Forecast 2015

Cloud computing claims a pivotal role in 2015

Not yet dominating enterprise IT, but progressing at a steady rate, cloud continues its ascent next year.

Martin Slominis had a problem familiar to lots of IT executives: His staff didn’t have the capacity to fulfill all the demands users put on his department.

So he did what technologists do best and used technology to solve the problem. Specifically, he turned to cloud computing.

“Cloud was an easy way to multiply our resources,” says Slominis, vice president of management information systems at the Wayne State University Physician Group in Detroit.

His organization started moving applications to the cloud several years ago to save money, increase agility and improve flexibility while reducing the maintenance work his team had to handle.

Martin Slominis, VP of MIS, Wayne State University Physician Group [2014]

Martin Slominis

Slominis wasn’t looking for small gains: He needed a game-changer. So early on he moved one of the organization’s mission-critical systems, a billing-related application, to the cloud. He says about 25% of his 20-plus apps are now in the cloud. Moving to the cloud has indeed delivered benefits, Slominis says. It has saved money and has enabled the 60-plus members of his IT team to be more nimble and responsive.

Encouraged, he’s planning to move more applications (though not all) to the cloud, determining which should make the leap by weighing factors such as cost, security requirements, the need for agility, and whether and to what degree the system in question will have to scale. So far, that evaluation process has led to a hybrid environment of software as a service, on-premises apps and infrastructure as a service.

The experience of the Wayne State University Physician Group is representative of where many leading organizations stand when it comes to cloud computing. Although they have a mix of on-premises and cloud offerings, they increasingly see cloud as a means of transforming the IT operation — and the business units it supports. Getting there, though, will take longer than the hype around cloud suggests.

A cloud migration involves “a ramp-up,” says Gartner analyst David Mitchell Smith. “One of the myths is that it’s all or nothing. But it doesn’t happen that way,” he explains. “It’s more workload by workload, application by application. It’s not, ‘We’ll turn everything off and move [to cloud].’”

He says he has seen companies move beyond viewing the cloud as simply a cost-saver, as some did in the early days, to recognizing that its attributes — such as its elastic, scalable and self-service nature — can deliver big gains for an organization.

“Are they saving money? Increasingly yes, they are. But the reason why people look to the cloud now is not for cost savings, it’s for things like agility,” Smith says.

That, in part, explains the rise of the cloud-first mantra in many enterprise IT departments.

And while that outlook is becoming increasingly common, Smith says IT operations are all over the map when it comes to adoption; there’s no typical IT shop. Some have moved large chunks of their operations into the cloud, others little or none. He also notes that even IT leaders have varying definitions of what constitutes the cloud and cloud-based services.

Computerworld Forecast 2015: Splintered Strategy [chart] Computerworld

Computerworld’s Forecast survey confirms that cloud computing is progressing but is far from dominating the enterprise IT landscape. Of 194 IT executives polled in May and June, 25% said that they have moved some enterprise applications to the cloud, with more to come, and 10% said that they have moved some enterprise applications to the cloud but have no plans to migrate anything else.

Meanwhile, 14% reported that they have moved documents, storage, and email and calendar tools to the cloud, and 9% said that they are moving some or all of their data center and/or networking infrastructure to the cloud. Only 7% of the respondents reported moving mission-critical enterprise applications to the cloud.

Moreover, 16% of the respondents to the Computerworld survey listed cloud computing as the single most important technology project that their IT departments are working on right now, and 18% said that they consider it to be the No. 1 disruptive technology that will impact their organizations over the next three to five years.

A thoughtful approach to the cloud

Joseph Young agrees that cloud computing is a key technology for the upcoming year and beyond.

“We’re making a very big push now to the cloud,” says Young, who is IT director at OK International, a global manufacturer of bench tools and equipment used in 3D printing and electronics and industrial product assembly. His IT department supports about 260 users at the company’s Garden Grove, Calif., headquarters, a manufacturing site in China and a distribution facility in the U.K.

Computerworld Forecast 2015: Potent and Innovative [chart] Computerworld

He moved the company’s website and online store to the Amazon Web Services cloud, and he’s in the midst of deploying Office 365, Microsoft’s suite of cloud-based tools, which includes the software vendor’s Enterprise E3 products.

He says OK International is also moving its backup data to Azure, Microsoft’s cloud platform. Like other IT leaders, Young says the cloud makes sense in these cases because it removes administrative and infrastructure costs from his budget, builds in disaster recovery, and provides scalability and agility.

However, he says OK International’s ERP and document management systems will continue to be hosted internally. The company just invested in the hardware to run those systems last year because it didn’t have the network bandwidth necessary to push all of that data to the cloud.

Plus, executives are hesitant to move mission-critical applications to the cloud because they still have concerns about security and response time. Those barriers are coming down, though. Young says OK International recently upgraded its network capacity, making the use of cloud-based offerings a more viable option — even for the ERP and document management systems.

Moreover, vendors are continuing to prove that their systems are secure and reliable, and they’re adding contract language to address those points — all of which reassures executives who were once skeptical that mission-critical applications can securely run in the cloud.

“It’s proven itself. And I think most companies are seeing that now it’s not a matter of if, it’s when,” Young says.

Forrester Research analyst James Staten says Young’s approach mirrors the overall strategy that he’s seeing user organizations adopt throughout the market. “Everything in IT tends to move dramatically slower than most people think it will. And that’s definitely the case with the cloud,” he says.

James Staten, analyst, Forrester Research [2014]

James Staten

Staten says Forrester’s research indicates that less than 20% of the total portfolio of enterprise applications is in the cloud. However, according to the firm’s latest Forrsights Software Survey, enterprise IT leaders for the first time say they prefer SaaS products when procuring new software — more evidence that a cloud-first mentality is taking hold.

Gaining confidence in the cloud

The apps making the move to the cloud are even more indicative of how far companies have come, where they are now and where they’ll be in the future, Staten says. Several years ago, companies refused to put many core applications in the cloud because they had concerns about security and control. Today, many enterprises have a number of significant cloud-based apps, such as those running HR functions, although they continue to keep mission-critical software in-house.

But now if they decline to move a system to the cloud, it’s often because the migration would be a complex undertaking, not because they have lingering fears about cloud technology.

“It’s not because the cloud isn’t ready. It’s usually because the application architecture makes it difficult to move to the cloud,” Staten says.

Other systems likely to be kept on-site include static applications — systems that consume the same amount of space all the time, Staten says, noting that many companies don’t see any advantage to running those in the cloud. And some companies build apps, including mission-critical ones, in the cloud and then move them in-house.

Ultimately, “everyone ends up being hybrid,” he says. “They can have static hosting and pay-per-use and even colocation.” Constellation Research analyst Holger Mueller concurs: “Everything is in play,” he says. “It’s just a question of readiness, timing, the offering being there.”

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