Recent Trends in Cloud Services Adoption

The cloud is also a world with various layers and choices. Do you adopt a public, private or hybrid cloud model? Do you use the cloud for software or your whole infrastructure? Are you a formal (enterprise IT) buyer or an informal (mid-market, SMB) buyer, and how does that affect the model you choose?

Then there are the different service models, aka the “aaS” acronyms: SaaS (software-as-a-service), IaaS (infrastructure-as-a-service) and PaaS (platform-as-a-service).

Adopters of public cloud services will be from the “informal” buyer camp, which are mostly small and midsize businesses or enterprise users who are outside the core IT operations and transaction teams. These buyers are more likely to follow the IaaS and PaaS models and put all their IT resources (servers, storage) in a cloud environment.

The Forrester report also predicts that buyers of SaaS applications will continue to be informal business buyers.

“At the high-level enterprise IT organization, a wholesale move to a cloud model is not practical due to the sheer size of the IT environment, as well as the many back-end legacy systems still in use and the compliance regulations to which the company must adhere.

Therefore, data center consolidation through server virtualization will remain a higher priority for enterprises than a public or private cloud migration, according to Forrester.”

• Cloud first approach to IT
• A new spate of cloud service offering will take root in 2011, according to Forrester, expanding SaaS applications beyond CRM, human resources and procurement technologies, and into business process technologies for tasks like payroll and billing, healthcare claims processing, trade settlements, clinical data management and tech support. This has spawned yet another “aaS” cloud acronym: BPaaS (business process as-a-service).
• Public cloud adoption among the enterprises is still low; “breaking the ice” phase is over in 2010. Public clouds moved from hype to reality with enterprises clearly understanding the strategic advantages of using them as a part of IT.
• Private Clouds are still not completely at ease with the public clouds, they have, however, realized that cloud technologies can help them greatly optimize their existing IT, leading to large-scale interest in private clouds.
• Acceleration of the use of cloud computing at all government levels and help increase the trust in cloud services for the enterprises.
• High Performance Computing (HPC) in the cloud.
• Aggressive acquisition strategy by traditional IT vendors including CA, VMware, Redhat, Dell, etc.
• Open source in the cloud era became even more important with the announcement of OpenStack project by Rackspace and NASA.
• PaaS gained lot of attention in 2010 as the realization set in about the fact that PaaS is the future of Cloud Services. Developers love the idea of PaaS and, slowly, enterprise managers are seeing the usefulness of PaaS in both cost reduction and business agility. Every major cloud provider is plotting their way towards PaaS layer of the stack and we are seeing the launch of more and more startups in the PaaS space focusing on different language stacks. Salesforce’s acquisition of Heroku signaled an impending wave of acquisitions in this space and expects to see more action in this space.
• The general purpose programming PaaS will get fragmented with different types of PaaS services entering the field. With seemingly infinite platform compute resources like Heroku on one side and with Azure and Google App Engine kind of services in the middle and Amazon way of packaging of finite chunks on the other end, we are going to see a debate on what constitutes a PaaS in the first half of 2011, much like the private cloud vs public cloud debates of 2009 and early 2010.
• Big Data and increasing adoption of tools like Hadoop made BI and Analytics.
• Organizations using SaaS are recognizing the importance of collaboration and social tools not just to break down the silos but also to increase the productivity within the organization.
• Social CRM became a hot trend empowering users in ways not imagined even a few years back.
• SaaS adoption has put integration services as a crucial part of IT buying checklist.
• Open federated cloud ecosystem
  • More and more traditional webhosts repositioning themselves as cloud infrastructure providers.
  • Emergence of regional clouds emphasizing on local support as well as compliance to regulatory needs.
  • OpenStack will unleash a cottage industry of cloud service providers while other cloud platform providers will also gain traction worldwide.
• Emergence of cloud infrastructure providers emphasizing on High Availability, stronger SLAs with better coverage for liabilities, managed support services, etc. Features like HA, Strong SLAs, etc. will become standard features in any infrastructure offering.
• Emphasis on Cloud Security
• Governance and compliance will gain more visibility
• Integrated Cloud Management providers who were focusing mainly on management, monitoring and automation will add support for governance and compliance in this year and the next, thereby, offering a more comprehensive set of solutions than what they offer now.
• CloudAudit gain some traction among the public cloud providers.
• SaaS ERP will slowly gain further traction this year getting ready to a more widespread adoption in 2012.
• Traditional enterprise collaboration vendors embracing clouds as they realize that their customers are already using cloud services heavily.
• The basic value proposition of the cloud means that the SMB and micro-business will continue to be at the forefront of cloud adoption.
• Cloud computing offers cost savings and an attractive pay-as-you-go model that allows SMBs and micro-businesses to establish an affordable and competitive IT infrastructure. Scalability, of course, is another chief benefit, allowing SMB and micro-business to remain responsive and viable in a soft economy.
• The demand for anytime, on-the-go accessibility will be a major force in shaping cloud computing. The ubiquity of powerful mobile devices and cheap bandwidth, coupled with today’s dynamic business environment, means that the demand for accessibility will continue to drive cloud adoption.
• New hybrid offerings will allow customers to combine dedicated hosting, public cloud, and private cloud to realize new and customized solutions.
• Cloud computing currently offers three basic delivery models: Iaas, PaaS, and Saas. Experts expect to see greater consolidation of cloud delivery models, especially as providers fill critical gaps in today’s cloud offerings. The demand for unified “stack-as-a-service” delivery models is expected to grow as more customers seek to build and deploy applications. This also means greater consolidation of cloud providers to achieve economies of scale in centralized data and services.

