IT industry is moving all in with cloud strategies
Cloud computing has quickly evolved from a technology that promised to improve how businesses function to one of the most popular solutions in the IT industry. The cloud's meteoric rise can be attributed to the numerous benefits it offers to companies of all sizes. Small firms with limited resources can replace antiquated equipment in favor of Internet-accessible environments that enable employees to perform work-related tasks anywhere at any time, while large enterprises use cloud services to supplement existing hardware and software.
Affordability is another driving force behind cloud computing's impressive growth in recent years. Organizations do not have to allocate upfront capital investments to launch cloud suites like they do with on-premises equipment. This is critical, given that on-site systems may never be used to full capacity yet the abundance of resources have already been purchased. Additionally, the cloud is available through subscription-based pricing models, so customers only pay for the services they consume. This is ideal for companies with fluctuating workloads.
With advantages available to both IT departments and corporate budget planning teams, the cloud represents a technology that is becoming essential to companies' future. What once was viewed primarily as way to replace legacy equipment with more agile systems is now a centerpiece of how brands will compete in their future markets.
Executives believe in cloud's potential
Evolve IP polled more than 1,250 decision-makers from various levels of the organizational hierarchy. Overall, 88 percent of respondents believe the IT industry's future will be driven by cloud computing. Seventy percent of vice presidents, technology directors, and C-level executives view themselves as "cloud believers," so they are fully invested in these services. This percentage is even higher than the 60 percent of IT managers who classify themselves in this regard, clearly showing that the upper levels of businesses have come around to the cloud recently, perhaps suggesting that they are even more eager to leverage the service than tech-based personnel.
Further supporting cloud acceptance, cloud believers use more cloud applications than their non-believer counterparts. Evolve IP found this group of respondents have an average of 3.3 cloud applications in place, compared to the overall average of 2.7 apps for other participants.
Even the respondents who are not as bullish about the cloud as others anticipate leveraging the service at some point. Evolve IP found 54 percent of "unbelievers" and "unconvinced" expect to adopt cloud computing within a three-year time frame.
A desire to benefit from cloud computing is also matched with investments in the service. In 2014, 42 percent of corporate decision-makers increased cloud spending compared to 2013. In 2015, 54 percent of executives expect to allocate more funding toward the technology.
"We continue to see across the board drops in barriers to moving to the cloud and more support from IT managers as they have become more aligned with business executives. Also, as we have seen in our business, companies looking to move to the cloud on their own are experiencing some hiccups along the way," explained Guy Fardone, general manager and chief operating officer of Evolve IP.
These challenges are the reason why nearly 25 percent of organizations plan to hire IT service providers to assist with their next cloud implementation, Fardone added.
Competitive advantage depends largely on cloud computing
Decision-makers seem aware that cloud computing may facilitate their companies' future success, while a lack of these services could negatively impact their organizations. A Canopy-commissioned survey conducted by Vanson Bourne found three-quarters of chief financial officers believe their businesses are missing out on earning potential by lacking the proper cloud infrastructure and applications required to achieve digital transitions. Seventy percent of CFOs and chief information officers are worried their organizations will be become uncompetitive in their markets at some point. A majority - 76 percent of these participants fear this shortcoming will occur as early as the end of 2015.
If firms recognize the level of income they could achieve by leveraging cloud environments, more organizations would be encouraged to adopt the technology sooner than they originally anticipated. The Canopy study found CFOs believe their companies missed out on revenue of more than $71 million in 2013. These decision-makers indicated the right cloud infrastructure could result in double-digit growth in 2015, achieving revenue increases of roughly $138 million.
"As our survey highlights, digital must be in the DNA of every department to help the business take market share and maximize revenue. From hospitality and retail through to manufacturing, we see that those who are emerging as winners are taking advantage of digital capabilities and innovation to build entirely new revenue streams," explained Canopy CEO Jacques Pommeraud.
