Cloud Computing Inflection Point?

If the predictions of a new Vanson Bourne study prove accurate, enterprise use of cloud computing in the United States, Canada, United Kingdom, Germany, Japan, Hong Kong and Singapore already has passed an important adoption inflection point, and is entering a phase of rapid majority enterprise adoption.

In fact, though 65 percent of surveyed organizations now use on-premises, owned and operated computing facilities, the study suggests we are but two years away from a situation where where cloud and in-house approaches briefly are equal, followed just three years later by dominance of cloud computing.

Also, the study suggests enterprises will outsource nearly 70 percent of their information technology  infrastructure by 2018, almost a complete reversal of the present practice, where about 65 percent of enterprises operate using internal and owned facilities, according to a new study by CenturyLink-owned Savvis.

That rate of adoption might strike some as implausible, suggesting that the Savvis-sponsored study includes a disproportionate share of early adopters. But the findings will make more sense if public cloud adoption is considered.

The study suggests adoption of public cloud approaches in fact has not yet hit the 10-percent threshold, even if private cloud, colocation and managed services already have passed the inflection point, using the 10-percent standard. 

That would be a major shift in virtually any industry, and will happen in just five short years, the study suggests. At the end of that period, enterprises in the studied countries will have shifted largely to use of outsourced cloud facilities as the dominant model, where today most operate internal facilities.

In fact, the study found that just five percent of enterprise respondents surveyed today depend on the outsourced cloud for the bulk of their IT resources. The shift to an outsourced, cloud-based model will represent the majority of organizations within about three years, the study suggests.

In 2009, about 60 percent of respondents said cloud would be a priority for their organizations at some point in the future, but 71 percent said it wasn’t near the top of their current list.

In 2010, 63 percent of organizations had started to use a cloud solution of some kind. By 2012 85 percent of respondents had some cloud apps in use.

In 2013, 89 percent of survey respondents reported that they are using at least some cloud apps. That suggests the next wave of growth will come from organizations that start to use cloud for additional apps that are more crucial.

Most organizations will use hybrid approaches to colocation and managed-service models, the study also suggests.

"The next five years will bring a dramatic shift in the way organizations approach IT," said Jeff Von Deylen, president, Savvis. "Clearly, cloud is part of the picture but it's not the whole picture. As businesses grow and move more IT infrastructure to outsourcing providers, they will adopt a strategic mix of colocation, managed-hosting and cloud services."

That is a classic case of non-linear adoption of a new technology, once an inflection point is reached.

But some might view the projection as unusually aggressive.

Most successful consumer technologies, for example, do experience a more-rapid adoption curve after the point where 10 percent of households have adopted. Cloud computing, if the new survey is characteristic of all enterprises in the studied countries, passed that threshold sometime before 2010.

After the 10-percent adoption threshold, the adoption rate dramatically accelerates.

But that is the issue. Does the sample survey represent all similar enterprises in the markets studied? And does the adoption of cloud technology represent the use of on-premises data centers, use of full cloud apps, volume of usage across all apps or volume across the mission-critical apps? There is much room for interpretation on that score.

Other forecasts are significantly less robust, at least measured as a percentage of total IT spending.

Savvis commissioned research firm Vanson Bourne to conduct the survey of  550 IT decision 

makers in the finance, media and entertainment, retail, healthcare, software and automotive industries.

Respondents generally report they have been outsourcing applications that are not mission critical. Up next are data-center facilities, storage and content-management applications, the study said.

Though in-house IT infrastructure models are most common today, colocation becomes the environment of choice in two years, managed services take the lead in five years and cloud eclipses all forms shortly thereafter, the study suggests.

As you would expect, while the top benefit of IT outsourcing remains "cost reduction or containment," said to be important by 42 percent of respondents, "improved quality of service" and "infrastructure scalability and flexibility" also rank high on the list of advantages, with each indicated "important" by more than 35 percent of survey respondents.

Nearly 90 percent of respondents say they use some type of cloud service today, with more than half doing so for storage and email applications. Slightly less than half of IT leaders employ cloud for intranet, website and microsite applications.