Cloud Spending Will Increase 1 Billion% by 2014

By Ben Stephenson, Journey to the Cloud

It seems like every week a new study comes out analyzing cloud computing growth. Whether it’s that Public Cloud Services Spending will reach $47.4B in 2013, Global SaaS spending projected to grow from $13.5B in 2011 to $32.8B in 2016, the public cloud services market is forecast to grow 18.5 percent in 2013, or cloud spending at Dunder Mifflin will increase 200% by 2020, the indication is that cloud adoption and spending are on the rise. But how is that relevant to you?

Does it matter to the everyday CIO that cloud spending at midsized companies west of the Mississippi is going to increase by 15% over the next 3 years? The relevant question isn’t how much will cloud adoption and spending increase, but why will it do so? It’s the “why” that matters to the business. If you understand the why, it becomes easier to put context around the statistics coming out of these studies. It comes down to a shift in the industry – a shift in the economics of how a modern day business operates. This shift revolves around the way IT services are being delivered.

To figure out where the industry is going, and why spending and adoption are increasing, you need to look at where the industry has come from. The shift from on-premise IT to public cloud began with SaaS based technologies. Companies like realized that organizations were wasting a lot of time and money buying and deploying hardware for their CRM solutions. Why not use the internet to be able to allow organizations to pay a subscription fee instead of owning their entire infrastructure? This, however, was not true cloud computing. Next came IaaS with Amazon’s EC3 initiative. Essentially, Amazon realized it had excess compute capacity and decided to rent it out to people who needed the extra space. IaaS put an enormous amount of pressure on corporate IT because App Dev. teams no longer had to wait weeks or months to test and deploy environments. Instead, they could start up right away and become much more efficient. Finally, PaaS came about with initiatives such as Microsoft Azure.

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The old IT paradigm, or a private cloud environment, consists of organizations buying hardware and software and keeping it in their datacenter behind their own firewalls. While a private cloud environment doesn’t need to be fully virtualized, it does need to be automated and very few organizations are actually operating in a true private cloud environment. Ideally, a true private cloud environment is supposed to let internal IT compete with public cloud providers by providing a similar amount of speed and agility that a public cloud allows. While the industry is starting to shift towards public cloud, the private cloud is not going away. Public cloud will not be the only way to operate IT, or even the majority of the way, for a long time. This brings us to the hybrid cloud computing model; the direct result of this shift. Hybrid cloud is the combination of private and public cloud architectures. It’s about the ability to be able to seamlessly transition workloads between private and public, or, in other words, moving on-premise workloads to rented platforms where you don’t own anything in order to leverage services.

So why are companies shifting towards a hybrid cloud model? It all comes down to velocity, agility, efficiency, and elasticity. IT delivery methodology is no longer a technology discussion, but, rather, it’s become a business discussion. CIOs and CFOs are starting to scratch their heads wondering why so much money is being put towards purchasing hardware and software when all they are reading about is cloud this and cloud that.

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The spending and adoption rates of cloud computing are increasing because the shift in the industry is no longer just talk – it’s real and it’s here now. The bottom line? We’re past hypothetical discussions. There is a major shift in the industry that business decision makers need to be taking seriously. If you’re not modernizing your IT operations by moving towards a hybrid cloud model, you’re going to be missing out on the agility and cost savings that can give your organization a substantial competitive advantage.  This is why cloud adoption and spending are on the rise. This is why you’re seeing a new study every month on the topic.