2010 Trends to Watch: Cloud Computing
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1 2010 TRENDS BRIEF 2010 Trends to Watch: Cloud Computing The most important trend of the decade has barely started Laurent Lachal, Steve Hodgkinson, Vuk Trifkovic and John Madden Reference Code: BFTC2534 Publication Date: January 2010 Ovum. All rights reserved. Ovum is part of the Datamonitor Group. Page 1
2 OVERVIEW CATALYST Cloud computing is emerging as a major disruptive force for both IT vendors and users. It is still very early days, though, for what many rightfully consider to be the most important trend of decade. The next three years will see cloud computing mature rapidly as vendors and enterprises come to grip with the opportunities and challenges that it represents. SUMMARY Enterprises will investigate cloud computing in 2010 for a variety of reasons: Cloud computing can be used to lower IT costs. It is also an effective way to boost IT effectiveness. Enterprises will also use cloud computing to boost innovation. There are two perspectives on the technologies that enable cloud computing to address enterprise requirements. The first perspective relates to the marketing and packaging of these technologies into either private or public cloud offerings. Depending on the technologies they combine and deliver, public clouds are usually split into: infrastructure-as-aservice (IaaS), platform-as-a-service (PaaS) and software-as-a-service (SaaS) clouds. The second perspective relates to the nature of these technologies. There are differences in the technologies (and design) choices between private and public clouds, as well as within and between the three types of public cloud offerings. They all, nonetheless, benefit from developments in various areas, including: Growth in computing power and broadband connections. High performance computing (HPC). Grid computing. Virtualisation. System management automation. Service-oriented architecture (SOA). Security, identity and compliance management technologies with a special focus on federated identities and data governance. Multi-tenant systems. Cloud computing is also pushing new technologies forwards to cater for its specific requirements. These include (among others): Ovum. All rights reserved. Ovum is part of the Datamonitor Group. Page 2
3 Federated identity. Non-relational data stores. OVUM VIEW Cloud computing promises to tackles two hitherto irreconcilable IT challenges: the need to lower costs and the need to boost innovation. However, it will take a lot of efforts from enterprises to actually make it work. Instead of a nimbler IT firm with its "mess for less" somewhere else, the ill-prepared will end up with their IT mess spread across a wider area. Ovum. All rights reserved. Ovum is part of the Datamonitor Group. Page 3
4 Analysis ANALYSIS A MULTI-FACETED PHENOMENON STILL SUBJECT TO DEBATE As with any new approaches to IT, cloud computing is the subject of a big debate about its importance, impact, nature and scope. There is consensus on its importance, but its impact on the market is usually overstated from a short-term point of view and understated from a long-term one. Adoption of any new technology is always slower than evangelists would like due to legacy infrastructures, skill shortages and organisational inertias. Despite the hype, cloud computing adoption will be no different. It will take years before enterprises (as well as vendors) come to terms with what it means for them and deal with the consequences. Cloud computing has numerous definition, which causes confusion. The variety of these definitions reflects: The multifaceted aspect of cloud computing. It originates from developments in technology (growth in computing power and broadband connections, grid computing, virtualisation), pricing/licensing models (subscription, pay-asyou-go), and business models (Amazon expanding from retail to IT), among others. The twisting of the concept to fit the marketing approaches of an increasing variety of vendors. Some prefer to limit it to IaaS and PaaS, while others (Ovum included) also consider SaaS and private clouds to be part of the phenomenon. A wider perspective helps understand one of the key trends in cloud computing: cloud computing will be hybrid. Enterprises will mix and match public and private cloud elements with traditional hosting and outsourcing services to create solutions that fit short- and long-term requirements. For example, Wordpress.com combines hosted servers and Amazon s S3 IaaS storage services to run its blog platform. Public clouds first The 'cloud' in cloud computing refers to the internet, a public infrastructure. In this public space, cloud computing started as SaaS, with Salesforce.com as the flag bearer of this new software delivery model. It then moved to IaaS, with Amazon as the first mover, and PaaS with Google and Salesforce.com as key pioneers. IaaS offers basic computing and/or storage resources. PaaS adds more (development and run-time) services to make it easier to create and manage applications. SaaS combines application functionality delivery via a web browser with data encryption, transmission, access and storage services. IaaS, PaaS and SaaS are different markets that cater for different needs and target audiences. IaaS and PaaS target IT departments while SaaS target end users (with business applications) as well as IT departments (with infrastructure software) for example. SaaS vendors not only position themselves as cloud computing providers but also claim to deliver more value than IaaS and PaaS, since SaaS customers do not have to develop their own applications. Some disagree with this positioning, and point out that SaaS predates cloud computing and differs from IaaS and PaaS in a variety of ways (for example, it is not usually available on-demand or on a pay-as-you-go basis). However, SaaS is indeed converging with IaaS and PaaS: it is not only increasingly available on-demand and likely to expand into pay-as-you-go territory (while IaaS and PaaS will Ovum. All rights reserved. Ovum is part of the Datamonitor Group. Page 4
5 Analysis applications. This means approaching the cloud from the perspective of understanding the benefits of cloud logic and looking for opportunities where it can be applied to create public value, rather than becoming preoccupied with its apparent inadequacies and risks or using it in areas where it is not appropriate. Many of the benefits of cloud computing stem from the fact that it is a commoditised, standardised, take it or leave it service environment. Successful early adoption of cloud services will require an acceptance of its limitations, astute selection of appropriate opportunities and a preparedness to solve the new problems that will emerge. RECOMMENDATIONS FOR PROVIDERS OF TECHNOLOGIES AND SERVICES Weave cloud computing into your strategy Ignoring this new IT delivery model is not an option. Cloud computing will certainly not be the only mode of IT provision but it will be an important element of the IT market. We do not suggest that every vendor ought to offer cloud services, but every vendor ought to have a strategy of how to accommodate cloud computing and its ramifications. If you are to venture into the cloud, consider your appetite for lower margins, although margin considerations need to be offset against the longterm viability of higher margin businesses within vendor portfolios. Value needs to be destroyed creatively in order for new value to appear. Avoid cloudwashing, the act of purporting to support the cloud while prioritising other IT consumption models, and making it difficult to reconcile the priorities of different editions. Should multiple deployment editions exist within the same portfolio, vendors should be genuinely agnostic regarding the support for these editions. Consider bundling complementary services, as the cloud computing model is focused on the delivery of IT services that can replace internal tasks with externally sourced IT. Significant opportunities exist for bundling other business services with the provision of cloud utilities, particularly in the software layer of the cloud computing model. While service bundling clearly overlaps with business process outsourcing services, this may be an attractive way to differentiate in an increasingly commoditised SaaS market. Adopt lock-in risk mitigation strategies The provision of service portability, if not frictionless migration, is important for the success of individual cloud services and the entire IT consumption model alike. A degree of lock-in may be hard to avoid, particularly in PaaS services, so there are no excuses for failing to adopt lock-in mitigation strategies such as the open-source licensing, code escrow, standardisation on widely adopted frameworks, or interoperability with alternative platforms. You also need to influence the direction of related legislation. The industry could make a greater effort to influence the direction of the positive legislation relating to cloud service provision. This will not be an easy task, even for the largest of the technology conglomerates. Nevertheless, there is scope for coordinated cross-industry action and lobbying for new legislative frameworks. Focus on why customers should rather than can The cloud computing market has become cluttered and confusing; a victim of its own hype. As a result, vendors are trying to be smarter, more explicit and more proactive in how they explain and differentiate their cloud offerings, all of which are Ovum. All rights reserved. Ovum is part of the Datamonitor Group. Page 15
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