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1. Cloud Usage in
Business Today and
Tomorrow
[10 Years Out]
rpeters@rftclouds.com
REACH FOR THE CLOUDS, INC.
11/1/2014

2. Cloud Usage in Business
Today and Tomorrow
[10 Years Out]
Cloud computing is often deemed as the big leveler that allows SMBs to compete with larger
enterprise rivals by taking away the need to post huge upfront capitals. As far as the larger
corporations are concerned, the apprehensions that were being harbored towards the
shifting of core and mission critical applications to the cloud are fast dissipating.
Add to this the several benefits of cloud computing and its acceptance by mainstream players
such as Microsoft and Oracle, and it is easy to understand why the sun is just about to rise
for the cloud. For organizations that have not jumped on the cloud computing bandwagon or
are mulling over the option, here is a look at how cloud computing is changing the face of
business today and what can be expected from it in the future.
Why move to the cloud?
As businesses struggle to balance functionality and return on investments, the cloud
inevitably emerges as the preferred option for companies across industrial sectors. In fact, a
Cloud Industry Forum found that there has been a growth of nearly 30% in the number of
first time cloud computing users over the last 1.5 years. However, the question remains what
is driving this stupendous growth?
The cost advantage: The capital expenditure on IT services is hugely reduced by migrating
to the cloud which allows companies to source IT facilities on demand. Also, the cost of
servers, connections, hardware and security becomes negligible as the cloud vendors handle
all of these factors. Although the business does not physically own the IT infrastructure or
the solutions, when using cloud services, they spend a fraction of their normal IT budget.
The cloud is both flexible and scalable: From the perspective of a business, owning servers
and IT infrastructure is a two sided sword. If the number of subscribers increases, the
organization needs to find funding rapidly to ramp up the hardware on their side. On the
other hand, those who have already invested heavily in setting up the IT infrastructure, stand
to lose heavily if the demand for their services does not meet their expectations.
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3. However, with cloud computing, companies get the liberty of paying for as much as they need
and when they need it. This in turn reduces capitals risks.
The agile and mobile cloud: The primary factors that have led to the popularity of the cloud
are agility and mobility. Cloud computing allows for remote access of the companies IT
resources. As long as the user is connected to the internet and has the bandwidth, he could
be in another continent and still work on the same application as his colleagues back at the
head office. This also means better collaboration between the team and enhanced
productivity.
Easy to upgrade: Since cloud vendors handle the upgrades required to keep the system up to
date, the subscribers do not have to worry about impending costs or keep track of new
developments and technical innovations.
Guaranteed business continuity: Nothing stops the cloud because it is not location bound.
This simply means that, even in the event of a natural calamity, theft, fire or outage, the
business can continue to function as it always does.
Security: Although this was the crux for the cloud computing sector not too long ago, over
the last few years cloud vendors have invested heavily in securing their data centers and
servers. The end result is an enhanced sense of safety for the subscriber without any
spending involved.
The cloud of today!
By the end of 2014, the cloud computing market is expected to reach a whopping $158.8
billion, which is a massive increase of almost 126% in the last 3 years. At this point, apart
from private and public clouds, the types of cloud computing services available include:
SaaS or Software as a Service: These applications are end-user driven and typically include
enterprise and productivity management software. The applications run on pooled
hardware resources, hence they can be accessed over a network. Popular services in the
category include Google apps, Microsoft's Office 365 as well as the offerings of startups like
Zoho.
PaaS or Platform as a Service: In this type of service, the cloud vendor offers a set of
components or applications that developers can use to create a requirement specific system,
much like putting legos together to build a specific structure. Examples of PaaS include the
Windows Azure Application and Forforce.com among others.
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4. IaaS or Infrastructure as a service: Also known as utility computing, with IaaS, developers
need to build a need based application from scratch without the availability of the building
blocks like in PaaS. However, the running of the app is done on a virtual machine. Here, it is
the software that mimics a dedicated server without the allocation of a physical dedicated
server. The advantage is obvious; new virtual machines can be spun up as fast as needed
without pouring in significant financial resources. IaaS cloud computing is currently being
offered by Xerox, Rackspace and Amazon web services.
Right now, the cloud keeps getting bigger!
Contrary to popular perception that only IT stalwarts are using cloud computing, it is
business that is driving the increase in cloud adoption, with as many as 52% of the current
cloud subscribers using it for the advancement of business priorities as opposed to the 36%
that use it for IT requirements.
In fact, when 16 cloud applications were tracked for adoption, it was found that 4 business
cloud applications, including file sharing, social business collaboration, marketing, CRM and
business productivity, were being used by more than half the organizations that have moved
to the cloud.
At this point, SaaS leads in terms of popularity but the highest growth was seen in IaaS, which
will eventually give way to PaaS. About 63% of organizations are now using SaaS, which is a
growth of 55% over the figures of last year. For IaaS, the growth in usage has been
astounding at 29% over that of the previous year. Nearly 72% of the companies that are
currently using cloud computing are expecting to use PaaS in the next 5 years.
