Has the business cloud era begun?

Ever more enterprises are shifting their data storage to public, hybrid and managed cloud services to cope with the escalating aggregate cost of resources and performance requirements for storing unprecedented high volumes of data.

What are the key indicators and have businesses reached the cloud era?

Cloud supply-side

The rules of the game are changing: enterprises are reducing their budgets for traditional on premise IT infrastructure and, at the same time, more of that spend is going to cloud companies.

In the second quarter of 2016, IDC analysts reported that revenue from sales of both public and private cloud infrastructure products (server, storage, and Ethernet switch), grew by 14.5% year on year to $7.7 billion.

The overall share of cloud IT infrastructure sales was also reported to have climbed to 34.9%, up from 30.6% in 2015.

Revenue from infrastructure sales to private cloud grew by 14.0% to $3.1 billion, and to public cloud by 14.9% to $4.6 billion.

In comparison, revenue in the traditional (non-cloud) IT infrastructure segment decreased 6.1% year over year in the second quarter.

>See also: The cloud is great, but what happens when it goes down?

These market changes are clearly going to have an effect on IT vendors – big and small.

Leading vendors like EMC, NetApp, IBM, HPE and Cisco are already re-evaluating their business strategies and in some cases proceeding with new business models.

As a result, the industry is starting to see acquisitions within, and the consolidation of, the storage market.

This will lead to a point where, in place of the proliferation of vendors of all sizes that there are now, just a few companies will specialise in storage hardware.

What kind of cloud?

In cloud’s early days, the key focus was on public cloud, and tier 1 offerings such as Amazon, Google and Azure were heralded as the future for virtualised environments’ storage provision.

However, the statistics show a move towards private cloud and cloud service management companies, which are increasingly taking a bigger share of the market.

The reason for this split in the cloud market is largely because tier 1 cloud providers offer high-volume-low touch storage business models.

As such they appeal to companies with sufficient IT skills to manage without extra support. But most businesses do not have the IT resource to proactively manage these cloud accounts.

>See also: 10 trends that will influence cloud computing in 2017

There are also organisations that prefer to handle their IT in-house for security and data privacy reasons: take banks, which tend to have a high proportion of IT personnel managing their private cloud data centres.

However, for most companies, IT resource is stretched and the public cloud can be prohibitively expensive at scale.

In fact, most businesses would do better with a managed private cloud solution running their database, SAP, email, exchange, or active directory applications as a service.

This is where cloud services or managed service providers come into their own.

These cloud providers become the new utility providers of today, except they do not provide electricity, water and gas to the general public, they provide IT.

There is plenty of opportunity for managed services companies to make serious profits by supplying easy-to-use cloud and storage solutions, with more services and support around these options than public clouds usually offer.

In 2017, it is highly likely that, although there’ll be fewer vendors, there will be more managed services companies carving up their share of the cloud market.

Are we there yet?

As for the cloud era, a shift to the cloud began in earnest in 2016 but it’s full force is yet to be felt.

>See also: An insight into the cloud storage industry

The underpinning technologies such as software-defined storage and software-defined networking are delivering ever increasing economies of scale and better value for money but the overall cost of cloud services seems to have flattened.

Instead we’re now seeing customers looking for the best cloud provision and performance for the same cost – and all the complexities that come with it. Only those who put the customer first will be the winners.
Sourced by Boyan Ivanov, CEO, StorPool

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Nick Ismail

Nick Ismail is a former editor for Information Age (from 2018 to 2022) before moving on to become Global Head of Brand Journalism at HCLTech. He has a particular interest in smart technologies, AI and...

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