Dec 2, 2013
All the best IT odds-setters — i.e. Gartner, IDC and 451 — are betting big on the cloud, and the major IT vendors and their largest public and private-sector customers are covering those bets. However, while there are a growing number of success stories, all does not appear well in cloudtopia. It looks like there’s a traffic jam at the cloud on-ramp and it’s not going to be cleared up any time soon.
By 2016 the increase in the use of cloud computing will become the bulk of new IT spend, according to Gartner: “2016 will be a defining year for cloud as private cloud begins to give way to hybrid cloud, and nearly half of large enterprises will have hybrid cloud deployments by the end of 2017.” Virtualization, service orientation, and the Internet have converged to sponsor a phenomenon that enables individuals and businesses to choose how they’ll acquire or deliver IT services, with reduced emphasis on the constraints of traditional software and hardware licensing models, said Chris Howard, research vice president at Gartner. “Services delivered through the cloud will foster an economy based on delivery and consumption of everything from storage to computation to video to finance deduction management.”
Worldwide spending on public IT cloud services will reach $47.4 billion in 2013 and is expected to be more than $107 billion in 2017, according to IDC. Over the 2013–2017 forecast period, public IT cloud services will have a compound annual growth rate (CAGR) of 23.5%, five times that of the IT industry as a whole. By 2017, IDC expects public IT cloud services will drive 17% of IT product spending and nearly half of all growth across five technology categories: applications, system infrastructure software, platform as a service (PaaS), servers, and basic storage. Software as a service (SaaS) will remain the largest public IT cloud services category throughout the forecast, capturing 59.7% of revenues in 2017. The fastest growing categories will be PaaS and Infrastructure as a service (IaaS), with CAGRs of 29.7% and 27.2%, respectively.
A recent study from TheInfoPro, a service of 451 Research, predicted explosive growth in the number of enterprise cloud computing projects over the next two years. While internal, private cloud projects still dominate cloud-related activity cited by 35% of respondents, in just the past six months, IaaS and SaaS activity has doubled to between 30% and 33% of the projects mentioned.
The above is some of the what’s going to happen in cloud computing. The following looks at some of the why‘s this widespread cloud adoption is expected to happen in the immediate future.
“Today, moving to the cloud is not a questionable proposition — it’s inevitable,” wrote Google Executive Chairman Eric Schmidt in a recent blog. “Sooner than almost anyone thought possible, hundreds of large-scale companies have succeeded in moving their businesses to the cloud, paving the way for millions more to follow.” According to Schmidt, the cloud is not just a cheaper way to maintain the status quo, but also a way to fundamentally transform the way a business is run and how people can get work done together. “The real beneficiaries of this rebirth of IT are not technology companies, but the rest of us — business owners, makers, teachers, students and employees. Having the power of massive data centers and smart mobile devices at our fingertips makes it easier than ever to create, communicate, learn and collaborate.”
Saving money is always good, and so is improving the way businesses run, but how about the cloud as a money generator? IBM says companies who use cloud computing as a competitive advantage can expect to have their revenue margins doubled compared to those who don’t have high adoption.
A recent survey of over 800 business decision makers and users put companies into three categories: pacesetters, who are “deploying cloud on a broad scale”; challengers, who are at a similar level to pacesetters yet “lag on differentiation and market responsiveness”; and chasers, who are more cautious on cloud. The three areas in which the pacesetters are taking charge are: strategic reinvention, such as improving business models and rapid product innovation; making better decisions; and deeper collaboration. These companies are 117% more likely to use the cloud to make strategic decisions through data, 79% more likely to utilize cloud for garnering expertise throughout a company, and 170% more likely to use analytics via cloud. Two thirds of leading organizations polled are using the cloud to “strengthen the relationship between IT and lines of business”.
So the cloud can save you money, make your organization more productive, and even increase your revenue margins. Where do I sign up? Which brings us to the third point of this blog — that wanting the cloud and having the cloud are two very different propositions.
The overwhelming majority — 83% — of TheInfoPro respondents are facing significant roadblocks to deploying their cloud computing initiatives, a 9% increase since the end of 2012. IT roadblocks have declined to 15% while non-IT roadblocks have increased to 68% of the sample, mostly related to people, processes, politics and other organizational issues. “As organizations are completing their transition to a virtualized datacenter infrastructure, their focus is switching rapidly to cloud computing projects,” said Peter ffoulkes, TheInfoPro’s Research Director for Cloud Computing. “Despite this shift of attention and the associated growth opportunity, there are major roadblocks – for the most part, they are not technology related and fall within the domain of people, process, policy and organizational issues, which are more complex for vendors to address.”
Regulatory and compliance issues are essentially ‘pass/fail’ criteria for public cloud provider selection, but security remains paramount as the biggest pain point for IT professionals implementing cloud computing projects.
In a recent blog here, Clive Longbottom identified three pitfalls to cloud on-ramping: volume; network issues; and synchronization. In addition to offering some suggestions for dealing with these pitfalls, he also suggested that using a logistics company might make more sense.
The bottom line is that cloud is a game changer and not participating — the sooner the better — is a guarantee of failure.
Image credit: WikiMedia Commons