The cloud: chapter two

As cloud computing turns the page into the next chapter, Hannah Breeze looks at whether it will be a fairytale or a horror story for the channel

When fads, trends and gimmicks burst onto the scene, they invariably end up on one of two pages in the history books.

Firstly, they could enjoy huge success very quickly, before plummeting to rock bottom just as fast. The Harlem Shake, planking and Gangnam Style all seem like distant memories now - despite having been very much the in thing within the past couple of years. Even the global phenomenon that is twerking might be dead and buried this time next year.

The second possible destiny awaiting new trends is that they stick around a while longer and become woven into the fabric of everyday life. The concept of a drive-through takeaway must have seemed a novelty when the first one opened in the 1930s, but the excitement of grabbing a cone of chips without leaving your vehicle is unlikely to light up the lives of many nowadays.

When cloud computing first really took off in the mid-noughties, some sceptics initially may have dismissed the technology trend as just a passing fad, but years later it is still dominating the headlines and to-do lists of IT managers the world over.

In its recent Worldwide and Regional Public IT Cloud Services 2013-2017 Forecast, analyst IDC claimed that cloud computing was entering "chapter two" - a stage it thinks will be epitomised by widespread adoption and greater innovation.

"Now there are signs that cloud services are starting to shift into a ‘chapter two' phase where the scale of cloud adoption will not only be much bigger, but also more user- and solution-driven," said the analyst in its report.

"The first wave of cloud services adoption was focused on improving the efficiency of the IT department," added Frank Gens, senior vice president at IDC. "Over the next several years, the primary driver for cloud adoption will shift from economics to innovation as leading-edge companies invest in cloud services as the foundation for new competitive offerings."

So, while the cloud may have avoided a place next to Psy and the inventor of planking as merely a footnote in the history books, it is unclear where the story goes from here for the technology and those who make a living out of it.

Turning the page
By the end of this year, IDC reckons annual global spending on public cloud is set to reach $47.4bn (£29.77bn). By 2017, that figure is expected to more than double to $107bn, and over those four years the compound annual growth rate for the cloud will
be five times that of the wider IT industry.

And new research from the Cloud Industry Forum (CIF) shows the market is going strong here in the UK too.

Some 69 per cent of end-user organisations that responded to a CIF survey said they had formally adopted at least one cloud service - a figure which was up eight points on last year's study. Thirty-one per cent of those who are not yet using a cloud service said they planned to adopt one in the next year.

CIF chairman Andy Burton (pictured) said the cloud market has definitely turned a page.

"Cloud has moved from [a buying model based on] novelty and opportunism to a mainstream IT model," he said. "People who made [an early] investment in the cloud were doing it opportunistically because they had either a lack of skill, or resource, or time-to-market, or capital pressures, for example. They tended to move less sensitive workloads, such as email or storage.

"What we're seeing in the second chapter is that people are moving more mainstream IT workloads [to the cloud], not because it's just an easier way of doing it, but because they recognise that there are overall organisational benefits achieved in doing so."
According to the Office for National Statistics, in 2012, 21 million households in the UK (80 per cent) had internet access, a figure up from 13.9 million (57 per cent) in 2006 - about the time the term cloud computing first came to prominence.

The huge leap in availability in high-speed internet access has helped propel cloud into its next stage of life, according to CloudSense's chief executive Richard Britton.

"The high growth level of cloud has been driven by the explosion of high-speed internet and the demand for mobile solutions. Cloud computing was far less compelling when we used dial-up internet, but it has now clearly reached maturity and is definitely entering ‘chapter two'.

"Cloud is the glue that holds together all the devices and services in modern life and as a result there are plenty of ongoing opportunities for the channel."

The fairytale

Cloud computing might still be a long way from its happy ever after, but CIF's Burton added that the constant emergence of new technology will keep it at the top of people's agendas in the future.

"If you take cloud on its own, it is a ‘so what?'," he said. "But if you add to cloud the [rise] of mobility and BYOD, the onset of social media in business intelligence, the use of big data and the Internet of Things, all those large cloud-enabled competencies together [are important].

"In the past, we did not have the device proliferation we have now, we didn't have the internet speed to be able to run the workload, we didn't have social media to enable effective communication and collaboration and we didn't have social media to do crowdsourcing.

"The bit that makes cloud a continuing growth engine is the convergence of social, mobile, cloud, communications and IT - this is driving the pace of change."

Gartner predicts that by the end of this year, global spending on all IT will reach $3.6tn - a figure which dwarfs IDC's worldwide forecast for the public cloud market of just $47.4bn. At Microsoft's Worldwide Partner Conference over the summer, the vendor admitted that only three per cent of its global partner base is actively selling its cloud products. Both figures point to there being a huge market still remaining for the channel and cloud vendors to take advantage of, according to Russell Ridgley, cloud vendor Pulsant's senior architect.

"The addressable market for cloud is still colossal and is growing," he said. "As the services develop, the appeal will broaden and I have no doubt at some point in the future every mainstream business function will be covered by a good choice of cloud-based alternatives.

"The market may seem saturated already, but for the forward-thinking providers looking to differentiate with new technologies, the marketplace is ripe for picking."

The horror story

"You're a cloud vendor? So is everyone else I'm talking to. Now tell me how you're going to help me with my business. Stop talking about the cloud - I get it." That is the attitude cloud firms and the channel could be up against from end users, according to David Bradshaw, IDC's research manager for software and services in Europe.

Despite the mammoth cloud market growth predicted by IDC, the analyst was quick to add some caveats to its predictions. It warned that with growth comes change, and that those selling cloud will have to adapt their offerings in order to take advantage of the next wave.

Bradshaw told CRN: "I would say we are on the way to cloud becoming a ‘so what?'. If some [resellers and vendors] have hyped what they can do and have depended on the fact that what they're offering is cloud in order to make a market, that's not going to work."

In its report, IDC added that technical innovation will be a key theme for cloud in the next chapter and that traditional cost saving and efficiency sales talk will no longer be enough to win customers, a sentiment echoed by cloud CRM vendor Workbooks' sales director Ian Moyse.

"The ‘it saves you money' pitch for cloud has been a disservice and oversold," he said. "Cloud is about a multitude of benefits [including] greater efficiency, flexibility, reliability and accessibility, as well as functional innovation and operational cost savings.

"To choose cloud based only on price and to position the cloud ‘because it is cheaper' is a risky strategy."

The crowding of the cloud market is just one issue vendors have to contend with, as increased end-user choice also means that not only winning customers becomes harder, but retaining them does too. According to research from industry body CompTIA, more than 60 per cent of cloud users have changed their infrastructure or applications provider following their initial move to the cloud.

Seth Robinson, CompTIA's director of technology analysis and market research, said: "Once companies hit a stage where they are using cloud systems as a standard part of IT architecture, they weigh the pros and cons of various providers and models and continually shift to achieve the optimal mix."