help companies boost their business and revenue. Sociocast's story may be indicative of a larger trend of customers "graduating" from public cloud.

Sociocast recently moved some of its infrastructure from a cloud service to Peer 1 Networks, and says the move has brought improvements. "Previous to us signing up with Peer 1, we were using cloud for most of our infrastructure," said Scott Hoffman, COO of Sociocast. "We were experiencing some anomalies. We would run some of our jobs at some point during the day, we’d measure how quickly they’d complete and they’d vary. It became hard to predict, which isn’t good when you’re in the predictions business.”

As an example, Sociocast assists advertising technology vendors gain real-time audience insights that help their own clients make effective marketing decisions. So timing of analysis is a key business deliverable.

Outgrowing the cloud would seem to be an oxymoron, as the cloud is billed as allowing seemingly limitless growth. In terms of the maturity of a company, however, Peer 1 Hosting says the move from cloud providers isn’t unusual.

“What we’ve seen happen with the guys from Sociocast is something we’re seeing more frequently with other guys as well,” said Robert Miggins, SVP Business Development at Peer 1 Hosting. “They’ve grown to the point where the variability or dependability of things needs to be higher. After some rounds of funding, or addition of customers, growth and hosting spend is bigger – there’s a contrarian thing where we find customers moving back to bare metal, particularly with database applications.”

The best-known example of this phenomenon is social gaming company Zynga, which once hosted 80 percent of its infrastructure in the cloud, but now runs 80 percent of its servers in company-operated data centers. SoftLayer has also reported customer wins in which companies have shifted from cloud services to dedicated servers.

Sociocast is young and spry. Launched in 2010, it really began to commercialize the product towards the back half of last year. Currently, it’s backed by two organizations: Detroit Venture Partners and Raptor Venture Group, out of New York.

Time, Money & Reliability

Sociocast claims that going from cloud to dedicated has lowered both cost and improved certainty in its infrastructure.

“Cloud satisfied our services when we were smaller," said Hoffman. "As we grew, we needed a service provider. In an environment where computational cycles are everything, we had to go back to bare metal.”

After evaluating a number of  service providers, it selected Peer 1 Hosting, and says its new provider was instrumental in helping Sociocast determine what changes to make in its infrastructure.

“Peer 1 came very well recommended with one of the clients. Customer service folks and the folks we went through at Peer 1 were all great,” said Hoffman. In a world where infrastructure is increasingly automated, people are still a valuable part of the equation.

The company grew to the point where hosting the majority of it in the cloud was unfeasible, yet it continues to use the cloud for non-sensitive types of functions. Sociocast uses a hybrid solution, in a sense. It’s another case of public cloud really being a complement to service providers rather than a threat. At the moment, there continues to be both cloud and traditional service provider customers.

“We see a lot of time-ordered datasets. As clients send us data real time, we correlate similarities between users, devices or IDs,” said Hoffman. “In real time, we provide a graph of how all of their different users are connected together.” The Sociocast service aides in defining how their clients define their users.  “Whether signing up for product, promotion or clicking on a banner – we tell them the behavior of their users in order to determine how to interact further, to shape business,” said Hoffman. “We’re working right now with a major mobile ad network, and what we’re doing with them is literally identifying people who have clicked on a specific campaign Who they speak to next.”

While there’s a lot of talk of the potential of cloud and big data, there are several cases such as Sociocast which suggest that maybe, the combination of the two doesn’t seem to quite be there yet. Cloud is used by small start-ups and ridiculously large companies like Netflix alike; however, service providers remain a part of the infrastructure environment.

Peer 1 Hosting Post-Acquisition: Business as Usual

Peer 1 Hosting was bought by Cogeco Cable in a $635m deal  in December 2012.  ”It’s been a positive thing for a number of reasons,” said Robert Miggins, “It simplified ownership structure,  no investors and board of directors to worry about.” The company was previously public company and had to jump through all the pertinent hoops that come with being public.  Now a subsidiary of another public company, the company runs very independently, and has an opportunity to expand faster than they would have under the guidance of the parent. All indications are that Cogeco has been a fantastic owner so far.

The Canadian company continues to move deeper and deeper into managed services. Its data center in Toronto, which is almost four years old, is loaded with managed hosting customers.