2014 Future of the Cloud Survey has Surprises - Nice Ones for a Change
Attendees such as myself at the Gigaom Structure event in San Francisco, got a sneak peak at 2014 Future of Cloud Computing survey, done by Gigaom Research in conjunction with North Bridge Venture Partners, and even had a chance to compare how the experts in the audience stacked up against the opinions of survey respondents. Spoiler alert! They pretty much matched.
This is the fourth annual survey and it included collaboration by a record 72 organizations, and hence is arguably the industry’s deepest and broadest examination of how the cloud revolution is progressing. The link above provides access to the full report. Its 124 slides are definitely worth spending more than a little time with. It is a real slide turner analyzing the inhibitors and drivers behind cloud adoption, separating the hype from true industry trends and real world cases across a sample of 1358 respondents.
Michael Skok, founder of the Future of Cloud program and General Partner, North Bridge Venture Partners commented, "With four years of data, we're now really beginning to see some interesting trends, such as the five-fold increase in SaaS (News - Alert) adoption to 74 percent and the nearly six-fold increase in PaaS adoption to 41 percent."
Skok was also kind enough to speak with me about the results and share a few other contextual factoids that are worth noting before getting into some of the highlights. For example, did you know that 90 percent of all data has been created in the last 2 years? How about that 80 percent of it is unstructured? Skok also shared his belief that more data will live in the cloud three years from now than will reside anywhere else.
Food for thought from the survey data
Some of the highlights from the survey data that are worth a pullout include:
Cloud Adoption Is Strategic
49 percent of 2014 respondents are using cloud to fuel revenue generation or new product creation.
Plus, 45 percent of businesses say they already, or plan to, run their company from the cloud showing how integral cloud is to business.
SaaS Adoption has more than Quintupled
This is one of the interesting metrics of how far we have come and how fast, despite universal agreement at the conference that we are very much on the on ramp of the learning curve of the impact the cloud will have. SaaS has gone from a 13 percent adoption in 2011 to 74 percent in 2014. Interestingly, in the enterprise it is still mostly about transitioning existing applications. Another interesting finding was that the front office is leading the way with sales and marketing at 51 percent adoption, customer service, and analytics both at 43 percent.
IaaS and PaaS Adoption Reaching a Tipping Point
While the adoption of SaaS is not that surprising given the popularity of cloud-based apps, what is going to be something to watch is that 56 percent of businesses are using Infrastructure-as-a-Service (IaaS) technologies to harness elastic computing resources, while 41 percent of businesses are using Platform-as-a-Service (PaaS) technologies to prototype and develop new applications.
These two findings, Skok said validate what the value of the cloud, “It only makes sense that if it is going to run in the cloud, or be integrated with the cloud, that it also be developed and tested in the cloud as well. Plus, the cloud enables development and testing to be much faster and less costly, and in many ways allows for developers to do things that would be otherwise impossible.”
Data Wants To Be Bigger In the cloud: While possibly self-evident, two-thirds of respondents believe their data will come to reside in some form of cloud (private, public or hybrid) over the next two years as bigger data needs consolidation, and collaboration and creation go online.
Transition to cloud – “The First Cloud Front”
"This wave of cloud computing that's revenue and new business driven is good news for long-suffering IT execs,” said David Card, Vice President of Gigaom Research. “If they can offload tedious but necessary cost-center functions, and refocus resources on cloud-driven new business, they might be able to retake their seat at the C-table."
"Even though it's largely just a transition of existing apps, the first cloud front has rolled in confidently each year as existing applications transition to the cloud and are adopted as SaaS solutions. Cloud is now integral to business," added Skok.
Transformation in the cloud – “The Second Cloud Front”
This is where thing get interesting. Skok and others have observed that thanks to the explosion of personal devices and the coming tsunami of network connected Internet of Things (IoT) sensors and embedded capabilities, the second phase of the growth of the cloud is going to dwarf what we have already witnessed. “With over 11,000 Cloud Services / APIs, and developer adoption of IaaS at 56 percent and PaaS at 46 percent respectively we are going to begin seeing the birth of new, re-imagined, cloud-native applications,” said Skok. “These applications, which are only possible in the cloud, will result in an order of magnitude greater value creation than the first cloud front. This second cloud front will be transformative."
