CIOs and CTOs are developing comprehensive hybrid IT infrastructure models, in response to growing demand from CFOs and line of business leaders that request access to applications hosted via both on-premises private cloud and off-premises public cloud offerings.

That’s why savvy technology leaders must therefore align with the most qualified vendors and service providers that enable them to manage and support these complex multi-cloud scenarios. Furthermore, the chosen provider must demonstrate vertical industry knowledge and prior experience.

A major shift is taking place in how enterprises select their financial management applications, with a migration to cloud applications happening faster than expected, according to the latest worldwide market study by Gartner.

Multi-cloud service market development

A recent Gartner survey of senior finance executives found that by 2020, 36 percent of enterprises will use the cloud to support more than half of their transactional systems of record (SoR) requirements.

Gartner surveyed 439 global senior financial executives (including 410 who had implemented cloud strategic and financial corporate performance management solutions) from January through March 2017 to explore their technology perspective, influence of IT, needs and priorities in technology investment.

Key findings from the survey include:

• Organisations of all sizes are moving to cloud solutions, such as core financial applications, for transactional systems of record.
• Cloud momentum is consistently higher across financial business applications year-over-year.
• Business analytics and enterprise business applications continue as top investment initiatives for senior financial executives.

According to the survey, smaller and midsize organisations are adopting cloud services more rapidly than larger organisations, with 44.6 percent of smaller organisations, 37.7 percent of midsize enterprises and 40.4 percent of large organisations planning to move to the cloud over the next three years.

“We have found that most clients asking about these financial business application markets are solely interested in the cloud option,” said John Van Decker, vice president at Gartner. “Many enterprises that currently run on-premises solutions want to move to newer solutions that put more control in the hands of the end user, and reduce the effort required when compared with on-premises upgrades.”

Gartner has found that the human capital management and procure-to-pay markets have already been migrating their business applications to the cloud, while the office of finance has been slower to move.

However, things are changing for the finance organisation. CFOs are usually more conservative about moving their data to the cloud, however, given the current change in the market there will be a steady migration over the next five to 10 years.

Outlook for multi-cloud service adoption

Multi-cloud solutions are still developing and do not have uniform capability to meet the needs of all industry verticals, company size and local markets. CIOs and CTOs will need to do their due diligence when evaluating integrated cloud solutions in these markets.

“The Gartner survey showed that 93 percent of enterprises see the cloud being utilised for half of enterprise transactions in the future,” said Van Decker.

According to the Gartner assessment, ongoing adoption of cloud services has changed the environment for financial management business applications. Vendors have responded with new and re-architected integrated platforms that incorporate cloud-based applications, and most have de-emphasised traditional stand-alone on-premises solutions.

Billions of people around the world use the internet to share ideas and trade with one another. With worldwide internet penetration at nearly 50 percent, the global digital economy has become a space of immense opportunity.

It’s clear that business transactions are becoming heavily reliant on us being connected onlne. Digital flows are now responsible for more GDP growth globally than trade in traditional offline goods and services. Digital transformation is now driving globalization.

As such, achieving a competitive advantage in the global digital arena has become a key priority for governments and businesses who strive for inclusion and relevance. It is also clear that trust has a critical role to play when countries look to improve their eCommerce adoption.

It’s in this context that The Fletcher School at Tufts University, in partnership with MasterCard, present findings from the 2017 edition of the  ‘Digital Evolution Index’ (DEI 17).

Exploring national digital trust development

The DEI 17 includes analysis of each country’s DEI score and digital momentum – the rate at which countries have been developing their digital economies. To investors and businesses, momentum is indicative of market attractiveness and potential; to policymakers, it is a proxy for national competitiveness.

The DEI 17 reveals how a country measures up and also how it might take inspiration from techniques and initiatives that have proved successful elsewhere. This is essential knowledge in the changing digital landscape, and also for governments and policymakers overseeing digital transformation.

DEI 17 incorporates a framework for Digital Trust that includes:

• Trustworthiness of the digital environment and the users experience.
• Attitudes towards key institutions and commercial organizations.
• Citizen’s behavior when they interact with the digital world.

According to the global study findings, digital trust is rooted in relationships. The guarantors of digital trust form one axis: the institutions, businesses, individuals and governments that are responsible for creating and fostering a trustworthy digital environment.

The DEI 17 reveals the identities of the digital elites operating at this level. As a group, they are split in two. First, there are the international trade hubs of Hong Kong, Singapore and the UAE.  And second, there are the nation states of the UK, Estonia, Israel and New Zealand.

