2016 Forecast: The Year to Think Out Cloud

Change happens in the information technology space, whether you want it or not. But even with all the talk of the post-PC era and the emergence of the demon that is cloud computing that’s forcing itself upon organizations. Change has happened in patchwork.

Undoubtedly, enterprise cloud computing is ballooning. Several enterprise IT players have agreed of late that, if you aren’t in the cloud, you’re nowhere. It certainly seems the case, given the growth of cloud-based services over the past few years.

By 2015, at least 20% of all cloud services will be consumed via internal or external cloud service brokerages, rather than directly, up from less than 5% today.

Cloud computing claims to transform IT infrastructure of organizations from a factory into a supply chain model. Businesses are driving towards reduced cost, easy availability, increased agility and managed risk — all of which is accelerated towards cloud computing.

According to a recent report by International Data Corporation (IDC), for the five-year forecast period, IDC expects cloud IT infrastructure spending to grow at a compounded annual growth rate of 15.6 percent reaching $54.6 billion by 2019, accounting for 46.5 percent of the total spending on IT infrastructure. And, at the same time, spending on non-cloud IT infrastructure will decline at a -1.4 percent CAGR.

The report also states that spending on public cloud IT infrastructure will grow at a slightly higher rate than spending on private cloud IT infrastructure – at 16.5 percent vs. 14 percent CAGR. Also, in 2019, IDC expects cloud service providers to spend $35.3 billion on IT infrastructure for delivering public cloud services, while spending on private cloud IT infrastructure will reach $19.2 billion.

Commenting on the same, Kuba Stolarski, research manager, server, virtualization and workload research at IDC, “Both private and public cloud infrastructures have been growing at a similar pace, which suggests that enterprise customers are open to a wide ranging of hybrid deployment scenarios.”

As a result, the driver for cloud adoption is now very compelling. The ability to support an agile business through controlled process and reduced costs, combined with committed service levels is the ambition of any IT decision maker. According to several reports, two thirds of organizations now have some form of cloud service globally with Forrester research predicting 40 percent of all IT spending will be on cloud services by 2020.

Pankaj Prasad, principal research analyst at Gartner said that, with the adoption of hybrid IT architectures, IT leaders now need to ensure availability and performance of critical business applications across on-premises and cloud infrastructure. “Legacy infrastructure monitoring tools were not built for the digital era of enterprise IT. Cloud infrastructure monitoring tools, instead, will provide the agility that infrastructure and operations leaders need,” he added.

However, interestingly, cloud computing is also a highly controversial phenomenon and had sparked rare, heated debates between CIOs, research firms and enterprise vendor companies. Despite the once divergent views, cloud computing is definitely driving the global IT service industry, currently, from both demand and supply sides, according to Gartner reports.

On the demand side, cloud computing is being rapidly getting adopted by both larger enterprises and SMBs. And, on the supply side, cloud computing is becoming a key service offering of many enterprise vendor companies, including firms that specialize in cloud computing as well as traditional IT service firms.

As the IT services industry undergoes such a collective movement toward cloud computing, different players are employing different strategies to leverage and shape the formation of this technology. This, in turn leads to the evolution of the cloud computing market in a highly entrepreneurial fashion.