Cover cloud long enough and chances are you’ll become this guy.

The marketing around these services also struck me as a little odd. They would be billed as having “true enterprise-grade security,” which always seemed to send the message that their public cloud services were… what? Not secure? Marginally secure? Amateur hour?

But legitimate “hosted private cloud” offerings finally found a home in the market, embodying all of the other characteristics of a cloud service except multi-tenancy. Here’s how market research firm IDC explains what hosted private cloud really means:

At the highest level, there are two types of deployment models for cloud services: public and private. Public cloud services are designed for a market and are open to a largely unrestricted universe of potential users who share the services. Private cloud services are designed for a single enterprise and have user-defined and controlled restrictions on access and level of resource dedication.

Hosted private cloud is a composite view of two private cloud services deployment models, both of which offer customers and providers very different choices about resource dedication, tenancy cost, user access/control of the computing asset, and real and perceived security structures in place. The two HPC deployment models are:

• Dedicated Private Cloud: This model offers dedicated 1:1 physical compute and storage resources focused on the needs of one enterprise or extended enterprise. This model offers the greatest customer control over their contracted resource. Examples of dedicated private cloud service offerings include Amazon EC2 Dedicated Instances, IBM SmartCloud Enterprise, Savvis Symphony Dedicated, and Rackspace Cloud: Private Edition.

• Virtual Private Cloud: This model is an adjunct of public cloud services with shared virtualized resources and a range of customer control and security options distinct from most public cloud services. Examples of virtual private cloud service offerings include Amazon Virtual Private Cloud (VPC), IBM SmartCloud Enterprise Plus, Savvis Symphony VPDC/Open, and Rackspace RackConnect.

Now, IDC forecasts that worldwide revenue for hosted private cloud services will surpass $24 billion in 2016, anticipating that the virtual private cloud approach will be the predominant model. IDC also expects the overall hosted private cloud market to experience a compound annual growth rate of more than 50% between 2012 and 2016.

Here’s some more interesting analysis from its press release:

[T]he majority of dedicated private cloud buyers will be those companies with existing IS outsourcing or hosted infrastructure services contracts. Potential buyers of dedicated private cloud services will place a premium on off-loading the asset management burden and on operational reliability, over and above other cloud features such as scalability, granular billing, and customer self-service.

When dedicated private cloud grows, the winners are likely to be large incumbent packaged software providers and equipment providers, global systems integrators, professional services firms, and telecommunications service providers. These providers are working mightily to build single-vendor stacks, providing all the underlying components from bare metal to “trusted partner applications.” But if virtual private cloud becomes the dominant provider-based model, as IDC expects, it will be more like a public cloud model with mostly standardized, virtually dedicated assets, which means a vastly different set of vendors will benefit.

“Not even the largest technology incumbents can sustain IT market leadership without achieving leadership in cloud services. Quite simply, vendor failure in cloud services will mean stagnation,” added [Robert] Mahowald[, Research Vice President, SaaS and Cloud Services]. “Vendors need to be doing everything they can – today – to develop a full range of competitive cloud offerings and operating models optimized around those offerings.”

When I had asked Ken about his “New Year’s resolution” for Xerox’s cloud, he mentioned something I’ve been hearing a lot from cloud providers over the past year: Portals.

Does this mean we get to do another Star Trek reboot?

So many cloud providers I’ve spoken to are concerned with improving the usability of their customer portals. Now that we have the back-end figured out, it’s time to make the customer-facing stuff look pretty.

With that in mind, I asked him to explain what his ideal cloud portal would look like.

Over the past year, I’ve heard a lot of providers talk about portals. Is there something specific that you would like to change or evolve?

Ken Stephens: We have some innovation [in our cloud portal] that we’ve developed and will introduce. I suspect we’re not the only ones [to have done so]. Because today, when you go out and you buy a computer on the Dell site, as an example, you see a picture of it. Then, you pick and choose what your options are. It prices it for you, and you hit “buy,” “move to cart” or whatever. That works pretty well for buying hardware. But buying cloud services might be a little geek-ish. [You say], “I want 4 gigs of RAM.” You have to know the technology a bit to really get what you want in the cloud. I think that’s a little complicated.

What we will introduce — and again, I don’t think we’re alone — is [a portal in which] you will be able to go out and say, “I want to run an ERP application with about 100 users. I expect performance to be high, medium or acceptable,” with some definitions around that. You will hit “submit,” and it will come back and tell you what configuration that you need to run in the cloud and what it will cost.

Then, on top of that, I’ll introduce a service in 2013 that will do a comparison. Think about Progressive Insurance — the advertisement that Progressive does all the time. You go onto their site and plug in what you want for insurance for your car. It will come back and tell you the cost from State Farm and Allstate, as well as Progressive.

