I came back from my summer break to an avalanche of cloud computing facts and figures in my inbox -- most recently CRN predicting that SMB spending on cloud computing would reach $100B by 2014. There are dozens of cloud computing forecasts and predictions out there (Reuven Cohen of Enomaly does a fantastic roundup on his blog), but its sometimes a challenge to figure out what they all actually mean.
Here are three things I think we can all agree on, and two real head-scratchers:
1) The market for public cloud computing services is large and growing, even if the exact numbers vary widely
IDC estimates the market for public cloud products and services at $16B in 2010, growing to $56B by 2014. Gartner more optimistically estimates the cloud market at $150B by 2013 while Merrill Lynch estimates the market at $160B by 2011. And of course, the article that spurred this post quoted AMI research's estimate that SMB cloud spending alone will reach $100B by 2014. Regardless of the exact numbers or the exact definitions of cloud computing that each of these companies used, the conclusion is that market for public cloud infrastructure, platforms and applications is large and growing much more quickly than any other type of IT spending.
2) Business agility is a critical driver of cloud adoption
While cloud vendors focus on TCO as the primary benefit of cloud solutions, customers are most interested in business agility. A recent survey of 500 IT decision-makers by SandHill found that ~50% of respondents cited business agility as their primary reason for adopting cloud applications. Similarly, an InformationWeek survey found that 65%+ of respondents said that responding faster to the business is an important driver for cloud computing. Again, the numbers are different but the conclusion is that being able to respond more quickly to changing business requirements is a critical advantage of the cloud model.
3) Mobile and social computing are growing faster than anything before in the history of technology, and enterprise applications will need to adapt
By now, we've all read or seen the stats about the explosive growth of mobile and social computing. Morgan Stanley estimates that by 2015, the mobile web will be bigger than desktop internet. Users now spend more time on Facebook than on any other site. But what does this have to do with enterprise IT? With user expectations about where and how they access information changing dramatically, there'll be growing pressure on IT to make enterprise applications available in similar ways. Cloud application providers like Salesforce are already leading the way with mobile applications and social platforms such as Chatter, which are instantly accessible to all current Salesforce users. Doing the same thing with legacy and on-premise apps will be a tall order both for the vendors and for IT departments.
On the other hand, here are a couple of real head-scratchers:
Head-scratcher #1: If virtualization is growing and cloud computing is growing, how can the market for private enterprise servers also be growing?
Gartner estimates that virtualization is growing rapidly and that by 2013, 60% of server workloads will be virtualized. In addition, based on all the numbers we've already seen, public cloud infrastructure, applications and platforms are growing at 25%+. At the same time, IDC projects that the market for enterprise servers will double by 2013. If virtualization is increasing server utilization and cloud computing is moving applications to vast pools of shared infrastructure, then how can the market for servers be growing at this clip? It's even more surprising if you factor in Moore's law.
Head-scratcher #2: Is IT on the sidelines or are they involved in cloud application decisions?
Ray Wang recently quoted an interesting survey that showed the disconnect between IT's perception of SaaS application usage and what's actually happening based on interviews with IT and purchasing departments at about 50 enterprises. This survey showed that every enterprise surveyed was using a SaaS application but less than a quarter of IT departments were aware that they were using a SaaS application. This contradicts our experience. We've worked with 180+ enterprises including Salesforce and Google's largest customers and there are less than a handful of instances where IT isn't at least somewhat involved. While IT might've been on the sidelines a few years ago when departments or branches adopted SaaS applications, there's no question for us that IT is not only involved but plays a critical role in any enterprise deployment.
Let's ask the cloud leaders
While there are lots of statistics out there, there are few sources of insight about those who are leading the way with cloud adoption. How are companies who have already adopted one or more cloud applications thinking about the future? What challenges do they face? What benefits have they experienced?
These leading adopters will have very different perspectives than those who are early in their adoption path. So we decided to ask them what they think -- stay tuned for some results from a survey we're doing with these type of companies in a future post.
Ryan Nichols is the Vice President of Cloudsourcing and Cloud Strategy for Appirio.