If you engage in online shopping, it is likely that you have done so through Amazon at some point. The Internet-based marketplace has become a go-to website for purchases. It has virtually assumed the status in online shopping that Google has among search engines. One might assume, therefore, that online shopping accounts for Amazon’s fastest-growing source of revenue. The reality is surprisingly different. Reuters confirmed in July 2016 that the corporation’s cloud unit, Amazon Web Services, currently constitutes its fastest-growing business. That cloud computing has overtaken Amazon’s synonymous shopping function in this respect speaks volumes about its impact on commercial IT. Gartner notes that the shift in 2016 from onsite IT services to cloud services is worth around $111bn. The same study denotes the overall cloud market size as $734bn.
What does this all mean for the future of IT?
Understanding The Present
To delve into further detail, let us examine the current figures more closely. Cloud computing is generally divided into three distinct spheres: Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS). Though there are others, these cover the bulk of available cloud services. Gartner has certified each of them for 2016 as follows: $144bn for SaaS; $177bn for PaaS; and $294bn for IaaS. Each of these represents its own shift away from traditional IT, worth between $10bn and $40bn.
The boom is thought to have originated, in part, by the economic downturn of the late 2000s. Firms realised that converting to a cloud-based infrastructure could cut their IT outlay by more than 35%, a handy asset in difficult times. Features including application multi-tenancy, scalable service capacity and a pay-as-you-use pricing model have driven this. This, among other drivers, has seen the cloud market size grow exponentially.
The current trajectory of cloud computing will continue, but at what gradient? Consider the cloud shift figure above, of $111bn. By 2020, that figure is predicted to have increased to $216bn – almost double the current rate. This in turn will influence over $1 trillion’s worth of IT spending over the next four to five years.
In a post-recession world, the hunger for cost-effective IT solutions is unlikely to die down. Nonetheless, alternative motives are likely to rise to the surface, taking much greater significance, in the years immediately ahead. These will include the growing adoption of enterprise mobility, and greater productivity through hybrid cloud structures, as key drivers of the cloud market size of the future. One may infer that the current major providers – Amazon, Microsoft, Google, IBM, Salesforce and Oracle – will absorb most of the new growth. However, with the likes of Apple and Samsung gearing up to engage, expect that particular battlefield to shift slightly.
The Impact On Business
The growth in cloud market size has profound consequences for the business world, far beyond cutting IT costs for users. There are the technical adjustments, such as the automation of certain business processes, integration of internal and external clouds, or workflow streamlining.
More significant are the reforms by which people work on a day-to-day basis. Enterprise mobility, referred to above, is perhaps the most significant of these. By centralising data in the cloud, the business makes it accessible from anywhere, on any device. This facilitates the phenomenon of the millennial mobile employee, where working patterns are not confined to a physical office space. Moving beyond the corporate walls makes business more dynamic, because it allows employees to meet potential clients without restriction and keep absentees from work in the loop. Furthermore, the cloud transition allows businesses to guard against disasters such as downtime or physical damage to an onsite server.
The result of a greater cloud market size will be a more dynamic, competitive economy, with SMEs benefitting the most. This is because the public cloud grants them access to a range of the latest versions of software, which they may not otherwise have. They also look to prepare themselves for the imminent trends in digital business, including the Internet of Things, virtual reality and further reform to audio-visual systems. Furthermore, the growth in the market hastens a time when cloud becomes the default IT choice. It is a sufficiently disruptive technology that its growth puts it on course to dominate commercial computing.
To understand the potential of the cloud market, simply consider how many PCs and mobiles exist in the world. Then consider how integral they have become to your business life. The cloud supports the network that connects them all – and that makes it extraordinarily powerful.
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