Cloud Computing in 2011: 3 Trends Changing Business Adoption

The business benefits of a cloud computing model have been well stated. You cut costs by switching to more flexible on-demand IT resources that can better handle the ebb and flow technology needs at a company.

But adopting a cloud model for your company is a multifaceted decision-making process. Before even sitting down at the negotiating table with a vendor, IT managers and CIOs need to make sure their infrastructures are virtualized and cloud-ready, and that they have a firm grasp of their own security and compliance regulations.

The cloud is also a world with various layers and choices. Do you adopt a public, private or hybrid cloud model? Do you use the cloud for software or your whole infrastructure? Are you a formal (enterprise IT) buyer or an informal (mid-market, SMB) buyer, and how does that affect the model you choose?

Then there are the different service models, aka the “aaS” acronyms: SaaS (software-as-a-service), IaaS (infrastructure-as-a-service) and PaaS (platform-as-a-service).

As these different cloud markets and services splinter off in 2011, business adoption will shift in three significant ways, according to Forrester’s 2011 Tech Industry Predictions report.

Public Cloud Uptake Will Be Driven by Informal Buyers

Forrester predicts that in 2011, cloud hype from vendors, the media and other sources will continue to exceed actual user adoption, especially among core enterprise IT hardware buyers (which is what Forrester dubs “formal” buyers).

Adopters of public cloud services will be from the “informal” buyer camp, which are mostly small and midsize businesses or enterprise users who are outside the core IT operations and transaction teams. These buyers are more likely to follow the IaaS and PaaS models and put all their IT resources (servers, storage) in a cloud environment. The Forrester report also predicts that buyers of SaaS applications will continue to be informal business buyers.

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Virtualization and Cloud Computing Hiring Outlook for 2011

In a survey of enterprise and SMB decision makers conducted by Forrester that asks users about their plans to adopt the IaaS cloud model, 16 percent of “informal” buyers said they have implemented an IaaS model already, and 10 percent said they are planning to implement one in the next year.

Comparatively, 6 percent of “formal” IT buyers in the survey said they have implemented an IaaS model already and 7 percent said they are planning to implement one in the next year.

The IaaS model consists of the pay-for-use hosting of virtual servers by service providers such as Amazon Web Services, Terremark, Savvis or Rackspace, to name a few.

Enterprise IT Buyers Will Stay Focused on Virtualization Over Cloud

At the high-level enterprise IT organization, a wholesale move to a cloud model is not practical due to the sheer size of the IT environment, as well as the many back-end legacy systems still in use and the compliance regulations to which the company must adhere.

Therefore, data center consolidation through server virtualization will remain a higher priority for enterprises than a public or private cloud migration, according to Forrester.

Data from the 2010 Forrester survey shows that 80 percent of enterprise decision makers surveyed said that consolidating IT infrastructure through server virtualization is a high priority. In contrast, 29 percent of respondents said that building an internal private cloud operated by IT (not a service provider) is a high priority at their organization and 28 percent said that using a cloud service provider for storage or server consolidation was a high priority.

Forrester adds that consolidating enterprise IT transactional workloads and servers through virtualization is the usual precursor to building private, internal cloud systems.

New Cloud Offerings Will Increase a Typical Enterprise’s Service Usage

A new spate of cloud service offering will take root in 2011, according to Forrester, expanding SaaS applications beyond CRM, human resources and procurement technologies, and into business process technologies for tasks like payroll and billing, healthcare claims processing, trade settlements, clinical data management and tech support.

This has spawned yet another “aaS” cloud acronym: BPaaS (business process as-a-service).

As new cloud services for business process management and other core enterprise functions take hold in 2011 and beyond, Forrester predicts that “enterprises using cloud computing will expand the number of services from one to three today to 10, 20 or more,” writes report author and Forrester analyst Christopher Mines.

“This will create a new challenge of multi-cloud orchestration … for both enterprise IT and cloud vendors.”

Shane O’Neill covers Microsoft, Windows, Operating Systems, Productivity Apps and Online Services for CIO.com. Follow Shane on Twitter @smoneill. Follow everything from CIO.com on Twitter @CIOonline. Email Shane at soneill@cxo.com.