Cloud Computing in 2011

We are in December and we have seen a lot of discussions on Cloud Computing, I believe that a short summary of what is in 2010 and what will be there in 2011 sounds to be the good topic for this post.

For me it became very clear that 2010 was a year where I spoke with the people who were interested in knowing a little more about cloud that will support their decisions whether to adopt the concept in 2011 or not. In my opinion, we will see, many pilot projects, the famous POC (proof-of-concept) being put into practice next year.

Some POC projects in the cloud development and testing environment as well as experiment on email and collaboration will be practiced. Interestingly, many tests done globally, clearly show that large companies choose to take its first steps toward clouds via small and medium private cloud that tends to go straight to public clouds.

But I am fully convinced that the cloud market tends to accelerate. Cloud is a new computational model, fully sustainable, which will gradually replace the current paradigm, the client-server model. As it is better understood, we see that cloud will significantly change the way where technology is purchased and consumed. It will create new models of engagement between technology providers and their customers.

A recent IDC report points in this direction. According to this analysis, in 2009 the market for public clouds covered only 4% or 1 / 25 of total spending on comparable products, the traditional model. In 2014, this number would be 12% or 1 / 8 of spending in the traditional model. We’re talking about a 27% growth year on year!

But the challenge is great. For technology providers, it is becoming clear that cloud, at least for now, is not a new source of revenue, but a possible cannibalization of a substantial portion of its sales of hardware and software. In short, instead of buying a new server, companies that adopt cloud using servers available in public clouds, or “cloudify” their own machines, already installed in the internal data centers for colocation web hosting. In the long run, cloud will completely transform the current model of selling hardware and software.

Let’s see the potential impacts in the long run: a model of cloud IaaS can replace the purchase of servers and storage. PaaS can replace the current middleware software sold on-premise to SaaS model can replace the sales of packaged applications like ERP that no longer need to be purchased and installed on internal servers.

The impact on the value chain of the IT industry will be significant. Companies that sell hardware will evolve to be service companies, since the hardware will, itself, be the service. Moreover, IT as a whole will be IT-as-a-service. Already we see companies that manufactured hardware only acquiring service companies and software, giving its first steps to understand and develop new business models. The intermediaries, companies that are mere “box-moving” or being bought cheaply and then resold, the manufacturer will have to redesign their future. Maybe in five or ten years the business of selling hardware as we know, will no longer exists.

The drivers for adoption of cloud are several. One of these drivers that I believe will drive adoption of cloud will be the fastest “time-to-value “, when CFOs recognize that their companies can take advantage of new systems and technologies without capital investment, as in the current model. It is an exchange model for Capex/Opex. As they exchange fixed costs for variable release more capital for investment in other business areas, and allow companies to dynamically adjust their spending on IT with business demands. A CFO is touched when we understand that can redirect their investments in the acquisition of IT assets for activities that generate revenue directly.

Another booster is the best business flexibility, when the company can launch a new product or service more quickly, without waiting for the long waiting time for acquisition and installation of new hardware and software assets.

But this scenario will not occur from one day to another. We still see a lot of misinformation circulating in the market. Today the cloud is used by hardware product or software provider and data center, even though it has absolutely nothing of the basic concepts of cloud, as discussed extensively. The lack of cloud computing knowledge among professionals and executives also acts as a barrier. Another day this knowledge became very clear when one CIO told me that they already have private cloud for most of their virtualized servers. But virtualization is just the first step. Create an infrastructure resilient, standardized and automated, accessed such self-service the feature of data center acting as a private cloud.

Cloud is not a universal panacea and its adoption is not so simple. It demands expertise and adequate planning. Incidentally, cloud can not be bought, but it is built. What you are buying is services and technologies that form the technological base that creates a virtualized environment, standardized and automated – the pillars of cloud.

In the long run, the IT industry will have another feature, different from today. To have a better idea of what could be this scenario, we split a cloud in the relatively well accepted taxonomy, which is IaaS, PaaS and SaaS as well as private clouds, public or hybrid. Each of the variants of cloud evolution dynamics is different both in terms of technology, as in the pace of adoption. Putting everything in one basket makes things very hazy.

Speaking of SaaS, this model will impact the consultants who live primarily to implement and customize applications like ERP. As SaaS is highly standardized, implementation services are faster and less expensive.

Public clouds IaaS model has its own dynamics. It is a mass market service, highly standardized, which demand from their providers a significant scale in order to offer services with a cost-benefit model above the current hosting. In general the margins are small and therefore need to have large numbers of users.

When we speak in private cloud, we have a different scenario. A company that intends to build a private cloud hosting solutions model transforms the relationship between their own IT and its users. IT is no longer a cost center and becomes a “service-provider” funded by contributions to its operating costs by its users. For providers of technology, it opens up a large space for the transfer of technology and consulting services that operationalize the private cloud.

Cloud computing means a risk and a challenge for providers and consumers of technology. Disruption in the consumption of IT products and services implies new business models and profound changes in current models.

In coming years, in my opinion, we will see an increasing adoption of IT-as-a-Service, with on-premise model being replaced gradually by the cloud model. The industry as a whole will undergo changes and believe that the “product-centric” pass to the model service-centric. ” The money that will turn the IT industry will no longer be to produce capital goods continued to provide services. The cultural model and governance, transactional and sales incentives will reward for one-time sales for the development and consolidation of lasting relationships with customers. Will be really challenging times for all of us IT professionals.


1 Response

  1. Mark

    What is different from "the big beast in the basement" (Usually an IBM) and "The Cloud".? Are we going backward so we'll be obligated to the "IT Professional", The System Manager", The "Programmers" who tell you what you can, and can't do with YOUR information? I see a resurgence toward that mentality and it scares me. We worked long and hard to "get the PC on the desk of the user". The mistaken belief that no one knows what's good for you better than the IT professional is hovering up in the "clouds" and, if my perception is accurate, the end user is going to be the one to pay the price. Sure hope I'm wrong.

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