Cloud computing in acceleration and transformation: outlook 2020

The multiple benefits of the cloud have turned it into a key component of the IT infrastructure in many organizations.

Cloud computing is a cornerstone of the third platform technologies which enable digital transformation and the cloud is the on-demand and distributed computing paradigm in which so-called disruptive companies are deeply rooted.

Cloud technologies and solutions have increased and improved dramatically, leading to a ‘cloud first’ reality – and as we’ll see potentially a ‘cloud only’ one. The true acceleration is still upon us with enterprises moving in a more profound, faster and broader way from 2017 until at least 2020.

Cloud computing in transformation - evolutions changing benefits and outlook 2020

Cloud computing: from an additional component to the core of business transformation

Just consider: whereas security was – and sometimes is – mentioned as a concern regarding the adoption of cloud, today security is offered in the cloud, as a service.

Moreover, large organizations are moving more mission-critical applications and workloads to the cloud, including the public cloud, which is even looked at to solve security challenges.

Virtually all organizations have some form of cloud nowadays and an increasing majority even has a multi-cloud environment.

Flexibility, business agility, the possibility to deploy and to scale fast are increasingly joining and even overtaking more traditional cloud benefits such as cost saving as organizations focus on optimization, innovation and transformation in an increasingly real-time economy where speed and time-to-market are essential and customers and end users expect fast and available applications and experiences. The cost saving benefit is sometimes even dropped as CIOs look at the cloud from an enablement and overall business value perspective.

The shift in perceived cloud benefits - i-SCOOP

Hybrid cloud and multi-cloud

As each organization, application, process, project and workload is different, companies today predominantly go for hybrid cloud solutions in a rapidly growing multi-cloud reality.

They can move workloads from one type of cloud to another, upscale in no time, adapt their cloud needs in function of demand and dispose of a wide range of additional tools in the cloud to accelerate application roll-out at scale, add intelligence to their cloud environments, protect the endpoints of their business with smart cloud-based security tools and deploy new software faster, not just by ‘putting it in the cloud’ but increasingly by truly migrating it to the cloud computing paradigm.

While virtually all organizations use some form of the cloud and the cloud is the number one choice for business departments that increasingly decide on technology spend, it’s important to have a cloud strategy.

Cloud computing in transformation - hybrid and multicloud i-SCOOP

The need for a cloud strategy

According to CompTIA’s Trends in Cloud Computing 2016 study, over 90 percent of companies claim to use some form of cloud computing.

And according to IDC, 68 percent of organizations had some form of cloud strategy (public or private) in 2015. Although both surveys are done by different parties using a form of cloud computing indeed doesn’t equal having ‘some’ form of cloud STRATEGY.

Moreover, IDC found, the variety of workloads being moved to the cloud grows and at the time of the survey 30 percent or more of responding organization had moved or planned to move ‘literally every workload’ IDC had questioned companies about, to the cloud.

The main challenge that remained: improving cloud strategies as more workloads and applications are moving organizations towards a cloud first environment.

Also in 2015, Gartner and other research firms found that the type of services that are being moved to the cloud become more mission-critical, of course depending on the type of industry as in some industries there is a rationale to keep data as close to the core of the organization as possible.

Yet, these exceptions aside, the evolution is clear, as is the growth of a variety of cloud services in the public cloud with mainly IaaS (Infrastructure as a Service), BPaaS (Business Process as a Service) and SaaS (Software as a Service) all growing, with a leading growth position for cloud system infrastructure services (IaaS).

Hybrid cloud and multi-cloud strategy and definition matters i-SCOOP

Cloud’s second decade: when enterprises and mission-critical applications and workloads go cloud

Cloud is moving to the next stage. Forrester speaks about cloud’s second decade, for instance, when announcing a new report that looks at the ten key developments in cloud computing which will shape the industry in 2017.

That next stage, expected to start in 2017 according to the report, that was released on November 2nd, 2016, is one of an accelerating cloud market.