Functional tools also driving cloud adoption
Vendor support is another factor leading to an even healthier cloud industry. Companies such as Amazon, Microsoft, and Google have been at the forefront of cloud innovation, offering affordable suites to clientele. Microsoft in particular has found its footing in this expanding field. Evolve IP found cloud-based Microsoft Office adoption increased 63 percent between 2013 and 2014, while hosted Lync environments saw impressive growth of 53 percent and virtual Exchange server deployment rates achieved year-over-year improvement of roughly 22 percent.
Evolve IP suggested Microsoft Office and Exchange will be among the top five cloud services implemented during a three-year period.
If the unified communications market continues to experience growth of its own, Lync may also find its market share improve in the near future as well. Cloud computing has had an immense influence on the expanding UC industry. With businesses doing their best to facilitate employee collaboration across different channels, the pairing of cloud with UC services is natural.
A MarketsandMarkets report said the global cloud-based UC industry totaled roughly $888 million in 2014. By 2019, the research firm expects to the field to surpass $3.2 billion, representing a compound annual growth rate of 30 percent.
With employees able to access cloud environments through PCs, tablets or smartphones, personnel can leverage UC platforms, which include video, email, voice, presence, and instant messaging functions, to be productive anywhere at any time. Organizations with these solutions in place can foster a workforce that can communicate with coworkers, clients and customers without limitations.
MarketsandMarkets noted cloud-based UC suites help personnel access critical data related to customers. This information is essential for delivering personalized service, which is achievable by pairing the two technologies.
What about security concerns?
Security is often at the center of what is holding cloud computing back from becoming even more successful. Some businesses are more comfortable with hosting mission-critical resources on-site, rather than in hosted environments. Yet taking this approach may actually put sensitive data and applications in harm's way.
Offices are prone to disruptions, whether that involves inclement weather, power outages, or incidents from human error. With content stored in the cloud, companies no longer have to worry about whether their systems will be damaged or destroyed if their most important assets are accessible through the cloud.
The Canopy study discovered 50 percent of respondents cited security as a main adoption barrier, while 44 percent said data protection was another concern. Despite these worries, 90 percent of participants believe cloud applications and infrastructure will facilitate their companies' digital evolution, with nearly two-thirds stating a lack of cloud spending will negate their progress.
Some businesses may find themselves in a stalemate if they continue to view cloud computing as both a necessity and security burden. Companies should realize that cloud services have evolved in recent years to address these vulnerabilities. Encryption functionality is essential for any secure cloud environment, as are identity and access controls which only permit authorized users to access the cloud suite.
Cloud computing has also made other significant strides in minimizing corporate security fears, so much so that businesses are actually relying on the technology to enhance corporate safeguards. A TechNavio report predicted the worldwide cloud security software market will expand at a CAGR of nearly 50 percent between 2014 and 2019.
The research organization explained traditional on-site security systems include higher total cost of ownership compared to their cloud counterparts because on-premises equipment has upfront licensing and deployment fees, as well as management expenditures. The cloud overcomes these shortcomings by offloading the maintenance tasks - data backup, updates, and implementation - to the cloud vendors.
Faisal Ghaus, vice president of TechNavio, added cloud-based security software is also available through a variety of options, eliminating connection-based costs.
"Cloud security is projected to become a major buying criterion for customers over the forecast period, which will lead to an increase in the number of partnerships among CSPs and security solution providers," Ghaus added.
The future looks bright
With businesses no longer looking at cloud computing's security in a negative light, the market cap for the technology could very well exceed even the most positive of projections. Perhaps the most impressive aspect of cloud computing in general is just the immaturity of the market as a whole.
A Market Research Media report forecast the worldwide cloud industry to achieve a CAGR of 30 percent between 2015 and 2020, totaling $270 billion.
With previous barriers dissipating, demand for flexible computing environments on the rise and trust in the service's data protection improving, the IT industry's reliance on cloud computing is just getting started.
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