The Business Cloud Roadmap

Cloud Computing has taken a foothold in the business IT space, serving small companies to the largest enterprise. Almost all organizations, including the regulated ones like healthcare, utilize cloud in some form. However, very few have moved their entire infrastructure to a public cloud. The trend for partial or “hybrid cloud” seems to be likely to continue.

The cloud computing concept is said to have originated when companies such as Google and Amazon saw the opportunity to sell, or rent, some of their surplus storage from their infrastructure. With the advent of virtualization software like VMware private or dedicated cloud became popular with organizations with multiple servers. Private cloud refers to a dedicated infrastructure of hosts (high capacity servers), running virtualization software (hypervisor) to create many more virtual servers.  Public cloud is a resource pool of shared infrastructure supplied by a cloud provider allowing their customers to rent virtual servers. A popular way a hybrid cloud occurs when an organization has their own private cloud and uses a cloud provider for public cloud to add additional virtual machines for additional workloads, backup or disaster recovery (DR). It is applications like DR and Dev-Ops that have driven and sustained the cloud growth. The term DEV-OPS comes from the combination of the terms development and operations and refers to the ability to integrate these two groups of an organization. The promise of DEV-OPS is to take a project from development to full implementation seamlessly and automatically.

Cloud Types

Current business cloud offerings can be classified into three categories: Software as a Service (SaaS), Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). SaaS is seen most often when a software company hosts its software and provides it to their customers; usually licensed by the user. Primary examples of SaaS are Microsoft Office 365 and SalesForce.com, two leaders in Enterprise software. These types of offerings, with continued growth and popularity, assure that the Enterprise won’t have all their cloud “eggs in one basket”. IaaS occurs when a cloud provider provides Virtual Servers or Virtual Machines (VM) to their client. This offers several benefits to the client including; elimination of CAPEX purchase of server hardware and increased agility and scalability for their IT network. IT Agility has come to mean moving quickly in deploying new infrastructure for new applications and embracing new trends such as DEV-OPS quickly. PaaS is a system of parts that can be used by developers to simplify and expedite building and implementing applications. The characteristics of a desirable PaaS platform is one that is highly reliable and very scalable such Amazons Elastic Beanstalk.

Current Cloud Market Share Leaders

From the beginning the leader in Enterprise Cloud Providers has be Amazon Web Services (AWS).AWS is by far the fastest growing and most profitable part of Amazons vast business, although not as well-known as their consumer products. AWS grossed more than 7 billion dollars of revenue in 2015.  That was a year over year growth of nearly 80% from the previous year. Second place in business cloud providers is Microsoft, predicted by analyst who follow them, to exceed 8 billion dollars of revenue in 2016. This number includes Microsoft Office 365 and their AWS-like platform Azure. Microsoft Office 365 has allowed Microsoft to claim a large market share of cloud through its $5.00 per month email inbox with virtually unlimited storage. The cloud trend drove Microsoft to cannibalize much of this share from themselves and their Exchange Server software.  However disruptive it is the right direction and Microsoft has committed to move their products to the cloud and are doing so successfully with their new leadership. Recently Microsoft has been promoting the benefits of integrating the Office 365 product with Azure. This coupled with the fact that Microsoft has a large partner network to support their existing enterprise software should allow Microsoft to start taking market share from AWS. Most business technology insiders believe AWS is a superior platform to Azure. Both of these company have the enormous challenge of being able to assist and support their enterprise customers as their cloud infrastructures scale larger and larger. Third place in business cloud market share is Google, a position they are not used to being in. While still far behind they have a very aggressive forecast for their business cloud product. Google predicts their cloud revenue to increase and exceed that of their search dollars in five years. Given that the primary component of a business cloud offering is a scalable infrastructure, I wouldn’t count Google out.

Future Cloud Forecast (Trends)

With the top two business cloud providers already household names and a distant 3rd place from a contender like Google, where do we go from here? I haven’t yet referred to the thousands of business cloud providers worldwide battling for what’s left of the market; which by any standards is huge. These providers range from telecom carriers to managed service providers to smaller multi-tenant data-centers who have evolved from their traditional colocation services. Many of the telecom carriers, whose original intent was to compete head to head with the big three, have dropped out. The multi-tenant data-centers however, have developed a different model and have a much greater success rate. They provide a higher level of service through the initial consultation, implementation and post installation management and support. This model also consists of Service Level Agreements (SLA’s) that are explained and easily understood and measured. Their pricing models are also more consistent easily understood also. The big three’s pricing can be confusing and is often filled with variables like transaction costs that can increase costs quickly. Another driver that causes the enterprise to look to the small datacenter is that it is local. The leadership of an enterprise, particularly regulated ones, want to know exactly where their data resides and who is monitoring it.

I believe the future of the business enterprise cloud lie in a combination of the two models, large scalable world-wide providers like AWS and Azure, complimented by the smaller customer focused data-center cloud providers. Additionally, I see these consultative type providers often managing the entire cloud infrastructure of the business, their own as well as the AWS or Azure portion. There are a couple of ways I see how this could happen. First, Amazon and Microsoft and the like may focus on building a partner network of these service minded data-centers allowing smaller data-centers to resell their products at an acceptable margin. Even more likely these service providers may develop systems or portals that allow their customers to add services from any provider while managing the cloud infrastructure and the entire process.

However it goes, cloud is here to stay, as well as a mix of business cloud providers that vary in their level of service and consultation to their clients.