After having been one of the most disruptive forces in the past decade, as Forrester puts it, and having enabled transformations across the board, the company expects enterprises (large organizations) to move in much faster and embrace the cloud to power their core business systems, on top of the customer-facing applications (systems of engagement) that are already very ‘cloud first’. In other words: Forrester confirms Gartner’s findings that mission-critical and core business applications are going cloud – and faster than before.

Focus on public cloud: major evolutions ahead

Despite the de facto dominance of the hybrid cloud delivery model in times when multi-cloud environments are on the rise, the increase of public cloud adoption, including for mission-critical applications, is an important evolution.

It has an impact on the cloud industry overall as the big public cloud providers up the ante and add intelligent services through developments or acquirements, while other ones, who come from a hardware background, are being challenged by them and, obviously, challenge them in turn.

It’s an interesting evolution and has led various cloud specialists to increasingly focus on services, vertical clouds, cloud brokerage and, beyond the latter stage, cloud services integration and multi-cloud managed services offerings, enabling organizations to not just have control in a multi-cloud reality but also to offer them maximum freedom and choice, while focusing on adding intelligent services and striving towards an end-to-end approach.

Away from legacy IT services towards the public cloud: 2016 as a year of change

Early 2016, Gartner forecasted that the global public cloud services market was poised to reach $204 Billion in 2016 (an increase of 16.5 percent in comparison with 2015), with IaaS as the fastest growing segment.

Predicting that this trend would continue in 2017, Gartner’s Sid Nag pointed out how there is a shift away from legacy IT services (often standing in the way of digital transformation and the capacities needed to perform as a digital business in a DX economy) and that enterprises indeed move away from data center build-outs as they move their infrastructure to the public cloud”.

More in the graphic below (if you wonder what the cloud advertising stands for: it’s indeed the cloud-based services segment in a context of advertising auction mechanisms).

Public cloud adoption faster, deeper and broader than expected: 2020 outlook

In a more recent report (September, 2016), Forrester said that it forecasted the public cloud market to grow even faster in the next few years than it had previously expected due to increased demand for SaaS, IaaS and PaaS.

The cloud application market (SaaS) would grow to a total of $155 billion by 2020, which is 17 percent higher than Forrester’s 2014 forecast. However, mainly cloud platform revenues (IaaS and PaaS) were showing accelerating growth which led the research firm to up its forecasts with a whopping 45 percent, in comparison with 2014 projections. The cloud platform revenues would thus reach $64 billion by 2020, in other words: moving far closer to half of the obviously dominating SaaS category than previously projected.

Public cloud computing evolutions 2020
Public cloud evolutions 2020

The CIO: a cloud orchestrator as IT spending is shifting to cloud computing

We talked about the changing role of the CIO as an orchestrator. On a technology level this will certainly be the case in the cloud where the CIO is expected to increasingly orchestrate cloud ecosystems that, to quote Forrester, “connects employees, customers, partners, vendors, and devices to serve rising customer expectations.”

And with the increase of multi-cloud realities, not forgetting the just mentioned growth in public cloud environments, that is a challenge for CIOs which is addressed by cloud services integrators.

Simply put, cloud is shifting from an additional technology which is added on top of existing infrastructure towards becoming the core of several systems, including – and increasingly – mission-critical ones in the enterprise, enabling organizations to move at the faster pace they need, mixing public and private clouds. And that has an impact on the CIO and on IT spend.

In July 2016, Gartner reported on the cloud shift, or how IT spending ‘is steadily shifting from traditional IT offerings to cloud services’.  In the Gartner image below you can see how the shift from traditional IT spending to cloud has been and increasingly is happening.

Cloud shift - shift From Traditional IT Spending to Cloud - source Gartner - July 2016
Cloud shift – shift From Traditional IT Spending to Cloud – source Gartner – July 2016
J-P De Clerck
J-P is the founder of i-SCOOP. Born and based in Belgium, he likes to share information, thoughts, inspiration and anything regarding the convergence of marketing, management, customer-centricity, publishing, digital technologies, psychology, transformation, optimization, media and IT - in the hope it serves you. The mentioned areas are those he has been active in since 1992 as a marketer, a consultant, a publisher and a trainer. Connect on Twitter via @conversionation or on LinkedIn.