The Cloud is Maturing – What’s Next for the Cloud Provider

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It’s nice to no longer have to explain exactly what “cloud” is whenever the topic comes up in conversation. For the most part, IT professionals and business leaders have a decent idea to what cloud computing is and what it means for the industry. Today, we’re seeing a sort of maturity around cloud as organizations work to find more ways they can utilize a cloud ecosystem to create competitive advantages.

The latest IDC CloudView 2016 study found that 58 percent of all organizations surveyed are embracing cloud, using public or private cloud for more than one or two small applications or workloads, up from 24 percent just 14 months ago. The top drivers of cloud adoption include improving resource utilization and staff productivity.

RELATED: Report Links Cloud Adoption to Better Organizational Resilience

“Beyond adoption and maturity, a series of questions on ‘why are’ or ‘why aren’t’ respondents moving more workloads to the cloud makes up a key part of the study,” said Ben McGrath, Senior Research Analyst, SaaS and Business Models. “Improving staff productivity remains a key driver, but in comparison to previous years’ studies, more respondents are identifying business-related metrics as a key driver of Cloud adoption, such as improved business agility and more support for business-related programs.”

Other key findings from the study include:

  • Respondents expect to increase their cloud spending by approximately 44 percent over the next two years.
  • Over 70 percent of heavy cloud users are thinking in terms of a “hybrid” cloud strategy.
  • Over 40 percent of heavy cloud users plan to spend money on open source and standards projects.

SEE ALSO: Security (Finally) Less of an Obstacle to Cloud Adoption: Report

So – we’re seeing that adoption continues to grow. And we see that organizations are including cloud in their overall strategy. But what’s next? What sets a cloud provider apart from just being able to tell the same old “me too” story? As the market for cloud and cloud services becomes denser providers will need to find ways to be competitive and think “beyond” cloud.

  • Adopting and promoting more ‘as-a-Service’ offerings. Here’s the thing – organizations might not need the entire “cloud.” In fact, they might only need a few resources, or hosting options. Consider this, another IDC report shows that worldwide spending on Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) will grow at a faster rate than SaaS with five-year CAGRs of 27.0% and 30.6%, respectively. And, from a company size perspective, large and very large companies will be the primary driver of worldwide public cloud services with spending of more than $80 billion in 2019. However, small and medium businesses (SMBs) will remain a significant contributor to overall spending with more than 40 percent of the worldwide total throughout the forecast period coming from companies with fewer than 500 employees. Cloud is being consumed across almost every vertical and company size. You need to differentiate yourself in terms of the types of service offerings you have. In developing deeper as-a-Service offerings you give customers real-world cloud consumption models which are highly agile and won’t lock the customer into a specific cloud option.
  • Adopting next-gen services like containers. Containers are becoming real popular. Their light, nimble, and capable of abstracting the entire operating system to bring you very specific types of services. For example, technologies like Docker are now adding a new level of abstraction as well as automation to the operating system-level virtualization platform. Docker implements new kinds of isolation features using cgroups to allow isolated containers to run within their own Linux instance. When working with a large number of containers spanning a number of different nodes – this helps eliminate additional overhead from starting new virtual machines. With even more cloud utilization, container systems using Docker can also be integrated with platforms like Chef, Puppet, OpenStack, and even public cloud systems. New capabilities allow you to create your own hybrid cloud container ecosystem spanning your data center and, for example, AWS.
  • Help organizations “optimize” their cloud and their strategy around it. The IDC CloudView report made a very interesting observation: Despite the increase in organizations embracing and investing in the cloud, only five percent of respondents believe they have an “optimized” cloud strategy. This means that they know what cloud is, they are aware what they can deploy into it, and they even understand – to some extent – how it can impact their business. However, many of these organizations still lack the direct integration with their business. Most of all, they don’t really know how to optimize their cloud and their strategy once it’s all deployed. Cloud providers must become business partners in the sense of “Day 2” support. That is – once you go live; what’s next? Are there both business-level and technology-level conversations happening? Is your cloud provider proactively helping you utilize the most out of your cloud services? Just because it’s up, running, and working doesn’t always mean it’s providing real-world value. Beyond cloud comes optimization of cloud services and direct business alignment.

Today, cloud is never further than a click away. Organizations are finding more creative ways to utilize a variety of cloud services to support mobile users, more data, and the digital revolution we’re all experiencing. Those providers which can set themselves apart and more closely align with the business are the ones which will win in today’s highly digitized market. The big challenge revolves around creating those unique services and enabling this level of competitive differentiation.

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  1. Hi Bill, Nice Article! Cloud is maturing and this also means that cloud service providers need to re-frame their cloud strategies. They should think about offering more and more “as-a-demand” services and enter partnership with big cloud players like Microsoft, IBM etc. this will give them an increased market exposure and access to untapped opportunities.