With Gartner predicting the public cloud service market will break the $200 billion (€179 billion) barrier in 2016, it seems the era of cloud services is well and truly upon us. However, not all cloud services are created equal and the appeal of some over others is starting to become apparent.
Among the areas predicted to see the most growth this year are business process as a service (BPaaS) and cloud applications or software as a service (SaaS). But the highest growth is expected in the areas of infrastructure as a service (IaaS) as well as cloud management and security services.
About a year ago we started asking people about the nature of their apps, workloads and processes, and what we found was that they categorised around 55% of their cloud projects as being made up of low risk, transitory type activities. The other 45% was a combination of production and mission critical workloads, Ed Anderson, Gartner
Robust growth
“We continue to see very robust growth ahead in that market. To put that $200 billion figure in context, we expect $90 billion (€81 billion) of it to come from a category we call cloud advertising or ad-funded cloud services. BPaaS will come in at around $40 billion, SaaS at $38 billion and IaaS at around $25 billion. As you can see, it’s heavily weighted towards cloud advertising,” said Gartner vice president for research Ed Anderson.
“This is a collection of free cloud services, so we tried to estimate how much of the spending is being pulled out of what were for-pay cloud services. This includes the Google products, some of the free Microsoft products like Office 365 on mobile devices, some of the file sharing, storage and collaboration applications – and there are a lot of them.”
At the same time, Anderson points out that the cloud services industry is in the middle of a period of change, as a growing number of companies gain the confidence necessary to move core applications into the cloud. Where previously they tended to only put non-core apps there and to use it for sand-boxed app development projects, now they’re happy to rely on it for real.
Growing reliance
“About a year ago we started asking people about the nature of their applications, workloads and processes, and what we found was that they categorised around 55% of their cloud projects as being made up of low risk, transitory type activities,” he said.
“The other 45% was a combination of production and mission critical workloads. So we’re absolutely seeing that shift already, and first and foremost it comes in the form of SaaS, things like Salesforce, Workday, Office 365, Google Apps. However more and more we’re seeing infrastructure as a service and platform as a service, which I think signals a change – they’re doing real development, and that development is turning into production applications in the cloud.”
Reassurance in uncertainty
Meanwhile, with the influence of the looming General Data Protection legislation and the recent introduction of the EU-US Privacy Shield, not to mention the shadow of Brexit, companies are taking advantage of the fact that cloud services offer them reassurance in a time of geopolitical uncertainty. In short, if it is in the cloud, it can be moved to wherever suits most.
“The geopolitical climate is having an effect. It’s generally true that corporates hate uncertainty, but that is what they are facing as a result of Brexit and the general economic climate. In a funny way it can help the cloud, because a lot of the uncertainty is based around which are the best locations to invest in and where companies should invest or base their cloud services,” said Steve Wallage, managing director of Broadgroup Consulting.
Of course if you build your own infrastructure in one territory and you get that bet wrong, then you’re well and truly scuppered. But if you think of cloud in terms of outsourcing flexibility, you can change and move your infrastructure very easily, Steve Wallage, Broadgroup Consulting
“Of course if you build your own infrastructure in one territory and you get that bet wrong, then you’re well and truly scuppered. But if you think of cloud in terms of outsourcing flexibility, you can change and move your infrastructure very easily.”
Companies building out their own infrastructure typically do so with a 10 or even 15 year plan to stay with their investment. However, in the current climate, that is a long time.
Cloud flexibility
“With the cloud, you can move assets around. That flexibility can often help increase adoption when things are a little unclear, as is the case with GDPR and Brexit, where there is not just immediate uncertainty but also long term uncertainty around the UK’s relationship with the EU. Will it conform to GDPR or do its own thing? Those kind of questions won’t be answered for two or three years at least.”
Wallage said that Broadgroup Consulting sees infrastructure as a service as a strong area for growth in the next 12 months, and that this is unlikely to change.
“If you look at the bigger picture, a lot of companies are looking at what it makes sense for them to own and run themselves – does it make sense for them to own and run their own data centres? Does it make sense for them to be owning, running, managing and maintaining their own infrastructure? A lot of our research is saying that they are deciding that it doesn’t.”
Staffing levels
Many companies that dramatically reduced their internal IT staffing levels during the economic downturn now find themselves at a crossroads, Wallage said.
“Now that they need to grow and expand they just haven’t got the manpower and skills in house to do a lot of the things they want to. For these kinds of companies, cloud-delivered services can really deliver. On the public cloud side in particular, you have lots of companies offering great scale and the cost benefits that go with that,” he said.
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