The start of a new year inevitable coincides with forward looking statements, and the tradition of naming the year as ‘the year of the cloud’ has been going around ever since the technology headed into the mainstream.
For Synergy Research, 2015 is officially the year of the cloud, although it’s really quite difficult to say, even if you take into consideration growth figures, what constitutes it being the year of something.
According to the research group, 2015 was the first year that cloud services and infrastructure officially became mainstream in the eyes of enterprise customers, but are these large scale deployments or a continued testing of the water?
Again, it’s hard to say; there has been an increase in examples of large scale deployment but whether that accounts for 10% of deployments or 95% we don’t know.
For arguments sake we can look at 2015 as being cloud’s year, so will 2016 be the year that companies go all in on the cloud?
In 2015 cloud operator and vendor revenues reached a total of $110 billion between Q4 2014 and Q3 2015. This equates to a 28% annual growth rate for all of the cloud service and infrastructure market segments measured.
Breaking that number down you see that Public Infrastructure as a Service and Platform as a Service recorded growth of 51%, while private and hybrid cloud services grew at 45%. Despite these impressive growth figures, infrastructure hardware and software continue to bring in more money than spending on cloud services.
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The growth of cloud should come as no surprise as every quarter seems to reveal new growth rates and, if you follow the financial reporting of companies like SAP and Oracle, you can see major shifts to the cloud.
SAP for example said that it saw a 103% rise in cloud booking in 2015 and a 75% increase in Q4 alone. However, that only equated to €0.63bn compared to €2.15bn for software licensing revenue, highlighting how big of a gap cloud has to make up to surpass software.
A look at Oracle’s finances would reveal a similar story; software brings in more money than cloud – at least for the moment.
The problem is that there are still a number of concerns when it comes to cloud, whether that’s security, meeting regulatory demands or cloud outages. These concerns are pushing companies to not go all in on cloud and play to why hybrid cloud models are being increasingly looked at and pushed by companies such as HPE.
High profile outages for example have hurt the image of cloud as a secure choice for running mission critical systems. Enterprises must surely ask how cloud can be considered ready for the most important systems if outages persist.
Clive Longbottom, analyst and founder of Quocirca told CBR: Public cloud does still have a way to go: it has got to prove itself to many more organisations as yet. The providers need to be more transparent in how they report and deal with outages – and show how they have learned from them."
Longbottom went on to say that the flip side to this is that a well-architected, well-run and well-chosen public cloud is likely to give the customer far higher availability levels than their own private data centre.
The ever changing world of regulations is another area that could leave companies feeling a little bit frosty towards going all in on cloud.
The demands on companies to adhere to privacy, data location and data usage laws could see a greater focus on keeping data in their own facilities in order to assure requirements on location are met, while also perhaps feeling more secure in their ability to manage the data themselves.
Security is another element of cloud that means 2016 is probably unlikely to be the year that companies go all in.
Barely a day goes by without a story regarding a data breach or a hacking group deciding to go after an organisation. While cloud companies would argue that security breaches aren’t happening as a result of poor security in their clouds, it is hard to separate the idea that somehow cloud leaves you more vulnerable.
This is probably because often you are relinquishing some control of your IT infrastructure to someone that you are paying to manage it, or perhaps your data no longer sits in the same building you are in, the idea being that it is off floating out in the ether rather than just someone else’s data centre.
The point is that people rarely like losing control over something they have managed for perhaps their entire business or IT career. Handing over part control requires a change of mindset, while handing over 100% of control requires an entire cultural change that is far harder to achieve.
While business and IT adapt to this idea in their own time, the cloud industry will have to wait for its chance to take control. In the meantime cloud vendors can focus on building trust and slowly increasing their stake in businesses.