• Cloud adoption will be gradual, and SMBs will continue to operate in a hybrid model with an increasing blend between off-premises and traditional on-premises infrastructure, for the foreseeable future
• As cloud computing becomes more ubiquitous and SMBs’ existing IT becomes outdated, adoption will grow rapidly. Hosting service providers should consider the appropriate sales, delivery and support models to target larger SMB customers that are more likely to pay for cloud services.
• SMBs that are adopting both SaaS and IaaS services are larger, more growth-oriented and more interested in additional services, such as unified communications and remote desktop support. This provides an opportunity for hosting service providers to offer both SaaS and IaaS in order to acquire and retain high-value customers and maximize revenue per customer.
• Given the complexity of integrating internal security, auditing and compliance processes with external cloud services, most IT shops are turning to private cloud initiatives first.
• A lack of staff skills to support a private cloud implementation was also a top reason why IT shops are not undertaking cloud projects this year. The majority of respondents said they would be creating new roles for cloud computing initiatives, but there would be no net gains in overall staffing.
• Public cloud will become a double-edged sword on the one side, the providers are usually the best at what they do and can provide the service better then we could internally. On the flip side, it makes the same companies bigger targets for hackers.

• Gartner forecasts that worldwide cloud services revenue will increase nearly 17% this year to $68.3 billion, with the UK accounting for 10% of those revenues. By 2014, the global market will approach $150 billion, a 20.5 percent compound annual growth rate over the next five years, according to Gartner.
• Back-office apps like financial apps, balance sheets, back-office manufacturing and production will adopt the cloud
• Cloud-based collaboration is moving to the cloud in a big way across industry verticals as a major trend that is catapulting the cloud – be it tech, medical, high-performance computing (HPC), automobile, consulting, and so on.
• Expected or realized cost savings of 30%–40%. This varies widely depending upon cloud adoption scale. Infrastructure-as-a-service (IaaS) adoption cases typically make it higher. Private cloud adoption cases make it lower.
• Companies don’t have much incentive to move to cloud-based enterprise resource planting (ERP). Especially where there has been substantial investment in integrating and customizing ERP systems, there is absolutely no urgency to move to the cloud. CRM is a different story. Largely due to the market-leading efforts from Salesforce.com, CRM is seeing the highest adoption among cloud applications.
• Analytics is moving to the cloud at a faster pace than we expected, but mainly in the private cloud for large enterprises. Analytics requires voluminous data movement, which is an Achilles’ heel for public clouds.
• Many gaps in vertical offerings for cloud apps in industries like education and healthcare and gaps in long tail business apps at enterprises and SMEs. This may be one of the most fertile areas for entrepreneurs for the coming decade. A promising combination to rapidly bring products to market would be the combination of a Platform-as-a-Service (Paas) and a vertical/long tail app to address specific pain points.
• IO-intensive applications (be they digital media, medical research, or some HPC apps) cannot move to the public cloud yet. We view this also as an opportunity for this decade. Couple that with the broader trends of mobile and social apps, and we can certainly expect to see interesting changes in both prosumer and consumer behavior.

Points to ponder for Cloud Adoption

• Prepare for the Change
• Think & Prepare for failures and you won’t
• Manage the cloud as part of the IT infrastructure
• Think for Cloud Security

If 2011 was the year when cloud computing turned from hype to reality, 2012 will see maturation of services and widespread adoption. On the infrastructure front, we will see enterprises taking a hybrid route to public clouds. On the platforms front, we will see further consolidation among the providers paving way for widespread adoption in the coming years. Enterprise PaaS will gain traction this year. Collaboration and social will be the key trends on the application side this year.