Cloud Market in 2016

by | Sep 7, 2016

Cloud Market in 2016

The cloud market is bustling with activities and transforming the IT landscape more rapidly than ever. The adoption of cloud computing by organizations is broadly driven by significant improvement in resource utilization and increase in staff productivity. Among other drivers, identifying business-related metrics is a key factor fuelling the adoption of cloud—public or private—among organizations. Increasingly, companies consider enhanced business agility and high support for business-related programs as compelling factors for embracing cloud.

Potential of the cloud market

The dynamic capability of cloud has led several CIOs across businesses to conclude: If you are not on the cloud, you are nowhere. Although, at present, this seems to be a sweeping generalization at best. However, unarguably, reduced cost, easy availability, and managed risks are forcing more businesses to migrate to cloud. According to IDC’s Latest CloudView Multi-client study 2016, 58% of all organizations are adopting public or private cloud for more than one or two minor applications or workloads—an increase of about 24% from the previous year.

Spending on IT infrastructure for cloud environment is expected to increase substantially in 2016. Forecasts and estimates produced by leading market research consultancies such as IDC, Gartner and Forrester indicate emerging market scenario in favor of cloud adoption. In addition, quarterly results from prominent technology players such as Microsoft and Amazon suggest cloud to be a disruptive force impacting the IT landscape worldwide. The research findings reveal ample growth opportunities for cloud service providers.

Cloud spending on public and private cloud infrastructure spiraling

A recent forecast from the International Data Corporation (IDC) Worldwide Quarterly Cloud IT Infrastructure Tracker estimates aggregate spending on IT infrastructure products for deployment in cloud environments to increase by 15.5% in 2016 and to hit $37.1 billion. IT infrastructure products mainly consist of servers, enterprise storage and ethernet switches. Research analysts consider the trend to be nearly universal across regions for the year 2016.

This spells a doomsday for legacy infrastructure monitoring tools. As Pankaj Prasad, principal research analyst at Gartner, Inc. concludes, “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”.

The public cloud market—prime time growth

The public cloud market has finally taken off this year. Significant shift in IT spending has been witnessed over recent years. Factors fuelling the demand of public cloud services market among businesses are low cost of services, business agility and feature of scalability. According to the Gartner forecast, the public cloud market is expected to hit $204 billion this year, a 16.5% increase compared to 2015.

IaaS platforms transforming the enterprise IT value chain

Enterprises are rapidly adopting public cloud infrastructure as a service (IaaS), with leading vendors such as Amazon Web Services, Google and Microsoft Azure alluring big enterprises. Amazon dominates the IaaS market share with its Amazon Web Services (AWS) offering. A recent survey of over 6,000 IT organizations found that nearly two thirds of the respondents are either already using or planning to use public cloud IaaS by the end of 2016. IaaS offerings is considered as a viable alternative to on-premises hardware for IT infrastructure. Infrastructure as a Service is a type of cloud computing service in which a third-party provides virtualized computing resources over the Internet. A key factor stimulating its demand among enterprises is scalability: an IaaS platform offers highly scalable resources that can be adjusted on-demand making it suitable for workloads that are temporary or experimental.

IaaS platforms are slowly but steadily transforming the enterprise IT value chain, with companies witnessing significant impact at infrastructural, architectural and operational layers. This has also created new opportunities among service providers.

In 2016, spending on public cloud IaaS (hardware and software) is forecasted to reach $38 billion worldwide. Many enterprises will consider a hybrid infrastructure—a mix of their existing IT infrastructure with cloud infrastructure— to attain an optimal path to public cloud IaaS adoption.

Software as a Service (SaaS) also getting popular

Software as a Service (SaaS) is the other category of cloud computing which is forecast to witness widespread adoption by enterprises; Gartner forecasts the SaaS market to grow 20.3% in 2016, reaching $37.7 billion. A prominent factor that rev up its demand among customers are option of flexible payments—they pay for this service using pay-as-you-go model. Other key factors that make SaaS popular are feature of automatic updates and patch management, and accessibility from any Internet-enabled device and location. Major business SaaS applications include email and sales management, customer relationship management (CRM), financial management, human resource management, billing and collaboration.

Companies need to tread cautiously

Having said that, amidst the wave of cloud computing sweeping the IT industry in 2016 and beyond, businesses and enterprises cannot throw caution to the wind. Cloud computing had sparked heated debates among CIOs, research firms and vendors. In the coming years, companies will focus on cloud management, security and governance. As market analyst opine that while enterprises will be busy picking a cloud environment or model for their IT strategy, they will consider how to operate one effectively.

Emerging opportunities in cloud market businesses can capitalize on

Cloud service providers, especially those who offer public cloud services, will persuade enterprises to consider security good enough for their mission-critical objectives. Companies will try to relate missing pieces such as cloud management and usage-based accounting. In addition, enterprises will focus more on third-party cloud offerings, thereby pushing providers to offer these features. Driven by increased business agility and aligning workflows with mobile devices companies are rapidly migrating towards browser-based cloud and software as a service (SaaS) applications.

As analysts at Gartner opine:

by 2017 the CMO will spend more on IT than the CIO”

which aptly sums up the emerging business scenario.

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