These four countries are powering ahead of their rivals thanks to a complex formula of IT and network infrastructure, incubating start-ups, a cultural commitment to innovation, and government support.

“The top five scoring countries in the DEI 17 – Norway, Sweden, Switzerland, Denmark and Finland – are all ‘Stall Out’ countries, reflecting the challenges of sustaining fast upward momentum,” says Dr Bhaskar Chakravorti, senior associate dean of International Business and Finance at The Fletcher School at Tufts University.

One important indicator of a country’s digital potential is its uptake of mobile internet via tablets and smartphones. Countries that reached this stage through iterations of services originally aimed at traditional desktop computing. Others, however, have taken a more direct route, with a singular focus on internet access via mobile devices.

Outlook for digital trust advancements

“The U.S. and UK markets were introduced to the internet through desktops and laptops, but the 1.5 billion new internet users added in the past five years had their first brush with the internet on a mobile device,” said Dr Chakravorti.

Trust is becoming increasingly important to online transactions. But this isn’t universal. The DEI 17 study found major differences in the level of digital trust in different countries. In those nations undergoing rapid advances in digital tech – such as China, Malaysia, Bolivia, Kenya and Russia – individuals are more tolerant of slow and unreliable online technology.

By the time the next DEI comes around, we will know just how well they fared, as well as how insights gleaned from the DE1 2017 helped the developing nations to navigate a path forward.

Are you open to new ideas, and given a compelling choice are you really prepared to change? That’s what informed CEOs are asking their C-suite leadership team.

The context of those questions is about determining who is most qualified to guide the organisation’s digital transformation journey. It’s also about setting expectations for C-level executives to partner.

IT and business leaders must acknowledge that they’ve likely reached a significant turning point. Business technology advances are disrupting the legacy status quo and bringing huge market turmoil in their wake. Industries are converging, and unfamiliar competitors are surfacing.

Granted, that convergence is creating opportunities for growth by shifting from products and services made by solo entities, to new cross-sector customer experiences built via strategic partnerships. But it’s also intensifying market competition. One company’s convergence can become another’s encroachment. So, how do you navigate through this labyrinth?

Open collaboration in the connected economy

Welcome to the ‘connected economy’ (CE) – a new business reality in which value is created through technology-enabled links among people, open digital systems and business partner networks. Across industries, huge opportunities are available for savvy organisations to become connected economy leaders.

Implementing connected business models and associated processes can help you significantly increase revenue growth and enhance your competitive edge. At the same time, a very real downside to falling behind exists: laggards risk becoming prey to disruptive innovations.

It’s a scenario in which a competitor with a completely different business model can put your traditional revenue stream at risk — or worse, put you out of business. So, with that backdrop, how do you survive and prosper? What does it take to be a leader in the connected economy?

IBM asked Harvard Business Review (HBR) Analytic Services to uncover the drivers for business change, assess the preparedness of organisations, and identify the types of adjustments we must make to capitalise on emerging opportunities. Here’s what they found.

A profile of the global CE leaders

Whatever their industry, the global CE leaders see their world rapidly changing, and they’re determined to be at the forefront of that change in order to remain relevant and claim their competitive advantage.

Their success is increasingly dependent on participation in broader business ecosystems. That being said, even the CE followers and laggards recognise the growing importance of tighter connections with other organisations in adjacent industries.

However, CE leaders are radically better positioned within their own business ecosystems – something that could lead to a long-term advantage. The rest are under pressure to catch up. Fifty-two percent say that a substantial part of their revenue is already under threat from digital disruption.

To counter that threat, savvy organisations are changing how they operate. Moreover, the progressive CE leaders are already reaping the rewards of their new connected business models.

They’ve seen significantly stronger revenue growth over the past two years than their less-connected rivals – in large part due to their ability to exploit information at speed through their use of hardware, software, and networking technologies.

How CE leaders leverage IT infrastructure

What really sets CE leaders apart is the degree to which they recognise the threat from digital disruption and the value of their IT leadership in bringing them into the connected economy. That awareness is causing them to make digital initiatives a C-level priority.

CE leaders have built relationships between CIOs or CTOs and line of business (LoB) leaders, based on collaborative engagement. They invest more in digital technology, skills, and projects. They’ve created digital transition teams, while emphasising that digital is part of everyone’s job.

