March 2015

We have covered what the cloud is, discussed the apparent benefits it has and overcome some barriers to cloud adoption. To round up cloud month we will be looking into the future and sharing with you our predictions for the cloud computing industry.

 

Cloud Adoption Growth

The cloud computing industry has so far undergone exponential growth so it comes as no surprise that our first assumption for the future of the cloud is that cloud adoption will continue to increase into 2015 and beyond.  The cloud is no longer just a capability to businesses, but central to the strategy of many organisations.

By 2016 it is estimated that 36% of all data will be in the cloud (up from 7% in 2013).

According to research, the majority of businesses have now adopted at least one form of the cloud, whether they know it or not. It is predicted that by the end of 2015, 80% of all businesses will be utilising some form of the cloud. Of those already happily existing in the cloud, 42% are planning to increase their spending on cloud computing in 2015. This year, SMEs are expected to spend an estimated $16 billion on online business services.

By 2017 the cloud market is set to be worth somewhere in the area of $250B.

$45.6 billion of the overall cloud computing market is estimated to comprise of Software as a Service (SaaS) market specifically. SaaS has seen a yearly growth rate of 20.2% since 2013. Software as a Service (SaaS) refers to the ability for businesses to consume software products that are hosted by a service provider and are available via the internet. Current examples that are easily recognised are Microsoft Office 365, DropBox or Groupon but SaaS applications are rapidly starting to change the way we do business.

Thanks to the cloud in general and SaaS in particular, entire businesses strategies can be automated, eliminating repetition, data loss, endless man hours etc. and it’s because of this that SaaS applications are predicted to be the largest cloud service category by the end of 2015.

Cloud Development Growth

We expect to huge growth in the development of cloud computing. Out of the 18 million software developers worldwide, less than 25% were developing for the cloud in 2014. This is predicted to increase substantially.

 An estimated 85% of new software being built is for the cloud.

This shift in focus will lead to more business software applications being available via cloud deployment, meaning organisations that are not making plans to integrate the cloud into their business strategies may find themselves left behind. For example accounting packages, collaboration solutions, creative tools, business management software etc. are already showing moves to the cloud.

• Adobe removed the successful Creative Suite in 2013 after 10 years in circulation and replaced it with Creative Cloud.
• HP invested more than $1 billion in the support and delivery of their new portfolio of cloud products in 2014.
• 2014 saw a huge increase in the number of online payroll solutions to coincide with changes in UK legislature.
• Google is launching a new cloud based cold data storage product this year to replace traditional cold storage methods.

In order to stay current in this competitive market, companies will have to realistically plan cloud development into their exiting strategies if they haven’t already. The next 10 to 15 years businesses are expected to become increasingly committed to moving their operations online.

Goodbye Traditional Infrastructure – Hello Hybrid Cloud

A Hybrid Cloud is an environment in which an organisation provides and manages some resources in-house (private) and others are provided externally (public).

The Public Cloud is owned and operated by a third party for use by others. Public Cloud providers develop highly scalable data centres to house data on behalf of the consumer. A Private Cloud is owned and managed by the organisation for the use of its employees/partners/customers. A Hybrid Cloud environment is one where a combination of both public and private are adopted.

By the end of 2015 it is predicted that more than 80% of businesses will adopt some sort of cloud computing, 65% of organisations will adopt hybrid cloud, so it seems the beginning of the end of the purely private cloud setup is imminent.

More Education & Greater Segmentation

The increased adoption of the cloud is not limited to personal and business uses. New generations are being born into the age of technology. The cloud is changing today’s classroom as it begins to form an integral part of the education environment. Not only in terms of the delivery of lessons (at the most basic level, teachers can set, collect and mark via the cloud) but also in terms of forming part of the curriculum.

77% of school children learned to use cloud tools effectively with little or no difficulty.

Current consumers (not born into the technology era) are already starting to grasp the more complex aspects of the cloud including deployment options of public, private and hybrid clouds. As the consumer continues to become more educated to make crucial business decisions, their expectations will grow.

Greater consumer expectations, teamed with increased competition (due to nature of the lucrative cloud software market) will inevitably lead to the development of more diverse and specialised products to satisfy a more segmented market.

