2014 Cloud Trends Outlook – Future of Cloud Services

We talk about the “cloud” today just like we used to talk about the “Internet” back in 1996. Now the Internet is an integral part of our lives and we hardly even use the word—we talk about the applications and services it enables, such as web applications and services (we get more of our information from the Internet than anything else), instant messaging and Internet telephony.

Cloud is going through the similar rapid adoption. Cloud adoption is growing at a compound annual growth rate (CAGR) of over 40 percent per year. Three years from now we won’t even talk about the “cloud”—we’ll talk about the applications and services it enables, such as Office 365, Google Apps, Salesforce.com, BCDR, mobility and file sync and share.

All businesses increasingly have access to a variety of cloud services that would have been unthinkable even five years ago, and while their tolerance for limited service integration and self-service is pretty high, it is shrinking fast. Businesses are looking for more value in the services they consume and to build a strategic partnership with their service provider.

In 2013, we saw the cloud service providers became a transparent extension of the corporate IT environment—need for more capacity or resources (compute, storage, etc.) was automatically fulfilled on-demand. Cloud providers such as Amazon Web Services (AWS) are making cloud services easy to purchase and consume. They frequently lower their price and pass on the efficiencies they experience in form of savings to their customers.

Over the past couple of years, we’ve witnessed the biggest impediment to cloud services the shift from security concerns to anxiety and lack of control.

The top two trends regarding consumption of cloud services in 2013 were the packaging of multiple services by cloud service providers and introduction of self-service. Both these consumption trends sought to reduce the friction of purchasing and consuming cloud services. As a result, the time to market (TTM) for cloud providers to deliver cloud services reduced from eight months to eight weeks.

Today, the factors fueling the demand for cloud services are popularity of applications such as Google Apps, SalesForce.com and Microsoft Office 365, which are becoming more and more prevalent within the enterprise.

Looking at the horizon, the top new cloud services buying trends in 2014 will be:

• Verticalization of managed services offerings
• Higher value managed services
• Packaging of cloud services offerings that provided an integrated experience; and
• Service providers becoming strategic partners to their enterprise customers.

Today, cloud is going through the challenges faced by any new business model. Customer turnover is high. Commoditization is taking place. However, intuitive tools are now available to cloud providers that not only facilitate initial customer onboarding (a very crucial stage in customer experience and overall customer retention—this stage has the highest customer turnover) but also provide service automation and remote management capabilities.

These trends and the enterprise confidence in the cloud is fueling the adoption of cloud services. Cloud is like water. It will be everywhere within a few years. Those that try to resist it will be washed away.

Ashar Baig is president and principal analyst and consultant at Analyst Connection, an analyst firm focused on cloud computing, IT products and services and managed service providers. He has more than 18 years of high-tech industry experience. Baig also is founder and manager of the LinkedIn Cloud Backup group.