There is no doubt that cloud computing is changing the way organisations
operate.
By 2020, many industry watchers believe the easy availability of commodity,
on-demand IT will have dramatically disrupted the market to the extent of
creating new ways of doing business.
However, there are issues such as security, open standards and culture, which
need to be addressed before cloud can achieve its full potential.
Roy Illsley, principal analyst at Ovum, says cloud in 2020 will be a standard
part of the IT sourcing that CIOs use in their delivery of services, but he says
the question of what adoption and use will look like depends on a couple of
pivotal transformations – how cloud will be consumed and paid for; and the
industry agreeing on an open standards approach.
“Will the funding of IT be transformed from the current centrally funded pot,
to a more transparent pay-as-you-use approach? This depends as much on the
organisation being ready to adopt a new way to pay for IT, as well as new skills
in the IT department to think of internal IT as providing a service that
competes with public/hybrid cloud computing,” says Illsley.
This potential cultural barrier is matched by an external barrier – the
industry’s willingness to agree an open standards-based approach versus a small
number of different vendor-specific approaches.
“If we have a single standard, like what happened in the browser wars of the
1990s, then adoption will become easy and will see greater acceptance. If the
market remains fragmented then adoption will be slower,” says Illsley.
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But overall, cloud will just become another source of IT and people will not
be overly concerned by the label.
Emma Rodgers, senior analyst at Clearwater Corporate Finance, believes cloud
will be so pervasive that it almost doesn’t exist. “Everyone will adopt cloud
and security issues will have been addressed by a range of technologies,” she
says.
Peter Chadha, founder of advisory firm DrPete, is a fervent fan of cloud, as
a user and as an analyst, and believes we will no longer be talking about
“cloud”, just as we no longer talk about “e-commerce”.
However, he predicts there will be new approaches to cloud to suit different
businesses. Although 90% of firms will be fine with public cloud, there will be
some global corporations that will have their own cloud and other organisations
in highly regulated environments that will form mutual clouds.
“Some organisations will never be satisfied with the data issues, and have
hardcore reasons to stay as they are," says Chadha.
"Where IT forms a small amount of cost, there may be no huge advantage to be
gained. For example, an insurance company in shipping where the minimum claim is
£500,000 – IT is practically irrelevant as an expense. It may have an archive of
20 years of data and it is doubtful whether it would benefit from moving to the
cloud. However, it might benefit from having a mutual cloud with other insurance
companies, where the same degree of diligence and controls are mutually
applied."
There are diverse views about how exactly cloud will evolve, but there is
broad agreement on how businesses must be agile and efficient to survive – and
cloud will play a role in this.
“Business in 2020 will be much more focused on controlling the cost levers
and agility aspects,” says Illsley.
“The business landscape is changing fast and at different rates in different
geographies and verticals, so businesses will need to move faster and change
things faster – expand and contract. So any IT used must be scalable and capable
of meeting local political regulations. Cloud will play a part, but will be only
one such source of IT.”
Much of the thrust for change will come from users, as the spread of IT
consumerisation increases.
James Herbert, managing partner, innovation and delivery at consultancy
Methods, believes the browser will be the operating system by 2020.
“People talk about shared services and a multi-tenanted platform and there
will be an even bigger push towards BYOD (bring your own device) from
non-technical people. Employees will want to be able to use any device and for
cloud to be successful in this scenario, you should just be able to log in via
your browser, regardless of device,” he says.
Large business that have many on-premise business applications will move
towards delivering applications via the web browser, and having a clear
architecture and vision will present a challenge in the run-up to 2020, says
Herbert:
“Organisations will gradually swap applications out from on-premise into the
cloud, and the browser becomes viable on any device, but you need a good
architect.”
Disruptive technologies will play their part in how cloud develops by
2020.
Illsley says the evolution of software-defined datacentres (SDDCs), where all
infrastructure is virtualised and delivered as a service, will be particularly
disruptive.
“It will change the way organisations view the value of the underlying
physical infrastructure. Within the datacentre space, there will be the complete
abstraction of services from infrastructure,” he says.
Simon Wardley, a researcher at the Leading Edge Forum, says the growth in
innovation that cloud is undergoing is following a perfectly normal pattern of
evolution, driven by competition by suppliers and users, which will lead to
cloud becoming a commodity.
“We are in a state of punctuated equilibrium and a period of rapid change,
where as a result of competition things will evolve to become even more
efficient,” he says.
Peter Chadha, founder of analyst firm DrPete, believes there is a danger for
many organisations embracing cloud services that may end up tied into a supplier
or cloud service by future market consolidation.
The reasons for moving to cloud – to save money and become more efficient and
flexible – may be undermined as the big cloud players have users locked in.
“The cost of systems may rise as competition is diminished and the bigger
boys get bigger,” says Chadha. He points to the dominance of Visa and
MasterCard, which almost have “a licence to print money” in their sector.
“This is the way cloud may go. Today cloud is economic, but it may not be as
economic as it is now, and once you’re hooked in, it’s difficult to leave,” says
Chadha.
He stresses that cloud is a powerful enabling technology which his business
relies upon, but it is important to look at future implications for anyone
subscribing to cloud services.
“It allows small businesses to behave as large businesses with great uptime,
but once data is in the cloud, how easily can you exit?” he says.
While suppliers are scrambling for market share, it is not an issue that is
prominent in organisations’ thinking, but by 2020, having an exit strategy will
be an important consideration.
“It is all down to an economic decision, and the organisation’s risk profile.
An insurance company may consider its own private cloud – where everything is
under their control – to be the better option, for example,” says Chadha.
“Cloud is easy to go into, but the problem is getting out."
The new commodity systems will enable the building of innovative new
services, but there will also be a fight for survival, so the period until 2020
will witness new entrants and the collapse of some well-known names.
“There will be explosions of higher-order systems and explosions of big data,
new practices and new forms of organisation. Lots of companies will get
disrupted as they have failed to plan for change,” says Wardley.
Although such a shift is predictable in terms of what will happen, it is not
predictable in a precise way, as new products will be commodity-driven by
consumers and suppliers.
“The platform shift to infrastructure utility has been clear, but we will
reach an age of wonder and the genesis of new higher-order systems. We can say
what will happen over the next few years, but we can’t say what will be
generated,” says Wardley.
New things will be built using the components built in this era – the “age of
wonder” has already begun, but there will be more casualties along the way.
“Look at Blockbuster and Netflix. Blockbuster is bankrupt because it was held
back by its legacy of DVD shops, which is why Netflix could storm ahead with
online rentals,” says Wardley.
Cloud will generate new levels of innovation because it is going to attract
the most skilled people, says Chadha, which makes it a compelling
proposition.
“Cloud will be better because it is like having a Formula 1 team running IT
compared to having the local garage – at the end of the day no organisation
could afford to employ these people. You see innovation on a daily basis and
organisations will go to the cloud because that level of innovation can’t be
matched,” he says.
It is not just the technical innovation cloud allows organisations access to
– it’s the sheer scale it offers.
Chadha concludes: “The big cloud providers have points of presence all over
the world as well as continuous innovation and Formula 1 standard engineers,
which makes it irresistible in the run-up to 2020 and beyond.”
