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Apr 8 2013   6:00PM GMT

The Enterprise Finally gets Cloud

Beth Cohen Beth Cohen Profile: Beth Cohen

Yes, it is a bit trite to say it now, but Cloud Computing has become a multi-billion dollar business which really has revolutionized Information Technology consumption for both the consumer and enterprise markets. It is well established in the white hot consumer market, especially with the widespread global uptake of mobile devices and Cloud services such as Dropbox, iCloud, Flikr, and Gmail, to name a few. The enterprise initially lagged in embracing cloud services to cut IT costs, improve time to market, and increase flexibility. It is now more than making up for its initial hesitancy, with nearly 50% of all enterprises in North America and Europe planning on a cloud investment in 2013.

From the Enterprise perspective, now has never been a better time to invest in cloud services. Enterprises are broadly adopting all types of cloud services at multiple levels in the organization. Initial predictions were for the enterprise to favor private and community clouds over public services, but the hottest trends in Cloud adoption has been Software as a Service (SaaS) and cloud-based business applications which are projected to grow from $13.4 billion in 2011 to $32.2 billion in 2016, a 19.1% five-year CAGR! The rapid adoption of SaaS applications of all flavors by the enterprise has been a surprise to many, but the vastly reduced costs due to the pay as you go pricing models, and high degree of service delivery flexibility has overcome any perceptions of needing to trade price for reduced feature sets. Unsurprisingly, the most often added cloud-based application services are Customer Relationship Management (CRM), Supply Chain Management (SCM) and Enterprise Content Management (ECM), with Web Conferencing, teaming platforms and social software suites nipping at their heels.

Infrastructure as a Service (IaaS) continues to appeal to companies that want to replace in-house and traditional data center models for the cloud hardware abstraction approach. Gartner is predicting Infrastructure-as-a-Service (IaaS), cloud management & security devices, and Platform-as-a-Service (PaaS) are growing from $7.6B in 2011 to $35.5B in 2016, a CAGR of 36%. A word of warning for companies that think just because the Amazon cloud is easy to use, it is easy to build and manage. Building a private cloud still requires a degree of expertise that few enterprises have in-house. In the next year or so expect more companies to see the value of using the services of cloud consultants to avoid painful and expensive mistakes when building private clouds; or alternatively using emerging enterprise focused public cloud services such as Bluelock or Terremark.
Platform as a Service (PaaS) which still does not quite know what it wants to be when it grows up, is lagging with only about $1B in revenue in 2012, but as the market matures, expect to see rapid uptake as companies recognize the value of standardized tools that can ease the pain of Cloud application deployments. Some of the newer PaaS tools like the ServiceMesh Agility Platform combine the features of a SDLC workflow engine, production support and orchestration across different cloud platforms.

New Cloud Technology Directions

Ultimately, innovation is the marriage of technology and organization change. The dilemma is how to pull innovation into IT core functionality without disrupting the flow of new ideas, when the modern enterprise understanding of IT is focused on operational excellence and cost control. The CIO should be leading the cultural change to the new flat organization by leveraging cloud and mobile application in new and interesting ways. The trick is to create tools for people to quickly test and validate their ideas so they can implement new ideas that work within the enterprise framework. Cloud tools can be used to deliver on that promise, but is the enterprise up to that challenge?

This is not the first time wrenching technology innovation has changed how companies do business, and it certainly will not be the last. Companies able to use disruptive technologies, such as cloud computing, effectively will leave companies who do not have that ability in the dust. By recognizing the seeds of change and embracing them, the smart company can leverage cloud services by using the efficiencies of pooled IT resources at the same time allowing greater flexibility to meet the challenges of the global economy. This combination of combining commodity utilities with innovation allows companies to compete effectively using the efficiency and flexibility strategies simultaneously.

Challenges, Always Challenges…

Consumers intuitively get cloud and have been more than willing to embrace it warts and all as it has matured. They are highly price sensitive and will easily sacrifice features in exchange for low cost. On the other side of the market spectrum, the more conservative enterprise market is still struggling with the basic model. Some companies worry that the emerging cloud companies are too small to do business with, while others are concerned with how to incorporate new technologies into existing technology portfolio investments. To address their concerns, at the same time as Cloud technology continues to mature and standards develop , innovation around service delivery and breakthroughs in storage technologies are making it ever more enterprise ready. The pace of cloud vendor consolidation has already picked up as the traditional enterprise vendors such as HP and IBM has rushed to add enterprise ready cloud services to their portfolios. This should alleviate the fears of even the most technology adverse companies.

A final word for any remaining cloud technology skeptics, as with any innovative force, the cloud is just a tool to drive change, not an embodiment of change itself. Enterprise cloud consulting leaders, have firsthand experience with how companies willing to ride the Cloud revolution will not only survive in today’s hyper-competitive world, but thrive. I cannot wait to see where the next wave takes us!

About the Author
Beth Cohen, Beth Cohen is a senior cloud architect for Cloud Technology Partners, Inc., focused on delivering solutions to help enterprises leverage the efficiencies of cloud architectures and technologies. Previously, Ms. Cohen was the director of engineering IT for BBN Corporation, where she was involved with the initial development of the Internet, working on some of the hottest networking and web technology protocols in their infancy.

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