Welcome to the Heyday of the Cloud. From an increase in growth to a development of importance and installation among even the most skeptical of enterprises, cloud technology is now in its ‘second stage.’ What’s next for cloud computing?
The public cloud services market exited 2013 with $58 billion in revenues according to Forrester estimates. Strong growth and maturity over the past three years has put fuel in its tank, which will push this market to $191 billion by 2020.
While the last several years can best be characterized as exploratory for most enterprises, cloud services and cloud platforms are now an undeniable part of the IT landscape. And based on Forrester enterprise CIO inquiries, the shift has begun from exploration of cloud as a potential option, to rationalization of cloud services within the overall IT portfolio. And this shift to the second stage of technology adoption yields significantly higher market revenues than the exploratory phase.
CIOs should start considering clouds as a core deployment option within their formal budgets.
Clearly, the bulk of this market’s revenues come from Software as a Service (SaaS) solutions which accounted for $36 billion in revenue in 2013. This segment of the market is significantly more mature and well established in several application categories. Cloud platforms, led by Amazon Web Services LLC, were only collectively $4.7 billion last year but are maturing quickly thanks to stronger recent solutions from traditional IT partners IBM, HP and Microsoft.
Drilling into the key market segments we see:
SaaS will shift toward replacement of existing systems.
SaaS has grown primarily in the form of new categories of applications that complement existing core, transactional solutions. However, in sales force automation, customer relationship management, human resource management, and seProcurement and ePurchasing, replacement of existing licensed software is becoming more common. This trend will spread to other application categories, providing a second front for SaaS growth from 2014 through 2018.
Related: Increasing Sales Staff CRM Adoption
Public cloud platforms will rival traditional infrastructure deployments by 2020.
The growth in use, maturity, and financial viability of public cloud platforms are proving their longstanding value as legitimate deployment options for enterprise applications. While not a one-for-one replacement for on-premise, hosting, or colocation, cloud platforms fit well as ideal deployment options for elastic and transient workloads built in modern application architectures. And as the seismic shift in application portfolios progresses, public clouds will capture a significantly larger addressable market. As such, CIOs should start considering clouds as a core deployment option within their formal budgets.
Public cloud services will rival traditional middleware for systems of engagement.
For applications and services built in an agile mode with modern architectures, discrete cloud services, such as database, storage, integration and other standalone cloud middleware components, will empower developers by freeing them from the management and maintenance of these components and reduce overall deployment footprint and cost. As these services are consumable by-the-drink, they free organizations from the traditional licensing constraints that are misfits with elastic or transient applications. They are also managed and enhanced by vendors as often as daily delivering new capabilities that can help a company maintain pace with the changing desires of an empowered customer base
Cloud services and SaaS bring high degrees of automation, standardization, and autonomy that empower the business to work faster, more flexibly, and adopt new capabilities more readily. The economic model of cloud computing yields greater efficiencies through shared consumption, pay-per-use pricing, and volume economics. It will increasingly be difficult to justify not leveraging cloud services.
As the largest clouds continue to invest in efficiencies that can only be achieved at their massive scales, the gulf between the cost efficiencies that can be had from the cloud and what is possible on-premise or through other outsourcing and hosting options will widen dramatically. And as clouds deliver a growth proliferation of services, components, and applications that accelerate new business service creation, their appeal will widen further.
Still, inertia is difficult to overcome in the enterprise market, and there remain legitimate concerns about the security and performance of cloud solutions in certain parts of the world and for certain use cases and data types. As the past three years have shown, these will be overcome. The CIO’s biggest battle will be the internal cultural, psychological and financial accounting barriers born in a different age that will take decades to change. Start the fight now.
InCloud360 is an Alpharetta, Georgia advisory that specializes in helping growing businesses achieve goals and grown into the cloud. We welcome you to sign up for News in the Cloud, find out more about our service offerings, and contact us.