We will be able to do that in our cloud. You go in and say what you want. It will say, “By the way, if you buy it from Rackspace, it costs this much. If you buy it from Amazon, it costs this much. If you buy it from us, it costs this much.

You’re going to see some innovative things, in terms of [making cloud portals] easier to use.

You’ll see most of the questions in the Q&A are the same from provider to provider. But during our interviews, the conversations often go much deeper and there’s usually a fair amount we don’t publish — in this case to create some consistency and continuity for the series, but more so because we don’t expect many people to read an 1,800-word article.

It’s a painful process because there is often so much we’d like to squeeze in. Luckily, the blog is the perfect place to dig into some leftovers. Here are a few questions and answers that didn’t make the cut from my interview with Michael Cohn, co-founder and senior vice president of marketing at Cloud Sherpas.

These are out of context, so it’s a little confusing, but they pick up after he talked in the Q&A about Cloud Sherpas’ hopes for next year, saying:

In our Google business unit, we often use the term “going more Google.” We hear Google talking about “going Google,” and we talk about going more Google. This is really starting to resonate in our customer base. Our enterprise customers are now viewing Google beyond what they initially purchased — which was messaging and collaboration systems — and they’re viewing Google as a platform for enterprise computing.

When you say the customers are looking at Google beyond Gmail and so forth, do you mean they’re looking at Google App engine and services like that?

Michael Cohn: That’s exactly right. When we think about the cloud, we talk about it in terms of different layers of the cloud stack — Infrastructure as a Service, Platform as a Service and Software as a Service.

Most of our customers bought Google Apps or came to us to buy Google Apps, so they bought at the very top of that stack, and they bought it for its messaging system for Gmail. They bought it for the amazing calendar, contacts and chat, and then on the collaboration front, Google Drive and Google Hangouts and all of the productivity suite that’s in the browser. That’s why they originally bought Google and came to Cloud Sherpas. But now the advancements that are being made in the other two layers in the inside of Google’s platform really make Google much more than just a SaaS provider; it’s also a platform and infrastructure provider, and so we have customers coming back to us and saying, “What else can we do?”

We’ve got all these other applications that may still be legacy applications — a Domino environment that still may exist in the organization or SharePoint applications that are still running and so forth and so on. By bringing together everything that Google has to offer in the platform layer, we’re able to help them “go more Google.” It’s about building applications on App Engine, it’s about leveraging Google cloud storage, it’s about using the predictive API and so forth.

What do you happening on the Salesforce side of the house, with respect to this?

Cohn: Yes, so on the Salesforce side: Clearly sales cloud and service cloud are growing at a tremendous rate. Cloud Sherpas is going to be building up our capabilities in Salesforce’s core offerings of sales cloud, service cloud and Chatter, the collaboration platform inside of Salesforce.

That moment when Michael decided that he’s tired of answering my stupid questions after all.

In addition to that, Force.com is the development platform inside of the Salesforce ecosystem, and we’re seeing customer demand increase for custom applications that integrate with sales cloud, service cloud and Chatter.

As an example, it’s no shock that mobility was a very big topic in 2012, and as a result of that, Cloud Sherpas has developed a world-class mobile application development team. In fact, our developers came from the consumer space where they built iOS and Android applications that support millions of users in a consumer environment.

And so we’re bringing all of that mobile application development knowhow to the enterprise and using tools like Force.com and other mobile development capabilities. We’re able to essentially unlock data that is in
Salesforce and deliver that data to employees on mobile devices. We’re
building applications for our customers — mobile applications that integrate back into sales cloud and service cloud via iOS and Android devices.

We’ve always used this spot to promote our own material. Now, we are opening it up to you, cloud providers. Here’s the fun part: You choose the topic. You choose the deadline. You tell the story.

If you are interested in submitting an article for SearchCloudProvider.com, we are happy to consider it. We have a few rules of the road, however, so please read the following before submitting anything:

• We are only accepting submissions from companies that sell or resell cloud services. We are not accepting content from vendors that exclusively sell hardware or software to cloud providers.
• Content must be original. That means we won’t publish a blog you’ve already written and changed a few words around. We will find out because, yes, we will Google it.
• Submissions must be neutral and may not promote a provider’s products or services. We’re seeking subject-matter experts and thought leaders to write about technical and business issues facing cloud providers or the broader cloud market in general. We will not publish thinly or not-so-thinly veiled marketing material.
• On that note, the audience is other cloud providers — not customers.
• Submissions are unpaid and must be at least 500 words.

Have an idea? Send your pitch to me at jscarpati@techtarget.com.

Microsoft Corp, IBM and Cisco Systems are on the short list for homecoming king top cloud service provider, according to Infonetics’ recent survey of 107 North American enterprise IT decision-makers. The analyst firm did note, however, that other “unexpected vendors dominate the cloud landscape in key technology deployment areas.”

