As the cloud hype fades, will the market be all that resellers hope for? Analysts are suggesting that smaller companies and IaaS, as well as competition from telcos, will increasingly move centre-stage.
Steve Hilton, principal analyst at global market watcher Analysys Mason, says enterprise cloud services revenue will go on expanding, reaching $31.9bn (£20.4bn) by 2017. Some $28.7bn of this will come from the so-called developed nations, representing a compound annual growth rate of 11 per cent.
That is slower than initially predicted due to the global economic downturn, but IaaS is slowly changing places with SaaS, and sales to SMBs with one to 249 seats will become increasingly important, rising to 49 per cent of the market by 2017, he adds.
"The year-on-year growth rate will be 17 per cent in 2013, but will decrease during the next five years as the size of the cloud services market increases overall," Hilton says. "SaaS accounted for 66 per cent of revenue in 2012, while 33 per cent was related to IaaS. The share of revenue from IaaS will increase to 43 per cent by 2017."
Hilton's conclusions are from his Enterprise Cloud Services: Worldwide Forecast 2012-2017 report, which looks at eight regions. In emerging markets, revenue will be smaller, although growth rates will hit 20 per cent or so.
He defines public cloud services as "the provision of applications or infrastructure in a hosted, multi-tenancy model, where pricing is generally structured as a recurring charge".
Research giant IDC has also announced what it believes will be the main cloud trends for the public sector in western Europe. Cost efficiency will be the key driver of cloud spending across the region in the public sector – and it will also be critical to ensure that cloud deployments actually deliver.
Silvia Piai, research manager at IDC Government Insights, says the research suggests that about half of government respondents were adopting internally hosted private cloud offerings. More than half were adopting provider-hosted private cloud, and only 28 per cent public cloud. Perhaps surprisingly, hybrid cloud came "a distant third".
"Internally hosted private clouds will not deliver relatively significant benefits to more traditional datacentre consolidation and virtualisation unless they are run as multi-agency community resources," Piai explains.
Public cloud and hybrid offerings will supersede private cloud as the market matures, says Piai.
Meanwhile, a KPMG study of cloud computing has found the trend harder to implement and more costly than at first thought. Of 650 respondents, about half were already using cloud, but a third said the transition was more costly than expected – in part because they did not realise how much change would be needed to existing business and IT infrastructure and processes.
Focus on integration
Vendors seem as focused as ever on the cloud opportunity.
The February summit of cloud enablement vendor Parallels Computing, for example, noted a strong focus on integration of applications and services in ways that should benefit customers. Email security, open source, storage and analytics remain strong themes, and increasingly smaller companies will be looking to build sophisticated cloud services. This means a bigger role for ISVs.
According to this vendor, cloud services providers will increasingly have to fight off the big telecoms firms in the market. Telecoms providers have long been familiar with an on-demand, services-oriented environment – and Analysys Mason's report, noted above, also gives an expanded role to communications services providers in the overall cloud computing market, in part because they can bundle cloud offerings with core connectivity.
Also, cloud services aggregators and markets should continue to move centre-stage this year, according to Parallels.
On the other hand, users appear to be no closer to fully trusting the cloud when it comes to personal data.
Philip Lieberman (pictured, right), chief executive of security vendor Lieberman Software, has gone on record as saying that a poll it has done revealed that even so-called tech experts harbour misconceptions about cloud security, with half of respondents who actually had cloud computing-related roles saying they did not trust cloud apps regarding personal data, including contact lists or webmail.
In addition, 86 per cent did not trust cloud apps for their organisations' more sensitive data, preferring to keep it on their own network.
"So many of the people we spoke with do not trust any of their personal data to the cloud," he says. "Cloud services providers need to demonstrate how seriously they take security and the lengths they are going to in order to safeguard sensitive data."
Channel could do better
It gets even worse if you speak to James Henigan, managing director of hosting provider Rise. According to Henigan, the channel could do a lot better when it comes to cloud education – boosting their own cloud-related sales as well.
"Many firms are waking up to the business benefits of cloud computing, and 2012 was very much a breakthrough year with more and more firms making the transition," he says. "However, while strides have been made across the entire enterprise and mid-market, there are those, notably SMBs, that continue to struggle with the concept of cloud."
Smaller firms need more help, and that is where the channel comes in, asserts Henigan (pictured, left). "It is imperative the channel acts as the instigator, bringing cloud services to the SMB market and not waiting for their call. For those that don't and just sit back, their business model will remain stagnant."
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