It is that time of year when companies, analysts and industry influencers are making predictions on what will occur in the industry over the next year. We’ve been monitoring these predications. Some we agree with, others not so much. Below you’ll find a roundup of predications we believe are relevant to the cloud service provider. We’ve include some Flexiant comments on these as well.
Cloud Computing as a Service
Coke and other ‘colas’
Prior to 2012, the cloud-computing market could be described as ‘Coke’ without any ‘Pepsi,’ such was Amazon’s dominance. Even if, conservatively, Amazon is more than $50m annual revenue in cloud. Credible other ‘colas’ are now coming on stream.
With Microsoft and Google extending into IaaS from PaaS, and HP and Dell entering the market, it’s clear that the addition of these mega-clouds will mean that it is not an Amazon-only world. Clearly, it’s Amazon’s market to lose, but with >50% of the IaaS market, it’s unlikely to be caught any time soon. It remains a rising tide that is floating all boats in this market.
This is a great opportunity for many cloud service providers to capture more market share. To achieve this though, you’ll need to provide a differentiated service that adds more value making you more intrinsic to the organisation. Cloud service providers will need to define and create cloud services unique to their business and highly relevant to their customers. This can help to build new, higher margin, more defensible revenue streams for the business.
Cloud computing is the norm, not an exception
The use of public cloud computing by enterprises is no longer an exception – it’s a norm. Cloud computing continues to make headway in the enterprise and is in danger of becoming a first-class citizen. In our latest ChangeWave survey, more than a third of corporate respondents (34%) reported that their company uses public cloud-computing services – up two points from the previous survey in July, and a full 12 points higher than one year ago. Amazon believes all of the Fortune 500 companies are using AWS is some way, shape or form. A total of 1,190 respondents involved in their company’s IT buying decisions participated in the October 10-29 survey, including 402 whose companies are currently using public cloud.
Private clouds provide the on-ramp to the public cloud
For many organizations, the move to the public cloud will begin with the implementation of an internal private cloud. Data from the TIP Wave 3 Cloud Study shows that many organizations appear to be implementing their internal private clouds (42%), while assessing their move to the public cloud (27%).
By implementing core internal private cloud-enabling technologies – which include orchestration and automation – enterprises are in essence building on-ramps to the public cloud. While only 9% of respondents said they have an orchestration stack currently implemented, 31% of respondents said they plan to adopt the technology over the next 18 months.
We have been shouting this from the rooftop over the last year. The market opportunity lies in public cloud. And while many are starting with private, the true benefits of cloud are not actually available. Read our whitepaper on the topic here.
- 451 Group, 2013 preview – Cloud computing, Part 2, William Fellows Agatha Poon Rory Duncan Katy Ring
Service provider as ISV
From a go-to-market standpoint, we see a gradual shift in the service provider’s role, transforming from being a service supplier to becoming a software vendor…
From providing cloud services to selling cloud software, providers are likely to invest further in improving process automation and management of the cloud platform. Segment/vertical-specific cloud software will be on the rise. Ultimately, the proliferation of highly automated cloud management software will forever change the role of IT executives in the areas of IT operations and application development.
To our earlier point, cloud service providers must differentiate. We agree with 451 Group that they’ll need to focus on a market, type of service, geographies etc. delivered and also by serving a particular industry. You can build your services for the government, high performance computing or pharmaceutical companies for example. And by offering a range of services, based on particular industry, you will become extremely valuable because you understand the challenges and pain points of your customers. Amazon is doing similar having recently launched services targeted at the US government. Concentrating on a particular industry will only help your go to market strategy. And to this point, people agree:
The rise of industry-specific and community clouds. Look for clouds that are purpose-built to serve specific vertical markets, such as healthcare, finance, retail, and manufacturing,” says Dave Linthicum, CTO & founder of Blue Mountain Labs in Cloud Computing Journal. This will provide for the demands of the “specialized security, processes, and compliance requirements for each vertical market.” Brian Patrick Donaghy , CEO of Appcore, (also quoted in Cloud Computing) says specific industry regulations will increasingly be addressed through what he calls ”community clouds.” A prime example is those arising in response to Health Insurance Portability and Accountability Act (HIPAA) regulations around standards for health-related data protection and storage. Another example is a telco community cloud provided specifically for telco disaster recovery to meet specific FCC regulations.