Sorry, Google. They’re just not that into you.

Keep in mind the sample size is pretty small, and the group surveyed appears to be overwhelmingly made up of die-hard cloud supporters; 91% of respondents interviewed said they use cloud services today, and 100% expect to use them by the end of 2014.

Still, some other data points seem to ring true: Software as a Service (SaaS) was the most popular cloud service adopted (our survey revealed the same thing), and the leading drivers for adoption now are “application performance and management of IT costs.”

“There is no doubt, the cloud has come of age,” said Sam Barnett, directing analyst for data center and cloud at Infonetics, in a statement. “While investments in cloud outsourcing are small in comparison to internal IT/data center spending, they are growing each year, with the number of enterprise organizations turning to cloud technology to manage budgets and transform service delivery increasing significantly in the last two years.”

Further validating the public cloud’s credibility is new research by Eileen Smith, program manager at IDC, who predicts that the U.S. public IT cloud services revenue will grow from $18.5 billion in 2011 to $43.2 billion by 2016. The market will experience a compound annual growth rate of 18.5% over the forecast period – making it increasingly challenging to argue that the cloud doesn’t have staying power.

The “services and distribution” vertical, which includes retail and professional services, spent the most money on cloud services in 2011, accounting for 30.3% of total revenue that year. Smith also measured cloud spending in financial services; manufacturing and resources; infrastructure services (includes media and utilities); public sector; and home businesses and consumers.

The forecast tracked five cloud service segments, which IDC refers to as: Applications as a Service, System infrastructure software as a Service, Platform as a Service (PaaS), Server as a Service, and “basic” Storage as a Service. It’s interesting to note that most of the services studied by IDC also ranked as high-growth areas in TechTarget’s recent Cloud Pulse survey. Our survey asked 1,497 IT professionals about their use of and attitudes toward public, private and hybrid cloud, and the results indicated that respondents continue to be drawn to public cloud due to several advantages it has over on-premises deployments (such as increased infrastructure availability, scalability, cost management and the “as a Service” model).

Also worth noting is that two months ago, another IDC analyst released a forecast for global public cloud services spending over the same time period. Worldwide, revenue is expected to shoot up to $100 billion by 2016 — meaning that U.S. cloud revenue may account for almost half of worldwide spending. So, if there are skeptics still out there, soon enough you may have to leave the country to hear their arguments.

Looking over the results, I thought about how this adoption barrier might be more difficult to overcome than, say, security. I know many of you categorically disagree with that statement, but humor me for a minute: Of course, there are many prospective customers who will never believe the cloud can be secure, no matter what a cloud provider’s strategy or messaging is. But there’s definitely a population that’s willing to consider cloud services if providers strengthen their IT security strategies, embrace transparency, conduct third-party audits and so on. I guess what I’m saying is there are tangible steps cloud providers can take to further fortify the cloud, and they have an opportunity to demonstrate this and possibly change the hearts and minds of enterprise IT pros.

But it seemed to me that there isn’t much a cloud provider can do when an enterprise isn’t interested in hearing the cloud pitch because it’s already sunk hundreds of thousands or millions of dollars into its internal [fill in the blank, e.g., storage area network, CRM deployment, development platforms].

I spoke to several cloud providers about all this for a recent story we published, Why CIOs have problems with cloud computing: Sunk costs in legacy IT. You can (and should!) check out the story to see how providers such as Microsoft, Savvis and Bluelock are dealing with this issue (spoiler alert: hybrid cloud is a common denominator), but I also wanted to share some of the really great reader feedback we’ve received in the comments section of this article.

We asked readers what they thought the biggest barrier to cloud adoption might be. Here are a few interesting responses we got:

• “In my point of view, solution providers still do not have a coherent [go to market], and, in most cases, they fail to provide a real business value proposition. The adoption of the model is restricted to IT service islands. In most cases, the focus remains on mere cost reduction rather than the possibility of having access to computing resources and preconfigured applications that add performance to companies into a new level of information processing and management, that only the mega corporations have today, through direct investment in IT assets, applications and IT and systems specialists.”
• “Empire’s [sic] built – similar to the sunk IT investment, can often be a big barrier. A CIO who clings to the concept of “building his empire” doesn’t want to lose that piece of his crown to an outsourced provider. If an IT Manager sees installing infrastructure as his key strength and can’t adapt to the new services model, keeping the status quo is a safe play. It takes a CIO or other C level managers to reconsider what an IT department provides and whether it is best placed to provide it. I think an IT department can be equated with the public service – where it is run lean, it adds value, but as a bloated empire it just acts as a roadblock for innovation.”
• “I believe the real reason around the “fear factor” syndrome of Security is not IT security but job security. Loss of control is a huge factor which individuals are downplaying. Most companies will not consider allowing their core transactional systems and applications to reside off site. Also a detailed transition plan that allows migration in phases is a must for any cloud business case which is sorely lacking and in most cases excludes a vital issue and that is a mutual sharing of risk and benefits.”
• “It could be a combination. Big Firms typically want to have their infrastructure managed internally. It is not the question of money but security, tradesecrets etc. Cloud can be good solution for SMBs,other organizations and can help generate new businesses and bring IT to businesses that can not afford Big IT. In my opinion, both IBM and Microsoft have good offerings on Cloud along with Salesforce.”