 

Increased Business Innovation

The cloud is widely discussed as a business game changer but little is said about what it is achieving for business innovation. Two thirds of organisations highlight innovation as a business priority but less than 25% felt their company was an effective innovator. However we believe that when utilised effectively, cloud computing offers opportunities that will drive business innovation:

1. Frees Up Resources: It is no longer necessary for companies to invest in complex infrastructure. If your business technology is being delivered and managed by someone else, you will free up in-house resources to focus on innovation. New ideas that normally take months and a fortune to coordinate could be tested and launched at lightening speeds for a fraction of the cost. As well as reducing IT costs, the cloud will also streamline processes, making the business more efficient. All money saved can be diverted to other projects – driving innovation.

Adopting cloud servers is estimated to have reduced average business IT costs by 88%. 

2. Power of Knowledge: The world is saturated with data. 90% of the world’s data has been created in the past two years. Companies estimate that they are currently only analysing 12% of the data they have because they either don’t know how to extract or what is relevant. The cloud has the ability to turn this disconnected information into valuable business insight which in turn can be used to make key business decisions. This increased agility means business processes can be altered as and when the market demands.

3. Connects People: The open nature of the cloud is connecting and empowering people.  Ideas, projects and plans can be discussed and refined by entire groups simultaneously in real-time from anywhere on the planet. Group discussions are no longer restricted to meeting rooms and limited by time-zones. This free-flowing information will allow for efficient and effective communication between employees (and clients) and therefore will help drive business innovation.

 

Before We Go…

It doesn’t take much research to be certain that the cloud will continue on its path of exponential growth. However what we think we will also see in the coming years is a significant shift from cloud computing as a strategic differentiator to a business norm.

Software development is set to focus on cloud applications. Organisations that are not making plans to integrate the cloud into their business strategies may find themselves left behind, struggling with outdated and unsupported software.

We will see a rise in the hybrid cloud because adopting a blend of public and private cloud services offers the best of both worlds for businesses.

Due to current consumers striving to become more educated in the realms of cloud computing, and younger generations being born into this technology saturated world, expectations will evolve. This will lead to the development of more diverse and specialised cloud products to satisfy a more segmented market.

We will see a significant rise in business innovation thanks to the cloud improving business agility and employee communication. Reduced spending on IT infrastructure and savings made from streamlined business processes will also present the opportunity to divert money into new projects.

Should I Move My Business To The Cloud?

There is no question that the cloud is here to stay, evident in the continued growth of adoption rates but there are still businesses who claim they have no intentions to integrate any online business software now or in the immediate future. With the cloud boasting so many great benefits (covered in last week’s blog post: Benefits of the Cloud) it got us wondering, what’s wrong with the cloud?

At Ornavi, we love the cloud – it helps us bring efficiency to businesses up and down the country so this week we are aiming to investigate and break down some cloud fears, and hopefully put to bed some cloud myths.

 

Cloud Barriers

Security

Security has always been and still remains the biggest concern for people who are considering moving important data to the cloud. It is estimated that 49% of people see security as an issue. These concerns are largely due to the fact that cloud data is stored on servers and systems that are neither owned nor controlled by the user. However control does not necessarily mean security.

Storing your business data internally does not necessarily guarantee protection from theft, damage or viruses and hackers. You can take steps to reduce these risks such as install security systems, invest in anti-virus software and perform regular backups. With cloud business systems – these risk reducing methods are part of the deal. Data centres are able to provide a greater investment in security infrastructure which allows them to constantly monitor and resolve security issues as they arise. They are also responsible for performing regular back-ups. Every service will be different so check to see how often backups are taken; you will probably find it’s more often than you are currently doing.

Lock-In

The fear of being tied to their vendor is stopping some businesses from making the leap to the cloud. People need to still be able to make decisions about their business and that includes the freedom to move to an alternative provider if they should want to. Concerns include the compatibility between different products, contract constraints and the general complexity of moving data that lives in the cloud.

Although there are some cloud service providers who purposely make it difficult to leave, most recognise the importance of being flexible for their customers. Look out for online business software with data import and export options that will allow you to get your information in and out again with ease. Read the fine print and check the contract terms – most providers now operate on a pay-as-you-consume basis meaning you don’t need to be tied into lengthy contracts.

