I recently had an interesting conversation with Sean Hackett, Research Director of Cloud Services at TheInfoPro, a division of the 451 Group, on their latest cloud study around market factors relating to growth of cloud services. Here are my five key takeaways.
1. Enterprises lack the technical infrastructure to move to the public cloud
Enterprises have very little infrastructure in place when it comes to automated provisioning, orchestration, and security across internal and external clouds. “Nearly 50 percent of the respondents in our study aren’t even thinking about doing these things even in their long-term plans” says Sean Hackett. “Without this kind of systems orchestration systems, enterprises are not in a position to leverage the cloud for mission-critical, highly integrated applications and for seamless movement of data between their data centers and public clouds.”
It seems like large traditional vendors that already provide systems and virtualization solutions such as Microsoft, HP, CA, and VMware stand to benefit a lot from this.
2. The majority of enterprise is going to private clouds
“The ratio of private to public cloud enterprise investment is 75 to 25,” says Hackett. However, most enterprises still think of virtualization as a private cloud initiative. They deploy a technology like VMware’s vSphere and think they have a private cloud. Having virtualization and the associated tools is an important first step towards private clouds. But, they also need other pieces like automated provisioning of workloads, metering and chargeback, self-service portals, etc. to get the full benefits of agility, scale, and higher utilization that only a full private cloud can provide.
But enterprises lack the internal processes, policies, and governance to fully exploit the benefits of private cloud. What good is a self-service portal if the end user has to go through a time-consuming approval and provisioning process?
3. End users and CIOs have no idea what Platform as a Service is
End users are confused about platform as a service (PaaS). We need to do a better job defining what it is and what it can be. “I think PaaS can become the most disruptive component of the cloud stack,” says Hackett. However, PaaS needs to become the control point for management, monitoring, and integration to any cloud. And if PaaS becomes a consumption point for business users as well IT users, it can lead to commoditization of not only the infrastructure layer but also the applications layer.
PaaS is not simply a cloud development and run-time environment – and this is where a lot of vendors have gone astray. PaaS is in its very early stages of evolution and relatively immature.
4. Four SaaS categories are experiencing the highest growth rate
The SaaS categories that Hackett says are experiencing the highest growth matches our Sand Hill study results as well. These categories are:
- Human Capital Management (Taleo, Successfactors, Workday)
- Salesforce automation (Salesforce CRM)
- Marketing automation (Marketo, Eloqua) Content and Collaboration including email, e-learning, instant messaging (Google Apps, Microsoft)
- NetSuite has a good amount of success with ERP solutions in the midmarket, but main-stream ERP for big enterprises is still lagging behind.
Another space Hackett mentioned was the SaaS-based IT service management. This appears to be the next big area of opportunity with various companies such as CA, ServiceNow, etc. looking to make inroads into that market.
5. Four inhibitors to cloud adoption
The study found the following four main inhibitors to cloud adoption (particularly the public kind):
- Regulatory compliance (this is where the security discussion starts)
- Fear of lock-in
- Interoperability and portability
There is a discrepancy between the CIO and the practitioner perspectives on the security of the cloud. The CIO’s belief is that external and third-party environments (cloud) are as secure if not more secure than their internal environments. On the other hand, security practitioners are up in arms about the cloud because they were very worried about security (“if there is a security breach, my job is on the line”).
Much of this aligns with Sand Hill’s Leaders in the Cloud study. But what surprised me most is the lack of cloud readiness of many enterprises. Of course, this is a great opportunity for many cloud providers. It also means that the transformation to the cloud will take much longer than what most optimistic cloud vendors think. I think it is a five to 10-year transition.
Kamesh Pemmaraju heads cloud computing research for Sand Hill Group. Follow him on Twitter @kpemmaraju.