As stated above, agility at 55% and scalability at 54% remain the biggest drivers for cloud
computing growth. Cost comes in a close third, with 48% organizations citing it as their
reason for moving to the cloud. Mobility was seen as the next major driver raking in a vote
of 25% while innovation scored 22%. About 14% of the companies believed that the cloud
was giving them competitive advantage.
When it comes to traversing the schism between the large vendors and the emerging market
players, most businesses state that interoperability and vendor lock in are major
considerations while security worries have come down from 55% to 46%. When looking at
suitability of a vendor, businesses will also pay close attention to reliability, system
complexity, regulatory compliance and privacy.
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5. In terms of benefits, almost 85% of cloud users said that they had cut application costs by
migrating to the cloud. In fact the average savings were pegged in the vicinity of over 21%.
On an average, the ROI on cloud vis à vis on premise applications is about 70%. About half
the companies that are now using cloud applications reported reducing their IT expenditure
by almost 25% while 13% managed to bring down their IT expenses by a staggering 50%.
The growth of the hybrid cloud not too far away!
Although hybrid cloud deployments are seldom seen at this point, industry experts are of the
opinion that by 2017, 50% of all enterprises will be hooked to hybrid cloud computing. A
combination of public/private cloud operations is known as hybrid cloud computing, and it
is expected to grow at a stunning rate in the next 4 years.
Analysts believe that the progression from private clouds to hybrid clouds was and is only
natural. That the day of hybrid computing is fast approaching is evident from the fact that
IBM, VMware and Microsoft have all undertaken technology initiatives in anticipation of the
future prospects of hybrid clouds. As far as private clouds are concerned, the driver for them
has always been the need for higher speed of IT responses.
With hybrid cloud computing, it is possible to get the benefits of private cloud along with
greater agility. The only hindrance will be the degree of compatibility that can be achieved
between the private and the public cloud. Integration at the application to application level
may not be achievable for many legacy apps. Yet, experts believe that companies will
progress towards harvesting the best of both public and private clouds through hybrid cloud
computing.
The driving forces and the inhibitors for the cloud of the future!
In the next decade, pervasive cloud solutions will become the standard for business solution
assemblies. Core services will be leveraged to assemble and tweak existing business
solutions. Although solutions do exist in the cloud today as well, in the future, they are
expected to offer greater compatibility, regardless of the public provider used.
Also, it is anticipated that a better context to understand the data stored on the cloud will be
incorporated. Today, information is stored on separate disparate systems. So, it is arduous
to gather business intelligence. However, as more organizations migrate to cloud computing,
a greater understanding will develop for holistically querying petabytes of information and
use it to the advantage of a business.
Even in the decade to come, scalability, agility and cost are expected to be the top 3 driving
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6. factors of cloud computing growth. As far as the inhibitors are concerned, security will take
a back seat as companies fight to get better ROIs and enhanced privacy.
How will the cloud change the technology scenario in the next ten years?
The software hardware divorce: According to John Manley of HP, computing will become
invisible over the next ten years as a greater number of companies will move to cloud
computing. As a matter of fact, application developers are predicting that in the foreseeable
future, software will be written to pass through several filters before it interacts with the
hardware. This means that whether it is front end applications or those that are built as a
service on top of a platform, all of these will be hardware agnostic.
The programs will become modular: A huge armada of hardware will become accessible to
organizations that could not even have afforded modest IT setups in the past. So, individual
software applications will undoubtedly get larger and more complex as programmers and
companies will try to leverage the sheer scale of the cloud. This is bound to create the need
for modular software; large applications will be designed to have components that can be
modified without rendering the whole program inoperable.
Software will simply have to be thought of differently as multiple clouds come into the
picture. Manley predicts that by 2020, applications will need to be created in such a way that
they will be simultaneously based in the cloud while being hooked to other clouds and on
premise applications.
The server will work around the client's requirement: Industry pundits are also suggesting
that there will be a time in the future when the datacenter would be molded around an
organizational task instead of the other way around. Programs will form automatic
associations, so developers will not have to worry about a server, provisioning space and a
switch.
The use of cloud computing to shoot down hardware costs and requirements: By 2020,
servers and storage devices will seem highly replaceable thanks to the cloud suggests Frank
Frankovsky, chairman of the Open Commute Project. This will enable companies to
transition to los cost hardware. Also, it will be easier to accomplish replacements and
upgrades as the infrastructure will be broken down into basic components.
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7. The cloud will get cheaper: In about a year or two, the low power ARM chips will be
introduced to the market with capability for 64 bit computing. This would herald in the era
of software development for the RISC chip, which means that companies will be able to use
power thrifty processing components in their data centers. This in turn would significantly
lower their operational costs.
Greater use of cloud for HRM and marketing: These two divisions are fast making their way
to the top cloud users list, as companies realize the ROI gains of allowing the human resource
and marketing departments of their companies to put the cloud to work.