Data wants to be bigger in the cloud
"If you get your head out of the sand and into the clouds you'll see the explosion of cloud-created data. It's not just big data it's exhaustive data, as everything from click streams to commerce and personal cloud lockers create Exabyte’s of data. According to Cisco (News - Alert), personal, cloud-carried data alone is estimated to grow from 1.7 Exabyte’s in 2012 to 20 Exabyte’s by 2017," noted Skok.
Cloud Drivers & Inhibitors
Over the last few years, the drivers for cloud adoption have remained constant with agility, cost and scalability as the top three. One of the trends of note is that one area that has moved up the agenda as a driver is that companies are increasingly moving workloads to the cloud to switch CapEx for OpEx. This is especially true for large companies with more than 5,000 employees.
On the inhibitor front, security continues to be a strong barrier to adoption. In fact, 49 percent of respondents are concerned about how secure their data is in the cloud. Ironically, one of the big messages coming out of the event is that the cloud, particularly public clouds, despite their being multi-tenant, are seen as being more secure over time than private clouds and then premises-based traditional approaches. As an inhibitor this may melt into the background as the industry does a better job of educating IT and C-levels that giving up ownership is not giving up control, in fact increased visibility and the ability to better monitor and enforce policies and rules is a real cloud benefit. That said, this will not be the easiest sell, especially to the financial services community.
In addition, and reflecting what are cultural and regional differences with it comes to the storage and handling of proprietary personal information, privacy concerns rose to 31 percent in 2014 as increased tension manifested itself between the desire for anonymity and the convenience and utility of personalization. This is an area for vendors’ and enterprises to distinguish themselves as faithful custodians of personal data and engendering trust.
Of note, interoperability as an inhibitor saw a significant decrease from 27 percent last year to 17 percent in 2014 with greater attention being paid to issues like data portability. However, fear of vendor lock-in was still 29 percent, which put focus on open source cloud projects, like OpenStack, that have grown significantly. This is not trivial. Indeed, the realities are, as many have noted, all clouds are not created equal and don’t necessarily play well with each other on purpose. In fact, much of the discussion at Gigaom was about how history has always been that all boats really do rise when the tide comes in. Everyone agrees that cloud islands, including even different implementations of things like OpenStack that bear the brand but not interoperability, would be bad for business. However, vendors will be vendors and the end users are going to have to exert themselves to make everyone play nicely in the sandbox.
A few other quotes from collaborators are worth noting. Mike Schutz, General Manager, Cloud Platform Marketing, Microsoft (News - Alert) commented on the findings that: What comes across to me loud and clear from this survey is that even more businesses are no longer thing, ‘why cloud’? But will focus the next 12-24 months figuring out ‘how do I execute a long-term cloud strategy?’”
Mike Reigel, Vice President, Cloud Marketing, Cisco observes that: “The customers who are enjoying the greatest success with cloud are taking a hybrid approach to IT. Instead of building internally or sourcing externally, these customers view cloud as a continuous set of interconnected and interdependent options. Cisco’s Intercloud strategy is built on connecting the world of many clouds to create new revenue streams, optimize business processes, and simplify operations.”
To sum up, SaaS is hot and driving everything. It also highlights that and IaaS and PaaS are at critical conjunctures in terms of enterprise adoption.
The industry is saying the right things to meet enterprise customer requirements, but how far and fast they can continue to move the chains is not an issue of execution and not technology. In fact, the interest in SaaS is so consequential that Gigaom and North Bridge are going to be conducting a second phase of the survey to explore the hot companies and issues in SaaS during the Fall 2014. And, they want your input.
Maybe the most promising findings from the survey were the first two about the cloud being viewed as a way to generate new revenues and as a strategic asset that can enable creation of differentiated and sustainable value. This is not to say the inhibitors are not significant, or that debates as to what to move where (which cloud and for what reasons), when, how and why, will cease and desist. They will rage on, and that is a good thing. Just as not all clouds are created equal, all customers have unique requirements, and what they are looking at right now is have choices, and ones that do not lock them in given the need to be adaptable in a world where the pace of change is increasing.
So flip through the slide show, and by all means become part of the conversation.
Edited by Stefania Viscusi