2011 in the Cloud: The Year of Managing Expectations

A. DeCarlo

A. DeCarlo

Summary Bullets:

  • While most businesses are still experimenting with on-demand services, research by Current Analysis shows the vast majority of those using the cloud today are happy with their experience.
  • Positive cloud experiences bode well for future growth, as market acceptance of cloud services rises and solutions mature.

2011 was a banner year for IT services.  As organizations continue to explore their alternatives to traditional outsourcing models, IT solution providers have been evolving their strategies to support the expected rise in on-demand services.  Acquisitions like CenturyLink’s multi-billion dollar deals for Qwest and Savvis; Dimension Data’s OpSource purchase; and Verizon’s Terremark and CloudSwitch buys, among others, are changing the market landscape for cloud services.  

The net impact of the acquisitions on the on-demand market segment may not be known for some time.  There is a sense that, for all the intense interest in all things cloud, in reality most enterprises are still very much in exploratory mode with respect to on-demand services.  Companies may be willing to move to Salesforce.com, or to use on-demand computing service for storage backup or test and development, but massive corporate migration to the cloud is still years away, if ever.  Current Analysis’ 2011 survey of North American companies’ cloud adoption plans found that 51% of the respondents currently using cloud services rely on these services to support 10% or less of their IT needs today.

The proportion of IT needs met through the cloud will increase in the near term, with the majority of companies expecting that by 2013 they will to use the cloud to support between 20 and 50 percent of their IT  needs.  However, the relatively slow growth in early enterprise cloud adoption has also produced backlash from doubters who suggest the model is not now, and may never be ready for prime time.

While it is early days for most enterprises in the cloud and there is room for maturation of on-demand services, it is too early to dismiss the model as either overhyped or a disappointment.

In fact, indications are that activity in the cloud is poised to ramp up dramatically in the coming years.  The economic and efficiency arguments are too compelling for cloud services to fail.  In Cisco’s recently published Global Cloud Index, the vendor projects that by 2014, more than 50% of all workloads will be processed in the cloud. While only time will tell whether reality will live up to projections, current experiences with on-demand services are going well, which bodes well for future cloud adoption.  Eighty-one percent of North American cloud users queried by Current Analysis described their experience as good, very good or excellent.

What do you think?  Is cloud coming into its own as our research suggests, or is the relatively slow pace of implementation an indicator of future issues?

 

About Amy Larsen DeCarlo
As Principal Analyst for Security and Data Center Services at Current Analysis, Amy assesses the managed IT services sector, with an emphasis on security and data center solutions delivered through the cloud including on demand application and managed storage offerings.

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