The cloud isn’t a passing fad or just training-wheel technology for bootstrapping startups; it’s increasingly how enterprises are affordable, reliable and scalable addressing their IT needs.
Free of hardware purchasing costs and long-term commitments, dedicated staff and real estate investments to host server farms in climate-controlled environments with rock-solid connectivity, cloud services allow firms to be more nimble and cost-conscious as they shift their processes, systems and functions to hosted solutions.
To be clear, this isn’t just hand-waving from enthusiasts trying to get more firms on the cloud computing train, the proof is in the numbers:
1. Many small businesses are already there… and the rest are on their way
For a small business, the economic case for moving to the cloud is completely convincing. Buying and maintaining their own hardware—even in an outsourced hosting facility—just doesn’t make sense for most business functions.
That’s why 35 percent of SMBs had already moved to the cloud by 2015 and 70 percent will have fully migrated by 2020. The ROI of DIY just isn’t there for most applications and ties up too much capital for businesses trying to be nimble in a competitive environment.
2. The cloud isn’t just for consumer apps
More than 70 percent of cloud apps are for enterprise services, which dispels the commonly held notion that it’s those crazy startups that are leveraging the cloud and not “real” companies that have to worry about reliability, security, corporate data and financials.
3. Cloud computing is a major budget line item
Seventy-five percent of enterprises with 1,000+ employees have at least one application running in the cloud. But that doesn’t just mean it’s a trivial app or some skunkworks in the research and development organization.
Ten percent of all enterprises are already spending more than $10 million annually on cloud services. And given how inexpensive cloud services can be, that represents a major financial commitment for these firms and a huge shift from traditional self-hosted solutions.
4. Enterprises aren’t just testing the waters
Large organizations are no longer viewing the cloud as something to try or limiting it to peripheral, non-essential applications. The average enterprise is relying on more than 1,400 distinct cloud-based applications, and that number is growing more than 20 percent year-over-year.
5. A familiar name and two newcomers are dominating the market
Most enterprises have been doing business with Microsoft on some level for decades and their cloud business will represent 30 percent of its total revenue by 2018. But spending money on anything other than advertising from Google is pretty new territory for most firms, yet Microsoft and Google now represent 24 percent of the cloud computing market.
However the biggest dog on the block is a new partner for nearly every enterprise, as Amazon continues to dominate cloud computing with its Amazon Web Services “side business” that has managed to claim 40 percent of the market and is growing at 68 percent year-over-year.
Amazon and Google have claimed their dominance through a combination of unparalleled scale, homegrown technology built to support their own core businesses and a willingness to sacrifice margin for market share.
How to add value in this cloudy new reality
For Managed Services Providers and outsourced IT services organizations, the cloud might seem like a danger to current business models, as firms are no longer looking for help purchasing, installing and running their own equipment like they used to. But the cloud revolution also represents a massive opportunity.
Purchasing cloud services is very different from old-school IT. How many instances do they need, how many concurrent hours, how much memory… this is a different way of thinking about computing that many will need help with comprehending and right-sizing for their applications. By developing expertise in translating between the two generations of technology and scoping their future needs, your services can add tremendous value.
Furthermore, other than Microsoft, the major players are entirely new vendors with drastically different business models than your customers are used to, which provides another opportunity for your firm to be of assistance.
And finally, many of the technologies and capabilities being offered in the cloud have great potential savings and efficiencies for your clients, but they will need guidance to map those services to current business processes and to transition core applications to these new cloud environments.