We’ll stop equating Cloud with AWS.
“While Amazon Web Services has opened up a substantial lead in the Cloud platforms market — arguably as large as 70% market share — in 2013 we’ll see that market position give way to a cadre of strengthening competitors and new entrants,” reckons Staten . “Microsoft have made significant improvements to their platforms, and by the end of 2013 we fully expect to see at least three substantial OpenStack based Clouds.”
Again, another proof point of the market opportunity for cloud service providers.
Infrastructure and Operations (I&O) will free the development teams to build apps in the Cloud.
“In 2013 the I&O team will get comfortable with the fact that development on public Clouds is going to happen whether they like it or not and it’s easier for them to engage developers and be part of the conversation about how to do it safely, securely, and with appropriate oversight,” suggests Staten . “It also gives I&O, working with application development and delivery (AD&D) and enterprise architecture (EA), the ability to set guardrails through a formal Cloud policy that shows what type of development is acceptable and engage in a dialogue about what may not be such a good idea . . . at least not yet.”
Developers will awaken to the idea that development isn’t all that different in the Cloud.
“There are no Cloud-specific or Cloud-best languages,” states Staten . “What’s different isn’t the coding, but the services orientation and the need to configure the application to provide its own availability and performance. And frankly this isn’t all that new either. We’ve had to worry about these aspects with our websites since 2000. While some of the best practices and Cloud services may be new, there are few excuses for a well-trained developer to not be productive in the Cloud.”
I find this relevant because of our feature Bento Boxes. Developers have a lot to do and a lot of decisions to make on how to run applications, handle security etc. Bento Boxes allows IT administrators and developers to get their job done more efficiently and effectively because allows service providers to offer pre-packaged, configured and sophisticated application stacks ready to use.
Flexiant’s Bento Box feature will allow customers to secure new revenue opportunities through the provisioning of pre-configured application stacks. Service providers will be able to offer customers a wide variety of pre-configured application stacks to encourage use of the platform. Service providers can differentiate against others while securing sticker revenue opportunities.
Read my Q&A on Bento Boxes for more info.
Hybrid Cloud Boom
Companies will look for a Cloud approach that allows them to orchestrate hybrid solution landscapes that best fit their business. Cloud vendors will be looking to drive openness and choice for customers, enabling them to adopt the Cloud in an incremental, hybrid solution model that protects and leverages exiting investments, supports change without disruption, and provides customers with the best of both worlds.
Agreed. Hybrid will be a stepping stone to enable organisations to benefit from the public cloud now for elements of their business not having latency or security issues for example.
Newvem chief evangelist Ofir Nachmani highlights how the “enterprise will move to the public cloud” in 2013.
The enterprise has already moved and started its proof-of-concept. Those who have realized the option to reduce cost, increase agility, and enjoy the real benefits of the cloud will continue migrating the resources of their non-critical services. Internalizing the public cloud (specifically AWS cloud) will inspire the enterprise to learn how to maintain a robust, highly available and secured service on the public cloud. That will put the hybrid environment in the front, supporting bursting and load migrations.
The traditional enterprise follows the new era one, making sure to transition and acquire only online and mobile services. The SaaS market will continue to grow and be the premier source for the enterprise new online services.
Another public cloud proof point. You need to capture this opportunity – this year.
The proliferation of routing stacks, load balancers, virtual switches and firewalls that support ever-changing traffic flows will be delivered in cloud orchestration systems, embedded deeper in hypervisors and even common operating systems.
2013 is the year of cloud management software. Cloud providers have matured to a point where cross-platform management layers will thrive and become mainstream. While widely-accepted IaaS standards are a ways off, organizations will look for solutions that let them manage their diverse cloud portfolio from a single interface.
The last two bullets showcase what we know to be true. Orchestration or management of the cloud is essential. Not only to provide a good service, but to maximise your existing infrastructure, bill accordingly and drive new revenue streams. There is a lot you can gain from orchestration. Check out a tour of some of these business benefits.
As always, these are predictions. It will be interesting to see when we approach 2014 where we stand against these. I hope that it will be a different industry with less cloud washing and more cloud service providers gaining traction in the market through differentiated services that include cloud orchestration.