By Simon Aspinall, Chief Vertical Markets, Strategy, Marketing, Virtustream
2014 will see the cloud market step out of adolescence and become enterprise ready. As enterprise organisations realise the significant impact that embracing the cloud can bring in terms of productivity and agility, the market will grow. However, at the same time there will be greater differentiation within the cloud industry as businesses become more savvy around what they want from the cloud.
1. Heightened security and compliance requirements will lead to national clouds.
In the wake of this year’s revelations of the unprecedented level of NSA surveillance, the cloud marketplace will be largely focused on security and compliance. Encryption will become an ever more important attribute for cloud offerings to possess while businesses will be increasingly concerned with advanced security features such as malware/virus prevention, BIOS and hypervisor authentication.
Heightened security concerns will also dictate the types of clouds that we will see being deployed in 2014. Organisations will increasingly look to deploy techniques such as geo-tagging and geo-fencing to track the location and movement of their data. This desire to know the exact whereabouts of data will see more organisations looking to move to nationally built clouds that operate under local laws, rather than large, multi-national clouds. This does not mean however that there will be a decline in multinational clouds as there is still a huge untapped market that will be moving to the cloud in 2014.
2. Cloud market will double and divide.
The cloud market is set to double in 2014, with an ever-increasing share of enterprise IT moving to the cloud within the next five years. Hand-in-hand with this growth will come the sub-division of the cloud market. As enterprise organisations become increasingly aware of the cloud deployments that will be most beneficial for their business, we will see greater differentiation in the marketplace. Rather than the single cloud market that we have grown accustomed to hearing about, 2014 will see it divided into specialities. In particular, large public clouds are proving very popular for the development of new applications and SaaS, while we will also see the rise of specialised clouds that will support certain verticals, such as migrating traditional enterprise applications.
3. Majority of databases and ERPs will move to the cloud.
Over the next two years, the majority of databases and ERPs will move to a cloud (private/public or hybrid). We will see significant improvements in cloud performance in 2014, in large part due to improvements in cloud management platforms, and the use of flash memory and flash storage, with read/write-times becoming increasingly quicker allowing businesses to access large data sets more efficiently. Over two thirds of enterprise organisations are looking to move business-critical applications such as ERP to the cloud by the end of 2014, demonstrating an evolution of thinking about enterprise applications in the cloud. Large UK businesses in particular are accepting that moving these core applications to the cloud will bring great improvements to their organisation in terms of productivity, agility and competitiveness.
4. Hold your horses on cloud brokerage.
This growing commitment to the cloud will mean that the large majority of enterprise organisations will be using multiple clouds (private/public and hybrid) next year. With the desire for cloud on such a large scale, businesses will want integrated cloud management capabilities or multi-cloud federation. Seventy-five per cent of cloud implementations in 2014 are set to be hybrid, as businesses look to find a mix of solutions that best fit their needs. However, the enterprise is not yet ready to deal with multiple suppliers. Increasingly, functionalities such as compute, storage and network will be provided by a single interface as efforts are made to adapt to the needs of enterprise through the integration of infrastructure, but the diverse nature of clouds and underlying technologies make seamless integration difficult. This means that, while cloud brokerage will come into play at a later stage, 2014 will not be its breakthrough year.
5. OpenStack not ready to be welcomed in by the enterprise.
There will also be no major breakthrough for OpenStack in the enterprise family. While it is a great alternative for the SaaS and developer market, it is still at least two years away from having the key features to be trusted as an enterprise-ready platform (performance SLAs, security, compliance, hybrid for example). OpenStack’s current offering is very basic (mainly provisioning) but this is not to say that it will not feature in the enterprise in near future. In addition there are currently many competing flavours of OpenStack from multiple vendors(14+). This should not come as a surprise, after all, if we look at how long Linux took to mature and take hold we can appreciate that this is a natural opensource process that OpenStack is going through. Its time may well come but the rigorous demands of the enterprise dictate that 2014 will not be its year.
6. M&A on the radar.
Traditional hardware vendors (compute/memory/network/storage) operating in siloes will come under increasing pressure in 2014. Those focusing purely on compute or storage for example will struggle to make headway as it becomes clear that to make the cloud work for you, a software-based approach is needed which combines all four elements. We’ve begun to see this consolidation as Cisco, IBm, HP and others launches integrated hardware solutions. As these traditional vendors look to play catch up, we will see a flurry of mergers and acquisitions.
Similarly there are number of companies providing key functions in cloud management that will continue to ally and combine in 2014. We saw early pioneers like Savvis and Terremark acquired by telcos. In 2013 we saw the acquisition of businesses like Softlayer (by IBM), Tier3 (by Centurylink), Cloupia (by Cisco), Nicira/Dynamic Ops (by vmware) and a number of smaller businesses being acquired as major vendors assemble cloud stacks and key functions. With the majority of enterprise IT spending moving to the cloud this market will continue to grow and remain very dynamic.
We will also see plenty of innovation and investment over 2014 in the field of SaaS. A large number of early stage businesses are looking to displace traditional software vendors with new SaaS Offerings. The level of competition and pace will continue to rise in 2014
7. On the horizon.
There are new functions that are still yet to be delivered in the cloud. Improvements will be made in the fields of security, compliance, performance assurance, application monitoring and federation but all are in the early stages of development and will not be completed in 2014.
2014 will see great leaps taken forward as the enterprise ramps up its adoption of the cloud. However this is still a burgeoning industry and things will not happen overnight. Elements such as cloud brokerage and opensource may well have a part to play in the future, but 2014 will not be their year. We must remember that the cloud market is like any other and, while progress may be rapid, the maturity in an industry will take time.