More innovation: The competition will get fierce for vendors, who will undoubtedly respond
to the pressure with the introduction of better products and services and greater innovation.
Anticipated uses of the cloud in the future
Gaming anyone: Gamers will have a field day with complex 3d graphics delivered to mobile
devices over the cloud. The gaming experience will no doubt be breath taking. In fact, cloud
has a huge role in entertainment in the future, as music, videos, games and more get available
over the cloud.
Get notified of breakdowns in advance: Whether it's your house or office, cloud based apps
connected to appliances and automobile systems will be able to alert you when something is
going to conk.
Better inventory keeping means you will find what you want: Most consumers are hugely
dissatisfied with the trend of shopping online, but buying the products from brick and mortar
establishments that don't have them in stock. With the cloud, inventory tracking will get
easier for consumers and sellers.
Advice will be easy in the coming: It is also expected that a new sector will be spawned with
the sole purpose of offering guidance and suggestions. This would also mean that you would
be making smarter decisions.
Small businesses will have a lot to gain: The cloud will create newer, larger, boundary less
markets and SMBs will be able to leverage this growth and get a bigger slice of the sales pie.
Wireless health monitoring: The cloud will also allow doctors to monitor patients wirelessly
and tap into expert information to devise better treatment strategies.
Greater diversification in supply chain management: The desire for greater efficiency will
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8. compel companies to use the cloud to diversify their pool of suppliers, so that they will have
greater flexibility in meeting unanticipated demands.
Collaboration at its peak: The cloud will bring about a collaborative revolution. Everybody
will be bootstrapped and ideas will flow freely which will undoubtedly give rise to a wave of
entrepreneurialism.
In simple words, cloud computing will permeate all facets of life as we know it.
What the cloud computing figures could look like in the future!
A common message resonates from cloud users, whether they are small businesses or
Fortune 500 companies, they are keen on enterprise applications that will help them to keep
pace on just how fast they want to move with their business strategies. The growing
migration to cloud computing clearly points to the urgency with which organizations are
now making IT the foundation for commercial growth. This is what the forecasts and
estimates for cloud computing look like:
• Nearly half of all companies will have cloud deployments by 2018
• Increased growth in the use of the cloud would also translate to an increase in spending on
cloud security which is expected to grow to $3.1 billion by 2015.
• McKinsey and Company reports that the total economic impact of cloud computing by 2025
would reach a jaw dropping sum of $5.5 trillion.
In this fray, if any business chooses to stay behind, this would mean colossal losses stemming
from lowered productivity, not being able to keep pace with competitors and the inability to
meet client expectations and demands. So, it can safely be said that cloud computing, despite
its volley of critics, is the wave of the future, one that no business can afford to miss.
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9. Sources
1.http://online.wsj.com/ad/article/cloudcomputing-changelives
2.http://research.microsoft.com/en-us/collaboration/fourthparadigm/
3.http://www.zdnet.com/cloud-computing-10-ways-it-will-change-by-2020-7000001808/
4.http://www.zdnet.com/cloud-2020-what-are-the-barriers-to-the-cloud-7000001814/
5.http://www.businesswire.com/news/home/20130619005581/en/2013-Future-Cloud-
Computing-Survey-Reveals-Business#.VDpOThYgGA8
6.http://siliconangle.com/blog/2014/01/27/20-cloud-computing-statistics-tc0114/
7.http://www.theguardian.com/media-network/partner-zone-microsoft/why-businesses-
switching-cloud-computing
8.http://www.theguardian.com/media-network/media-network-blog/2013/jul/25/cloud-
computing-benefits-large-businesses
9.http://www.businessinsider.com/why-businesses-are-embracing-cloud-computing-
efficiency-agility-and-cost-2011-3?IR=T
10.http://www.networkcomputing.com/cloud-infrastructure/gartner-50--of-enterprises-
use-hybrid-cloud-by-2017/d/d-id/1111769?
11.http://www.forbes.com/sites/louiscolumbus/2013/09/04/predicting-enterprise-
cloud-computing-growth/
12.http://www.forbes.com/sites/tjmccue/2014/01/29/cloud-computing-united-states-
businesses-will-spend-13-billion-on-it/
13.http://www.syntax.com/20-cloud-computing-stats-want-know/
14.http://www.ijser.org/researchpaper%5CAn-Overview-On-Current-Trends-
Technologies-And-Future-Scope-Of-cloud-computing.pdf
15.http://cordis.europa.eu/fp7/ict/ssai/docs/future-cc-2may-finalreport-experts.pdf
16.http://cloudtweaks.com/2011/04/cloud-computing-market-will-top-241-billion-in-
2020/
17.http://softwarestrategiesblog.com/tag/cloud-computing-forecasts/
18.http://www.weforum.org/pdf/ip/ittc/Exploring-the-future-of-cloud-computing.pdf
19.http://upstart.bizjournals.com/companies/innovation/2009/03/09/A-Long-Term-
Forecast.html?page=all
20.http://www.scientificamerican.com/report/cloud-computing/
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