Cloud computing trends to watch out for in 2014
The enterprise cloud has begun its transition to the fast lane. In the last 18 months, drawing from several CXO conversations, I clearly see at least an average 10 percent increase in the number of enterprises using at least one cloud platform.
The cloud is also increasingly seen as the next evolutionary step in IT services delivery, with more than half of the enterprises worldwide integrating cloud budgets into overall IT spends, as opposed to treating it as a parallel project. Another sign of enterprise cloud maturity is that scalability, resilience, agility, speed-to-market and ability to innovate, rather than only cost, are clearly the key drivers of adoption.
Based on our experience, and the current momentum of the cloud, we believe that 30-50 percent of enterprises will have a clearly articulated cloud strategy roadmap in 2014, unambiguously defining strategic cloud milestones within the broader context of their enterprise IT strategy. With most organizations taking a crawl-walk-run journey into the cloud, this blueprint will enable them to pick and choose services and providers as they evolve, as well as adopt appropriate metrics to periodically measure the outcomes of their cloud decisions.
Here are some features that will define the progress and pace of the cloud journey in 2014:
The IT organization will gravitate towards outcome-based, SLA-oriented constructs
The technology headquarters of the enterprise will begin to transform itself into a services brokering powerhouse bringing together the best of various service providers. And the transformation will gain impetus from the organization’s cloud strategy. There will be increasingly greater levels in maturity in business-IT partnering.
The most visible impact of these redefined terms of engagement will be on SLAs. Users will insist on moving away from standardized SLAs towards agreements that more accurately capture their business-led priorities. Also, in a move that may well spell the end of vendor lock-in, more and more SLAs will incorporate contestability clauses and open standards providing users the leeway to seek best-in- class solutions from an evolving landscape of service providers, or change providers at will.
Public cloud will be ready for enterprise, and enterprise ready for the public cloud
This means early adopters have the world to gain in terms of speed-to-market, agility, innovation and cost advantages. Concepts like sandboxes, cages, a healthy portfolio of services, location-specific security and regulatory requirements, transparent recovery procedures, etc., will become key considerations in the enterprise engagement model. And this will be satisfactorily addressed in the hybrid cloud ecosystem. Starting next year, public cloud service providers will raise their offerings and their pitches to reflect enterprise requirements and priorities, better than ever before.
Say hello to transformed outsourcing with the cloud in perspective
The number of IT outsourcing contracts including a cloud component has tripled in the last three years. The proportion of cloud services within a typical outsourcing deal is also increasing. These developments will compel radical structural changes in the nature of sourcing contracts. In the scalable, agile, flexible world of cloud computing, multi-year monolithic contracts will become extinct. Users will insist on including contingencies and variables into contracts to enable them to rapidly realign vendor relationships in order to leverage emergent competencies in the cloud ecosystem. Successful cloud sourcing contracts will be structured around individual business rules and needs rather than on long-term vendor partnerships.
WE’LL LET GO OFF THE LEGACY
Addressing the constraints created by legacy applications and infrastructure has always been a top priority for enterprise technology stewards. Starting 2014, the cloud will spur a two-fold increase in application and infrastructure modernization programs.
Modernization will become an imperative for enterprises looking to leverage new-age possibilities with the cloud as well as make the most of converging technologies in mobility, social and Big Data, which are best served by the distributed computing model. Any hybrid enterprise IT model that still has a significant legacy component will create operational bottlenecks for organizations. Only with large-scale modernization will enterprises be able to fully realize the cost, efficiency, agility and flexibility features of the cloud.
The center of gravity, around cloud, will begin to shift from infrastructure to applications
Enterprises’ cloud strategy will
have an increasingly balanced view of both infrastructure and applications. All of this will be geared to inspire confidence amongst users concerned with interoperability and portability issues. This will manifest itself in several ways — like a move towards a cloud-standard API that will enable users to connect and evolve applications across the cloud ecosystem based on their business objectives. The cloud ecosystem will begin to look more holistic.
Currently, more than 160 different standards govern cloud computing systems. The shift towards common or open standards for cloud deployments will be central to the development of the cloud model, especially if features like interoperability and portability are to be realized
Standardization will take center stage
The cloud ecosystem today is characterized by a plethora of standards, mostly unique to service providers and therefore incompatible with other platforms.
Currently, more than 160 different standards govern cloud computing systems. This situation has the potential to dampen the growth prospects of the cloud. The shift towards common or open standards for cloud deployments will be central to the development of the cloud model, especially if features like interoperability and portability are to be realized. The movement for a common cloud standard will have to be spearheaded by users to ensure that the cloud promise does not get buried under an overwhelming barrage of incompatible operating principles.
Consortiums like the Open Data Center Alliance (ODCA), framed to focus attention on the crying need for a dependable framework to progress the evolution of organizational standards, that streamline the cloud journey, will grow in stature.
New leaders will emerge
The financial services sector, given its near- obsessive concerns of compliance and security, seems an unlikely candidate to lead cloud adoption. But surprisingly, our analysis strongly indicates that the sector will invest almost 4 percent of its total IT spend on cloud technologies.
The cloud model will empower banks on two counts — by helping them address the significant legacy component that still exists, and allowing them to enhance the scale and scope of their product and service portfolios in the face of a competitive onslaught from more technologically enabled players. Taking a geo-view, by size, North America will continue to dominate cloud services spending. But Asia-Pacific and Latin America will set the pace of growth for the cloud market.
Mobile, analytics and social solutions will still be driven in silos
The ability to deliver a unified mobile, analytic and social solution is one of the key opportunities presented by cloud adoption. And yet, most enterprises still have siloed strategies for each of these intertwined components.
Just as it is hard to imagine a successful scalable mobile deployment on non- cloud infrastructure, it is hard to envision a mobile or social solution that will actually be useful without access to on-the-fly analytics.
In short, neither mobility nor analytics nor social should be viewed in silos — as something to be bolted eventually onto a central cloud strategy. And yet, enterprises in 2014, will not adopt this cohesive strategy. However, the first mature plans for these components to be embedded into a core cloud strategy will be formulated.
In the last two years, the cloud has generated sufficient reach and momentum to become a serious contender in IT services delivery. But as it moves from hype to enlightenment, there are still some issues that need to be addressed by users, service providers and policy makers to take the cloud to its potential as quickly as possible.
I am placing my bets on a great chunk of this happening in 2014.