Cloud in 2025: An Exercise In Futurology

Recently, I attended a very interesting event, the Cloud Summit , and after my talk, I was asked to opine as the market for cloud computing that will evolve in the coming years. How Cloud Computing will be in 10 or 15 years? Well, here’s my strictly personal opinion.

In my view, cloud services model is a new computing paradigm, sustainable (i.e., not just a hype) to be the dominant model in the next year, succeeding the previous models, centralized (mainframe), client-server and networking computing. This model will cause significant changes in how the technology providers will engage with their customers and vice-versa.

But in my opinion, “the statement has not fallen.” The concept itself is still kind of fuzzy and  I have heard many lectures in that it still cause more confusion that explore the potential and of course the limitations of the model.

The IT market has undergone significant changes in the last 40 or 50 years. The end of an era of centralized systems and the advent of client-server model led to the disappearance of several established companies and new firms that dominate large sectors of the market, like Microsoft in the personal computing segment. These transformations brought about significant changes in the economic aspects of IT, and brought new economies of scale. The cost of storage has dropped to almost zero, allowing companies like Google to make free disk space available in exchange for advertising revenues. The cost to process a transaction electronically fell, as the price per GB of memory or processing capacity.

What is my vision for the coming years? Cloud will cannibalize some of the companies’ current investments in hardware and data centers, which will concentrate its investments in the clouds offered by the market. IT services will shift from the traditional model (sales of hardware and software licenses) for the cloud model.

At least the next year, there will not be a new money, but cannibalizing sales of hardware and software licenses for the cloud model. But in my opinion, in the long run we will see a transformation of the current model of ownership of IT investments (capex) for services (opex), which will cause profound changes in the market as a whole.

Cloud Computing will lead the ranks of the new economy of scale values and cause a wave of innovations in the use of IT. Companies and businesses today limited by the need to invest resources in advance of hardware and software will be free of this budget constraint and can innovate and dare. The capital now has to be allowed to purchase computers and software will be released for the proper operation of the business. The risks are much lower.

With the spread of Cloud or as utility computing, IT will become much more embedded in their own business, as now the energy is embedded in any commercial or industrial operations. Electricity is part of the “landscape”, you do not remember it when you open a business. With the Cloud model the process may be similar: to choose providers and technology solutions and ready, the business operation is in the air. And who knows, this choice will be mediated by Cloud Brokers, who will choose the best alternatives to deal with clouds for certain cases.

Of course it is a futuristic scenario, which may not be 100% true in the next ten years, but what about in 2025? At this point, no more sense to talk about IT (Information Technology), but in BT (Business Technology). One implication? Greater operational flexibility. Today, it is necessary to install new servers and software, and infrastructure to mount an operation of this equipment to open a branch. With the cloud model, it is only requesting more instances of computer resources and more software subscriptions. Just like that?

But as I see the market today, Some technology providers look at this scenario with fear, for fear of cannibalizing their existing business models. Others have recognized the signs of change are clear, and since change is inevitable, we change first. At IBM, Cloud is seen as the inevitable future and the company has begun to mobilize, and it is not easy for a company of 400,000 employees, moving in that direction.

It is a time of many unknowns. Many companies sometimes offer providers of simple location, rename it as “Cloud providers.” In general, in the early stages of a paradigm shift arise numerous bidders, without economic support, which in time will be purged by the market itself.

Probably we’ll also see many new business models that Cloud will offer. The name Cloud hides a wide range of different services, such IaaS, PaaS and SaaS. Each demands resources and structures of different technologies.

For example, one provision of public cloud IaaS, like Amazon, is geared towards the mass market. Public clouds are highly standardized and widely shareable and not the most suitable for specialized services that require a high degree of customization to the demands of customers-ers. These clouds treat their customers in an almost anonymous, without needing to know more deeply the needs and demands of each. The margin obtained from each client is small and therefore require very high volume of customers to be profitable. Demand, in turn, huge computational resources to achieve economies of scale sufficient to stay in business. It’s a market for the few and large ISPs.

Another model is completely different company that intends to offer a private cloud for a given client. A private cloud creates a new model of engagement between the IT and business users. The IT department is no longer a cost center and becomes a service provider funded by the utilization of computing resources offered to the business units of the company.

An IT provider that intends to help its customers to build private clouds must have full understanding of the concept of clouds, but to adopt appropriate technologies and models and consulting practices to help customers migrate to this model.

So when someone asks me what the best option for Cloud, comparing Amazon, Google, Microsoft or IBM, there is no single answer, because they are entirely different.

But what we can risk and predict? Funny that I always hear questions like “what is the future of technology x”, as today ask me about Cloud. In economics, politics and technology, there is a tendency to feed the dream that you can see the future before it happens. The risk of error is large.

Once I read the “Nostradamus predicts Code”, the book of prophecies, which speaks of an inevitable doom. So far nothing has worked, although we can interpret his prophecy of the way we like. No one foresaw the fall of the Berlin Wall and its consequences for the world. Bill Gates did in 2004, that spam would disappear in two years. So, speaking of the future is pure speculations, but I’ll take my chances to receive many hoots and tomatoes:

With the model of Cloud, the IT industry will pass ownership of the model for services-centric. Investments in IT products and services will continue, but the companies will use them in the context of services. The idea is “Do I want a washing machine or want my laundry?” So, increasingly, companies depend on outside suppliers to meet their technology solutions, as currently dependent on external providers to meet their demand for electricity.

The business models of current IT industry will become the sale of hardware and software licenses to offer services, where hardware and software will be embedded in the service itself.

The sales cycles of the IT industry will be much more aligned with the business demands of their customers than their own marketing and sales cycles. Today technology companies announce new models of hardware and new software versions without stronger linkages with the market demands.

Within services-centric, the driving force behind the cycles of new products and services come primarily from the market.

BPO (Business Process Outsourcing) will also be offered services in the cloud. Or may be, will be dynamic in its offerings, similar to the resources requested in public clouds. Instead of contracts for five to ten years we will see contracts pay-as-you-go.

Companies with private clouds may aggregate around clouds collaborative, working in synergy with certain industry sectors.

Cloud Broker. Businesses that interact with providers to deal with clouds and identify, for each customer, the best offer for cloud services. Probably build an interface layer standard that will allow you to access and inter-operate with any cloud.

PaaS will be the new battleground of middleware technologies. Those who master the context of PaaS will be the first to define the fact of standard middleware for the new Cloud.

In ten years, the Cloud model will be dominant and the term itself will no longer be used. Does the computer model of current use and therefore will not need to be differentiated. Today no one speaks in personal computing or client-server. The same will be true with cloud.

And do not get there via the “Big Bang”, but it will be a slow and gradual process, accelerating as the concept solidifies and more success stories to come forward.

Conclusion

Cloud will have a profound effect on how IT will be purchased, delivered and consumed. New business models will replace the traditional models of selling hardware and software licenses. Instead of buyers of assets, users will be “computing subscribers,” trading budgets for capital investments directed to the operation.

A new world for sure.