Privacy

Attitudes towards cloud computing are generally improving however privacy worries are on the increase. In August 2014, the media was saturated with stories of leaked personal photographs of numerous high profile celebrities that had been illegally obtained by hackers via the cloud, adding to the growing concerns.

Firstly you need to be able to trust your provider. A good cloud vendor should have a clear and transparent privacy policy available on their website. It should detail how secure your data is, how they will use it and also the type of encryption that is provided. If you don’t feel comfortable, keep looking. Secondly, adopt good internal practices. Use secure passwords and codes, change them regularly and don’t share them. You wouldn’t leave your house unlocked while you were out, give colleagues your bank card pin code or share personal details with strangers. Apply these basic principles to your online information and you can be sure you are doing everything you can to retain your privacy.

Expense

This is the cloud barrier that is now mentioned the least; however it is still a valid concern for some businesses, especially smaller sized companies. Business owners worry about the upfront implementation costs, and say the stress of being unable to accurately predict on-going and long term costs means they would rather avoid the cloud.

Firstly, with the cloud computing industry exploding in recent years, increased competition is driving prices down. Global players Google and Amazon announced huge price cuts in their cloud computing services in 2014.  Secondly, there has been a significant shift from infrastructure being a capital expense to a variable cost. It is now common practice for online business software providers to offer their services on a pay-as-you-consume basis. This subscription based strategy means you can pay for exactly what you need as you are using it. Avoid services that include lengthy contracts, huge start-up costs or include exit fees.

Interoperability

Interoperability generally refers to the ability of different systems and software applications to communicate, exchange and utilise shared data. Existing and potential cloud users have concerns that using online software and systems could lead to interoperability problems and fragmented data. Consumers do not wish to be limited to a single cloud provider and would prefer the freedom to move their data around from service to service as their business requires.

Until there is industry-wide cloud standards, the consumer could be in for a long wait for complete data mobility within their different systems. However, the cloud is becoming increasingly open in nature due to high demand and growing competition so there is already evidence of disparate cloud systems working together. This could be one reason interoperability is placed so far down on the cloud adoption barrier list; only 17% of people report interoperability as an inhibitor to cloud adoption in their business, which is a 45% drop since 2012. It could also be due to pre-cloud systems offering absolutely no cross-communication, meaning any cloud solution is an improvement on the businesses current strategy.

Reliability

Reliability concerns include outages, slow responses and data loss. These translate to concerns of availability. Consumers want to be able to access their data quickly, at any time, with minimal risk of running into issues.

The whole design of the cloud is based on the idea that all systems will fail one day. In the world of cloud computing you might hear the word “redundancy” being used. Although often used with negative connotations, in the online community it is a great thing. Redundancy in cloud computing refers to the duplication of data and systems that exist as a “plan B” in the event of a primary system failing.  This basically means the cloud will always out perform an SME in terms of reliability capabilities.

Look for the stated downtime of the cloud service. Most availability statistics will be in the region of 99.95% to 99.99%. Availability of 99.99% equates to a minute a week of downtime. To put this into perspective, you are statistically more likely to be killed by a grizzly bear than stumble by chance upon the minute of estimated downtime within that week.

Complexity

As the cloud continues to evolve and adapt to its environment, cloud service providers strive to increase the flexibility of their products, to allow them to deliver to a wider market. But with increased capabilities comes complexity and fragmentation. The intricacies of cloud business systems are a real concern to the average business owner, evident from the rise in the number of cloud management companies seeking to capitalise on consumer confusion.

First of all, you need to be crystal clear on your business reasons for considering moving to the cloud. This will help identify the correct system for your needs. Look for intuitive software that doesn’t require a user manual to understand. Try to find an online business management software option that has been designed to be used “out of the box” – which basically means you won’t need a team of experts to implement it.

 

So, What Does This Mean?

According to the evidence, it is realistically no longer a question of if you should move your business to the cloud, but when. By taking the right approach when it comes to choosing the right cloud computing services for your business you will limit the risks and be confident in your decision. Plan carefully, research thoroughly and pick wisely.

If you are still suffering from cloud fears then it’s simply a case of where are you better off and the answer it would seem is up in the air…literally.