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Businesses Look at Long-Term Cloud Strategies as Apps Moving to the Cloud in Droves: Gigaom Report

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According to the fourth annual North Bridge Future of Cloud Computing survey released on Monday in partnership with Gigaom Research, over the next 12-24 months businesses will be focused on implementing a long-term cloud strategy. The question is no longer “why cloud?” but rather how to integrate it into the existing business model. Nearly half the respondents said they use cloud to generate revenue or assist in product development.

There were several case studies cited in the report, which surveyed 1,300 users and vendors, that highlight the revenue generating capabilities and cost savings of integrating new cloud services.

“The customers who are enjoying the greatest success with cloud are taking a hybrid approach to IT,” Mike Riegel, VP cloud marketing at Cisco said. “Instead of building internally or sourcing externally, these customers view cloud as a continuous set of interconnected and interdependent options.”

By 2017, nearly two-thirds of all workloads will be processed in cloud data centers. Workloads in cloud data centers will surpass traditional workloads five times over between 2012 and 2017. Reduced infrastructure cost, agility and scalability help businesses and encourage the move to cloud.

“Agility, reduction in capital expenditures, and reduced operating expenditures–in almost 100 percent of situations–have been the primary drivers of cloud adoption,” Jim Morrisroe, CEO of Piston Cloud Computing said. “We also expect to see cloud adoption increase as a result of the recent explosion of big data analytics, mobile, and next-gen web applications development and by line of business innovation.”

One example used in the survey was American Golf, whose infrastructure was maxed out and affecting uptime. Through services with demandware it was able to increase traffic, average order value and online sales. Disney Interactive decreased time to market and increased delivery of games and media applications with services from Citrix. Photobucket saved over $120,000 in data center costs by migrating to resources to cloud. It reduced server provisioning time to minutes, previously measured in days.

“This next wave of cloud computing that’s revenue and business driven is good news for long-suffering IT execs,” David Card, Vice President Gigaom Research said. If they can off load tedious but necessary cost-center functions and refocus resources on cloud-driven new business, they might be able to re-take their seat at the C-table.”

SaaS is leading cloud growth with an increase of 59 percent since 2011. It is also moving up in importance among CIOs as SaaS is seen more useful in multiple applications. Across all business apps except manufacturing, 70 percent of respondents said they would move processing to the cloud over the next 12-24 months. Expected with this kind of growth and transition is a concern for cost. Only 6 percent of respondents were worried about cost in 2011, that number is now 18 percent.

Big data alone could be driving cloud adoption. Over 90 percent of the world’s data has been generated in the last 2 years with only 66 percent currently being held in the cloud. Half of enterprises will buy as much storage in the in 2014 as they have accumulated in the history of their business.

The top three inhibitors to moving to cloud are security, privacy and compliance. Security still leads and the primary concern with 49 percent of respondents. One-third see compliance as an issue in moving to the cloud. Making compliance easy for adopters may be an area through which cloud service providers can distinguish themselves from the competition. Reliability concerns dropped by almost half over the last four years.

Despite these challenges, the survey concludes, “The second cloud front will be an order of magnitude bigger than the first cloud front.” Everything as a services seems to be the next wave of growth in the cloud.

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