That being said, only 18 percent of survey respondents say that their organisation have applied progressive CE business models or open innovation to a significant extent. A key to success is the ability to exploit information at speed through the use of open hardware, software, and networking technologies.

As a result, 48 percent of CE leaders have seen double-digit revenue growth. And three times as many CE leaders claim growth of 30 percent or more, when compared to the laggards.

Common traits of proven CE market leaders

CE leaders are much more likely than other companies to:

• Have C-level executives involved in leading digital initiatives.
• Dedicate teams to help with various aspects of the transformation.
• Break down organisational silos through restructuring and fostering cross-functional collaboration.
• Invest in a data-centric IT infrastructure needed to build their digital platform.
• Recognise the need for new, more advanced skills, and ensure their teams are acquiring or developing them.
• Have a “business innovator” CIO or CTO.

HBR believes C-level involvement is crucial, given the profound changes that must take place to transition to a connected-economy business model. In fact, all senior executives at CE leader organisations take an active role in their digital business initiatives.

Why open innovation ecosystems matter

As internal resistance to change is overcome, the connected economy will become even more connected, with success relying on participation in a broader business ecosystem, defined as an interdependent network of collaborative individuals and organisations.

More than half of all survey respondents (and three-quarters of CE leaders) said their organisation’s success is tied to relationships with organisations in adjacent industries. And, 80 percent of CE leaders are more likely to be favorably positioned within their partner ecosystem.

In conclusion, these strategic shifts don’t just happen; they’re led by change agents. CE leaders have made this transition to open innovation a C-level priority. They’re significantly more likely to benefit from business-innovator or transformational CIOs and CTOs who drive cross-functional integration and collaboration between IT and other parts of the business.

Not only are they breaking down silos inside their own organisations, they’re connecting to new business partners that apply open technologies in creative ways, as part of a broader digital business transformation model. This is the new normal; leaders adopt open ecosystems.

Editor’s note: To read more about blockchain technologies, visit The Block.

Much of the initial interest in cryptocurrencies centered around their potential as alternatives to fiat currencies. Now attention has shifted to the upside potential of open distributed ledger technologies known as blockchain.

A clear indication of blockchain’s increasing maturity is how the emerging fintech sector, which was once dominated by tech start-ups, is becoming crowded with leading IT platform providers — many of whom are developing their own offerings.

The market leaders have been involved in collaborative ventures and consortia. As an example, IBM unveiled Blockchain as a Service (BaaS) for developers back in February 2016 that’s based upon the Hyperledger Fabric.

Blockchain market development

Meanwhile, market demand is growing rapidly across vertical industries. Juniper Research has found that 57 percent large corporations are either actively considering, or are in the process of deploying, blockchain technology, according to the analysis of the data from their latest worldwide study.

Almost 400 company founders, executives, managers and IT leaders responded to the Blockchain Enterprise Survey. Among those companies who have reached the Proof of Concept (PoC) stage, 66 percent expected blockchain to be integrated into their commercial systems by the end of 2018.

Using data from the survey, settlement, land registry and digital fiat currency were identified as the best-fit opportunities for blockchain deployment, but Juniper analysts cautioned that for each of these opportunities the scale and variety of barriers were significant.

Companies which would benefit from blockchain include those with:

• A need for transparency and clarity in (trans)actions;
• A current dependence on paper-based legacy storage systems;
• A high volume of transmitted information.

However, Juniper also argued that while awareness of blockchain and its benefits had increased dramatically during the past 12-18 months, there was a concern that companies might seek to deploy blockchain without having first considered alternative options.

Outlook for blockchain applications

“In many cases, systemic change, rather than technological, might be a better and cheaper solution than blockchain, which could potentially cause significant internal and external disruption,” said Dr Windsor Holden, head of forecasting and consultancy at Juniper Research.

Indeed, the research found that companies may have underestimated the scale of the blockchain challenge. For issues such as interoperability, the proportion of survey respondents expressing concerns progressively increased as companies proceed towards full deployment, while concerns also rose sharply regarding client refusal to embrace blockchain.

That scenario is fueling the demand for information and guidance from a qualified professional services provider that are already experienced with blockchain apps and the associated deployment challenges.

Cloud computing services supported by converged networks will create new opportunities for forward-looking senior executives to make informed decisions and gain significant new strategic competitive advantages.

According to the latest market study by Frost & Sullivan, transaction data is the new currency for the digital enterprise and high-speed, dedicated and secure network connections are crucial for senior decision makers to monetize their commercial data residing in cloud services.

