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With adoption growing, service provision changing and the emergence of true cloud architecture, this is going to be a big year for cloud computing. Here is the story behind each trend:

SMBs drive cloud adoption

Small and medium-sized businesses will be the driving force behind the cloud adoption not only because the cloud presents an amazing and cost-effective opportunity to utilise the services they are not able to afford in-house, but also because it’s the easiest and scalable market demographic for service providers to drive sales.

Take for example the widespread adoption of Microsoft Office 365. It is a direct cloud replica of what everybody is used to in a classical office infrastructure sense — Microsoft Exchange email. Office 365 provides the same functionality, except there is no need to buy hardware or purchase licensing for the entire server. Just hosting a few mailboxes through another hosting provider is the easiest way to adopt the service. Attached to that, comes a myriad of add-on services extending the functionality of Office 365 mailboxes. Backup, analytics, additional file storage and many other tools make the service more attractive to all users across the board. This provides an attractive opportunity for service providers to increase recurring revenue and for end users to adopt and use the service without any large investments.

There are many other examples that will drive the cloud adoption by SMBs in the next 12-18 months. This will be the largest service adoption shift in the whole of the IT market space.

Traditional distributors give way to cloud service providers

The classical distribution model, which involves moving physical boxes of hardware and software to provide service to customers, is rapidly changing shape. To stay in the game, traditional distributors are turning their focus from physical goods onto service provision. Not only in a sense that they start providing services from their own datacenters, but also in a sense that they are turning into aggregated cloud distribution companies to provide their reseller channels with all the available Independent Software Vendor (ISV) services they are able to consolidate under one invoice.

This will create a completely new trend where cloud services will be more predominant and focused on the traditional distribution channels. When choosing a cloud vendor, service providers will be giving preferences to services that come with easy management, integration, and flexible onboarding tools.

True cloud architecture emerges

We are going to see a big shift in the understanding of the true cloud architecture. Cloud has become a buzz world over the last few years, but in its essence, it’s not much different from what’s been on the market for about 15-20 years: a model of providing services from a centralised location, from a shared platform, to take of case of IT needs of SMBs and enterprises.

In the next 12-18 months we’ll see a strong trend toward creating a true cloud architecture, which will become the foundation of the cloud industry. It’s very different from just provisioning individual services to individual customers. It’s all about the management and service delivery layer that sits on top of the actual commodity cloud services.

Cloud vendors who are not able to offer a white-labeled, multi-tiered, multi-tenant, securely separated, and management-delegated solution will miss out on new business in 2017. Service providers and SMB customers will be looking for a solution that allows them to sign in their own distributors and sub-distributors, resellers and sub-resellers, and has a capacity to create multiple user roles for multiple user departments. This functionality will be a critical service differentiation in the cloud space in the coming months.

This year’s developments in the cloud space will create unprecedented opportunities for service providers and SMB customers. Service providers will be able to grow their business by packaging and reselling ISV hosted services through existing channel ecosystems, without any capital investment. This will also open new opportunities for SMBs, who will continue replacing in-house IT infrastructure with cloud-based services, taking advantage of the Opex model of service consumption.