After five years of cloud hype, real examples of its business benefits are starting to present themselves. Cloud services and technologies are no longer simply used to replace aging or costly on-premises infrastructure and the scene will continue to evolve in the next few years.

However, in terms of the number of vendors in the market, IDC is of the view that about 30% of suppliers currently in the cloud market will be out of business by 2015 as it is a relatively new market with many players entering and leaving the playing field. Therefore, it is imperative for CIOs to ensure due diligence when selecting a cloud service provider.

It probably comes as no surprise that such a young market will experience some consolidation, but one out of three? Yikes.

I checked in with the analyst behind this research, Chris Morris — vice president of for Asia/Pacific cloud services and computing research and director of IDC’s regional services research — to see if this consolidation will be global or specific to APAC. Here are his thoughts:

You will find that this will be a universal phenomenon in the cloud business. Competition is very strong with the current market actually being relatively small. For a new start-up, generating cash-flow to support their start-up and R&D costs can be slow, especially in emerging markets where there is a more cautious approach to public cloud. For an existing ISV with existing revenue streams from traditional licenses, making the transition from license-based business models to a subscription-based can also be difficult, as they essentially have to cannibalize their own business to make the move.

So some will falter and fall from business causes, while others — those who pick a business niche based on either industry vertical or horizontal business process — will be ripe for acquisition by the likes of IBM, Oracle, SAP et al.

But those 30% which fall from view will likely be replaced by at least that many new entrants. So for the CIO and any vendor managing an ecosystem of partners, managing the market churn will be onerous.

Cloud providers, consider yourself on notice.

Image courtesy of ajc.com.

Global spending on public cloud IT services is expected to exceed $40 billion by the end of this year, IDC reports. By 2016, cloud spending will approach $100 billion.

Over this four-year period, that represents a 26.4% compound annual growth rate. That’s five times as fast as the IT industry overall, according to IDC.

Which cloud services are going to be the hottest markets? IDC says Software as a Service (SaaS) will “claim the largest share” of cloud services spending over the next five years. Interestingly, however, cloud storage and Platform as a Service (PaaS) will grow faster.

This probably comes as no surprise to cloud providers. Infrastructure as a Service (IaaS) is on track to become commoditized (if it hasn’t already), and cloud providers are recognizing that selling SaaS and PaaS will be more profitable over the long term.

From a geographic perspective, the United States will occupy the largest share of the cloud market, IDC reported. Following closely behind the U.S. are Western Europe and the Asia-Pacific region (minus Japan). But the fastest-growth area for cloud spending? Emerging markets, whose “collective share [will] nearly double by 2016 when it will account for almost 30% of net-new public IT cloud services spending growth,” according to IDC.

According to Wired‘s Robert McMillan:

“It’s certainly not anything that the companies involved discussed openly, so it is kind of a big deal that they said something on the record,” says Dean McCarron, who runs Mercury Research. McCarron reckons that about 10 percent of the approximately 16 million server chips sold each year go to big internet companies that are skipping the mainstream server vendors.

One of the reasons that data center operators are so hush-hush about their purchasing decisions is that they don’t want to tip their hand whenever they’re adding capacity. That can drive up prices for other components of the build out — bumping up costs for everything from real estate to networking gear.

Obviously, very few cloud providers have the means or motivation to follow Google’s footsteps here. And while Google’s strategy is grounded in using custom hardware to build a competitive advantage, it echoes something I’ve heard anecdotally from cloud providers big and small: Vendors often aren’t meeting their needs, so they’ve taken to building their own systems.

This is no shocker for the larger providers, particularly the telcos, which have long developed custom systems and applications through their internal research and development divisions. Nor have I heard about a consistent area of complaint among cloud providers adopting a do-it-yourself strategy — sometimes it’s with networking, sometimes storage, sometimes platforms. But it seems those anecdotes and stories like this one from Wired — in addition to the growing interest in open source projects like OpenStack and OpenFlow – all seem to point toward the suggestion that either vendors aren’t satisfying cloud provider needs, or data center infrastructure has become such a differentiator that it’s better to build rather than buy.

Either way, it’s not good news for vendors.