Furthermore, an integrated network with cloud services will ensure a secured network to deliver business-critical applications and data to support executives in achieving their digital transformation agenda and related business outcomes.

Converged infrastructure market development

Industry verticals, both traditional and emerging, are already investing heavily in integrated networks as part of their cloud-first journey to leverage next-generation technologies – such as big data, analytics, artificial intelligence (AI), blockchain and the Internet of Things (IoT).

“Converged infrastructure offers a more evolved cloud computing platform to derive better cost efficiency and time savings,” said Mayuri Ghosh, senior consulting analyst at Frost & Sullivan.

Network-enabled cloud services with next-generation security features will provide the reliability of a private network – such as multi-protocol label switching (MPLS) and Ethernet – allowing enterprises to take advantage of a flexible and multi-tenant, usage-based billing model.

According to the Frost & Sullivan assessment, savvy vertical industry leaders are currently adopting MPLS, Ethernet, and leased lines to create a seamless network experience — this includes banking, financial services and insurance, manufacturing, eCommerce, professional services, retail, healthcare, and the hospitality sector.

Deploying network-enabled cloud computing will:

• Allow cloud services to seamlessly fit into existing enterprise network architecture;
• Act as an extension of the enterprise wide-area network (WAN), enabling remote employees and partners to connect to cloud-based applications in a secure manner;
• Extend the flexibility of the cloud model to network services so that network resources can scale as required; and
• Help enterprises take advantage of increased application performance resulting from improvements through network functions virtualization (NFV) and software-defined networking (SDN).

“Cloud and network value chain providers together can realize the network-enabled cloud for the enterprise,” said Ghosh. “For network value chain providers – including network managed service providers, Telcos, internet service providers, and network original equipment manufacturers – network ownership and maintenance is the key value proposition, and effectiveness is vital to success.

Three significant business technology trends will enable business leaders to thrive over the next five to 10 years. Artificial intelligence (AI), transparently immersive experiences and new digital platforms will provide the foundation that enables organizations to connect with new business ecosystems.

“Enterprise architects who are focused on technology innovation must evaluate these high-level trends and the featured technologies, as well as the potential impact on their businesses,” said Mike J. Walker, research director at Gartner.

In addition to the commercial impact, these trends provide an upside opportunity for enterprise architecture experts to help their senior business leaders respond to digital transformation opportunities by creating actionable plans that guide IT investment decisions.

Digital transformation market development

Artificial intelligence technologies will be the most disruptive trend over the next decade, due to radical computational power, access to vast amounts of data, and advances in deep neural networks. That will enable organizations with AI to harness data, adapt to new situations and solve problems.

Savvy CIOs and CTOs should consider the following technologies: deep learning, deep reinforcement learning, artificial general intelligence, autonomous vehicles, cognitive computing, commercial UAVs (drones), conversational user interfaces, enterprise taxonomy and ontology management, machine learning, smart dust, smart robots and smart workspace.

According to the Gartner assessment, technology will continue to become more human-centric and introduce transparency between people, businesses and things. This relationship will become much more adaptive, contextual and fluid within the workplace.

Digital technologies to be considered include: 4D printing, augmented reality (AR), computer-brain interface, connected home, human augmentation, nanotube electronics, virtual reality (VR) and volumetric displays.

Emerging technologies require revolutionizing the enabling foundations that provide the volume of data needed, advanced compute power, and ubiquity-enabling ecosystems. The shift from IT infrastructure to ecosystem-enabling platforms creates the foundations for entirely new digital business models.

Key platform-enabling technologies to track include: 5G, digital twin, edge computing, blockchain, IoT platform, neuromorphic hardware, quantum computing, serverless PaaS, and software-defined security.

Outlook for digital transformation growth

In summary, these digital technologies make new IT realities possible by providing the underlining platforms that will fuel the future. Gartner believes that technologies such as quantum computing and blockchain are poised to create the most transformative and dramatic impacts in the next five to 10 years.

“These mega-trends illustrate that the more organizations are able to make technology an integral part of employee, partner and customer experiences, the more they will be able to connect their ecosystems to platforms in new and dynamic ways,” said Walker.

Open source software adoption continues to disrupt the traditional IT markets, as enterprise CIOs and CTOs seek ways to evolve by working with progressive vendors and service providers who have a proven track record of open innovation.

