Cloud in 2013: From Hype to Hyper Growth

By Steve Caniano, VP, Hosting, Managed Applications and Cloud Solutions, AT&T Business Solutions.

  • Monday, 15th April 2013 Posted 11 years ago in by Phil Alsop

Like earlier transformative phases in IT – the adoption of personal computing in the 1980s, client/server in the 1990s and the uptake of SaaS earlier this century – cloud has reached a similar tipping point that will create unprecedented opportunities for both new entrants and established vendors.

For many industry soothsayers, 2012 was going to be the year cloud went mainstream. Are we there yet? With IDC reporting that global spending on public IT cloud services will be more than $40 billion this year with a compound annual growth rate of more than 25%, it looks like 2013 will be the year that cloud pays off for many vendors and customers.

This represents a significant shift, from the “testing/development” stage that characterized a large share of enterprise cloud activity in 2012, towards a much broader adoption and deployment of cloud solutions. The evolution and rapid industrialization of cloud is transforming nearly every facet of information and communications technology.

Following are five key trends we see shaping the cloud landscape in 2013:
1. Increased adoption of applications as a service impacts capital expense
While not a zero sum game, we are already seeing the inroads cloud is making against capital expense allocated to traditional IT infrastructure. Businesses are seriously considering buying services on-demand rather than purchasing physical hardware (e.g. servers, racks, network switches, PCs ), software licenses and maintenance contracts. This shift is not only limited to public clouds, but also to private clouds, where more and more businesses are moving towards paying for X-as-a-service type solutions on-demand within their own datacenter or that of a provider. Part of this can be summarized as a trend towards a business model that favors op-ex rather than cap-ex. Conversely, cloud service providers are becoming much larger customers of hardware and software vendors.


2. The rise of specialist cloud consultants
As the money shifts to cloud we are witnessing an entire new industry of specialist cloud consultants spring up to help businesses build and use cloud architecture. Joining the ranks of smaller independent niche consultants and hardware vendors with professional service arms, the traditional big consulting firms are all working to assemble the talent and skillsets needed to beef up their newly formed cloud consulting practices. At the same time they are shifting resources away from consulting on legacy hardware and applications. It’s no longer about integrating the latest release of an ERP app, instead it’s about which cloud solution works best for which business unit and workload mapping to public/private/hybrid clouds. At the same time, there are increasing opportunities for enterprise IT departments to become internal cloud specialists and play a more strategic role in helping provide their businesses greater agility in leveraging cloud capabilities.

3. Evolution of mobile cloud
The bring your own device trend and the continuing demise of the PC as the dominant computing platform will serve to accelerate the move towards mobile cloud as more businesses become increasingly mobile and shift IT assets from their own data centers to the cloud. In this environment, security becomes more important than ever. As a result, enterprise IT will be entrusted with setting clear policies that provide security for accessing cloud applications on mobile devices and doing so without squashing the innovation enabled by cloud.

4. Cloud clarity will start to emerge in 2013
Today there still exists a great deal of confusion over the conflicting approaches to deploying cloud by various vendors and service providers and it’s not clear who businesses should turn to. This fragmentation should begin to dissipate later in 2013 and beyond as the marketplace coalesces around standards and clear winners emerge. According to Gartner, by 2015, low-cost cloud services will cannibalize up to 15% of top outsourcing players' revenue, and more than 20% of large IT outsourcers not investing enough in industrialization and value-added services will disappear through merger and acquisition. In the meantime, open source alliances will make a play against the traditional vendors. Open source will continue to gain relevance, and we’ll see more commercialized services based on open source platforms coming to market.

5. Cloud standards slowly emerge
For cloud to truly go mainstream it needs to evolve from a vendor-by-vendor solution, as it is today, to a utility platform differentiated by reliability, scalability and standardization. Marketplace standards are driven by vendors, standards groups and market forces. APIs will have to be standardized, and interoperability and federated cloud formations will need to happen – both in a geographic sense and within industry verticals.

Following the evolutionary trajectory of equally transformative periods in IT history, cloud has shifted from hype to hyper growth and its impact is not just changing IT delivery models but overall business models as well, unleashing innovations that have the force to reorder not only the IT industry but also nearly every industry.