All pointing skywards for cloud computing

Scepticism about cloud computing, still in its early stages of development, abounds in the technology industry, but despite the critics who apparently describe it as not much more than hype, there’s a new prediction that in the next six years – by 2015 – cloud computing will make up 17 percent of all IT expenditure worldwide.
There’s also been a note of caution sounded, with a warning that IT suppliers who do not begin to invest significantly in cloud computing and “learn from the demands of users” will find themselves increasingly marginalised, with “serious consequences for customer loyalty, revenues and profits.”

This take on the development of cloud computing comes from industry analysts, Coda Research Consultancy, who reckon there’s nothing short of a “radical transformation” going on across the technology world, and, “it’s called cloud computing.”

“For many commentators, cloud computing is the future of all computing, whilst for other commentators, much coverage is hype, and cloud computing is not significantly different from current and even older technologies and ways of doing computing.“

Despite strong growth predictions, senior director at Coda, Steve Smith, says many questions remain around revenues, cost, security, vendor lock-in, standards and the roles it has to play among different organisations.

“IT users who do not begin to evaluate cloud computing for their businesses risk seeing their competitiveness, productivity, customer loyalty and revenues all decline relative to their competitors.

The 17 percent growth in cloud computing over the next six year predicted by Coda, if achieved, would bring revenues worldwide to $180 billion by 2015, from a mere $46 billion just last year.

According to Smith, who authored the report on cloud computing, the greatest growth in expenditure upon cloud services will be around collaborative applications, IT management applications, personal and business applications and storage.

“Thus, IT suppliers must develop strong cloud application propositions, especially through providing software as a service (SaaS) platforms and partnerships to such providers.”

Smith says that in the short to medium term, growth in public cloud usage will be greatest among small to medium sized organisations, and growth of cloud computing among larger organisations will be slower, with these more likely to employ hybrid and private clouds as the market matures toward 2014.

“Significant vertical market specialisation will begin to take place among cloud service suppliers from 2011, particularly around manufacturing, health, energy, finance and media,” predicts Smith, adding that there is also a significant risk that smaller and more recently launched IT suppliers will “leave behind long established suppliers in the innovation and provision of cloud services.”

Smith also says it is vital that IT suppliers work together to increase trust in cloud services among IT users and “act on their concerns.”

“Issues for buyers include security, reliability and transparency, along with the development of common standards that enable interoperability; portability of applications, software and data across cloud services; and management consistency,” observes Smith.

On the question of security risks associated with cloud computing, Smith says these risks “tend to be exaggerated,” and he adds, “rather than increase risks related to security, availability and performance among others, cloud computing is likely to significantly reduce these.”

According to Smith, absence of upfront investment in infrastructure and software, absence of upfront commitments and usage contracts, and what he describes as “few minimum use costs for cloud service buyers” mean that cloud suppliers will become more “susceptible to turnover and revenue fluctuations” and, he says, “the balance of power will shift to buyers as competition, cloud specialisation and ease of migration across cloud services develop.

Interestingly, in the introduction to his report, Smith describes cloud computing as big news and points to the experience of Amazon Web Services, which he says has a peak usage of 80,000 work requests per second, 52 billion files stored and thousands of developers using it.

“When Amazon's virtual computing service, the Elastic Compute Cloud (EC2), launched three years ago, it tended to attract low budget start-ups and web 2.0 entrepreneurs. Now it works with organisations from the New York Times to Sun, Oracle and IBM,” Smith says, adding that “organisations spent $383 billion on business applications, infrastructure software, application development and deployment, servers and storage in 2008.”

BY Peter Dinham



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