The growth of digital business transformation and the Internet of Things (IoT) is expected to drive large investment in IT operations management (ITOM) through 2020, according to the latest global market study by Gartner. A primary driver for organisations moving to ITOM open-source software (OSS) is lower cost of ownership.

OSS ITOM market development

While acceptance of OSS ITOM is increasing, traditional closed-source ITOM software still has the biggest budget allocation today. Moreover, complexity and governance issues that face users of OSS ITOM tools cannot be ignored.

“In fact, these issues open up opportunities for ITOM vendors. Even vendors that are late to market with ITOM functionality can compete in this area,” said Laurie Wurster, research director at Gartner.

Gartner believes many enterprises will turn to managed ITOM or ITOM as a service (ITOMaaS) enabled by open-source technologies and provided by a third party. With OSS, vendors can provide more cost-effective and readily available ITOM functions in a scaled manner through the cloud.

Through 2020, public cloud and managed services are expected to be leveraged more often for ITOM tools, which will drive growth of the subscription business model for both cloud and on-premises ITOM.

However, on-premises deployments will still be the most common delivery method. This imposes multiple challenges to incumbent ITOM vendors. First, those vendors that do not offer a cloud delivery model will face continuous cannibalisation from ITOM vendors that can deliver ITOM through both cloud and on-premises.

Second, platform vendors are providing some native ITOM functionalities on their public clouds. Customers that are running workloads solely on these platforms may prefer these native features. There are also hybrid requirements for ITOM tools that can seamlessly manage both cloud and on-premises environments.

Future of cloud services and OSS for ITOM

Customer demand has driven traditional software vendors to transform and adapt to the changing technology and competitive landscapes. Competitive pressure from cloud (SaaS offerings) and commercial OSS (offerings with a free license plus paid support) is forcing ITOM providers to move toward subscription-based business models for both cloud and on-premises deployments.

The influx of new, smaller ITOM vendors focused on one or two major tool categories will continue to cause disruption for large traditional suite vendors. Given this situation, traditional vendors will need to react by changing how their products fit together.

More importantly, according to the Gartner assessment, traditional vendors need to change how their solutions are sold as customers exert significant pressure to shift to offering cloud-based services.

The shift of IT workloads to hybrid cloud computing continues to grow, fuelled in part by the rise of digital transformation projects. Worldwide spending on public cloud services and infrastructure is forecast to reach $266 billion in 2021, according to the latest market study by International Data Corporation (IDC).

Although spending growth will likely slow during 2016-2021, the market is still expected to achieve a five-year compound annual growth rate (CAGR) of 21 percent. Moreover, public cloud services spending will reach $128 billion in 2017 — that’s an increase of 25.4 percent over 2016.

Public cloud market development

The United States will be the largest market for public cloud services accounting for more than 60 percent of worldwide revenues throughout the forecast, and total spending of $163 billion in 2021.

Western Europe and Asia-Pacific excluding Japan (APeJ) will be the second and third largest regions with 2021 spending levels of $52 billion and $25 billion, respectively. APeJ and Latin America will experience the fastest spending growth over the forecast period with CAGRs of 26.7 percent and 26.2 percent, respectively.

However, according to the IDC assessment, six of the eight regions are forecast to experience CAGRs greater than 20 percent over the next five years.

“In Western Europe, the public cloud market is going to more than double in the 2016-2021 time frame led by strong spending growth in Germany, which is also the largest national market, Italy, and Sweden,” said Angela Vacca, senior research manager at IDC.

The U.S. industries that will see the fastest growth in public cloud services spending are professional services (21.5 percent CAGR), media (21 percent CAGR), retail, and telecom (each with a CAGR of 20.9 percent).

The U.S. industries that will spend the most on public cloud services are discrete manufacturing, professional services, and banking. Together, these three industries will account for nearly one third of all public cloud services spending in the United States in 2021.

In Asia-Pacific excluding Japan, banking, professional services, and telecom will deliver more than a third of the region’s public cloud services spending in 2021 while the industries with the fastest spending growth will be professional services, personal and consumer services, and process manufacturing.

Software as a service (SaaS) will remain the dominant cloud computing type, capturing two thirds of all public cloud spending in 2017 and nearly 60 percent in 2021.  Spending on infrastructure as a service (IaaS) and platform as a service (PaaS) will grow at much faster rates than SaaS with five-year CAGRs of 30 percent and 29.7 percent, respectively.

Outlook for enterprise adoption growth

In terms of company size, more than half of all public cloud spending will come from very large businesses (those with more than 1,000 employees) while medium-sized businesses (100-499 employees) will deliver about 20 percent of spending throughout the forecast.

Large businesses (500-999 employees) will see the fastest growth with a five-year CAGR of 22.8 percent. While purchase priorities vary somewhat depending on company size, the leading product categories include CRM and ERM applications in addition to server and storage hardware.

More CIOs and CTOs are choosing to architect and deploy hybrid multi-cloud computing environments in 2017. The trend is being driven by growing demand to support digital transformation projects that are led by the C-suite.

Newly released results from the CloudView Survey 2017 reveal the top drivers of cloud adoption – include improving agility and security, as well as standardising IT infrastructure.

Cloud computing market development

As multi-cloud environments and hybrid cloud become more prevalent, the survey revealed that 87 percent of cloud users have adopted some capabilities for a hybrid cloud strategy – that’s an increase of 17 percent compared to 2016, according to the latest market study by International Data Corporation (IDC).

“Beyond adoption and maturity, a series of questions on ‘why are’ or ‘why aren’t’ respondents moving more workloads to the cloud makes up a key part of the study,” said Benjamin McGrath, senior research analyst at IDC.

Additional findings from the study include:

• 56 percent of users run more than one type of cloud deployment
• 40 percent of cloud users are “cloud First” organisations

“When we look at the shift in IT spend over the next 12-24 months to more of a mix of multiple types of cloud deployments, we see each type of organisation take a different journey,” added McGrath.

The study gathers data on the journey to cloud and how it differs by vertical – and micro-vertical – by country, by company size, company age, and by job title.

What industry-specific projects are moving to the cloud? What are end-users looking for from their vendors in each country? How will all that change over time?

CloudView 2017 encompasses thousands of surveys from line-of-business cloud buyers and IT operations staff on cloud adoption rates, trends, and attitudes.

Survey respondents are from more than 6,000 organisations worldwide, all of whom are current users of cloud services.

To gain a complete picture of potential cloud customers along the journey, data is also collected from respondents at organisations who are not currently utilising cloud.

The public cloud computing sector is in a constant state of evolution, as vendors design new IT infrastructure architectures and service providers deploy them in their own unique hyperscale data centre facilities.

According to the latest analysis of cloud pricing by 451 Research, for the majority of new applications, a serverless solution offers a lower total cost of ownership (TCO) than both virtual machines (VMs) or containers.

Severless cloud market development

When analyzing serverless offerings from the leading public cloud service providers, 451 Research determined that IBM generally offers the least expensive service, with Microsoft leading for certain other configurations.

According to the 451 Research assessment, the TCO of serverless tends to be lower than VMs, even when the VM is hosting containers, because there is no need for developers to provision, configure and manage the infrastructure.

As an example, when a serverless function is active for just three quarters of the month, it only takes a 10-minute saving in operational overhead for serverless to beat virtual machines on TCO.

451 Research analysts believe that even without the savings in developer time, the ability of serverless to increase utilisation means it is cheaper than using VMs when the code is executed fewer than 500,000 times each month.

451 Research finds that IBM is least expensive for 0.1 second duration scripts, and Azure is cheapest for 10-second scripts – assuming memory requirements match predetermined size allocations.

Besides, IBM offers a distinct cost advantage by allowing users to choose exact memory requirements, whereas other cloud service providers round up the figures, resulting in users typically paying for unused capacity.

That being said, and considering the similarities in pricing methods and offerings between cloud service providers, 451 Research believes serverless is poised to undergo a round of price cutting this year.

“Serverless is more than just hype; it has the potential to transform the way we develop, build and run applications in the cloud. Understanding the economics of serverless technology is vital to understanding its potential to disrupt the industry,” said Owen Rogers, research director at 451 Research.

Outlook for serverless cloud services

Freemium serverless offerings are already fueling the growth of new services by stimulating experimentation and helping enterprises gain skills. In the analyst’s opinion, this could result in serverless solutions becoming the next cloud ‘price war’ battleground.

451 Research expects adoption of serverless – or FaaS (functions as a service) – to continue growing over the next few years. In its 2016 market study, 37 percent of the IT decision-makers surveyed were already using serverless technology.

The term ‘serverless’ implies that no servers are used to run an application or service. But in reality, this model means that developers and cloud service providers do not encounter the typical complexity and maintenance management of VMs or containers.