Over the past years, use of the cloud has evolved and it is forever changing how we look at IT. Spending on cloud services demonstrates just how rapidly usage has grown. The cloud became mainstream in 2015 and Gartner predicted that, globally, enterprises would spend $140 billion on on-premises data center systems. In 2016 the cloud started to dominate many IT market segments and in 2017 cloud was the new normal, according to John Dinsdale, a Chief Analyst and Research Director at Synergy Research Group.
Gartner’s latest worldwide public cloud services revenue forecast published earlier this month predicts Infrastructure-as-a-Service (IaaS), currently growing at a 23.31% Compound Annual Growth Rate (CAGR), will outpace the overall market growth of 13.38% through 2020. Software-as-a-Service (SaaS) revenue is predicted to grow from $58.6B in 2017 to $99.7B in 2020.
In 2018, cloud computing will dominate the business environment more by providing public cloud solutions, cloud data centers, platform, and infrastructure-as-a-service. This transformation will not just benefit large enterprises but also SMEs and start-ups, in fact, Botmetric’s cloud usage report indicates that mid-size companies may be the biggest beneficiary here.
The rapid adoption of public and private cloud services has sparked a major reallocation of IT budgets. Enterprises are moving away from relying solely on on-premises data center systems and are boosting spending on IT infrastructure for deployment in cloud environments. The result, according to IDC, is that cloud services and infrastructure spending will reach $266 billion annually by 2021.
Large companies and industries are changing practices internally and there are several major trends impacting how companies will invest in cloud in 2018, according to Stefano Bellasio of Cloud Academy.
“The demand for advanced skills in cloud and software development is already several times larger than the current pool of talent and resources can support” — Stefano Bellasio of Cloud Academy
Cloud Expertise Study
Rackspace’s Cost of Cloud Expertise study yielded the following findings:
Organizations Are Losing Revenue Due To A Cloud Expertise Deficiency
Nearly three-quarters of IT decision makers (71%) believe their organizations have lost revenue due to a lack of cloud expertise. On average, this accounts for 5% of total global revenue, or $258,188,279* per organization.
IT Decision Makers Are Struggling To Keep Pace With The Cloud
Four in ten IT decision makers (40%) are concerned that they cannot keep pace with cloud technology’s evolution and demands, and 38% struggle to keep up with the expertise required to maximize the return on investment in the cloud.
Shortage Of Cloud Expertise Is Holding Businesses Back
Nearly two-thirds of IT pros (65%) believe that they could bring greater innovation to their organization with the right expertise. Similarly, two in five IT decision makers (42%) believe there is a lag in their organization’s ability to deploy cloud platforms due to a lack of skills.
There’s Significant Competition For The Best Cloud Talent
On average, it takes five weeks to fill an open role on an IT team – over 50% more than the overall average of 23 days.
IT Pros Stuck Operating, Not Innovating
Nearly half of IT pros (44%) spend more time managing their organization’s cloud services than they initially expected.
Most It Decision Makers Say Return On Investment (ROI) Has Increased With Managed Services
More than half of IT decision makers (53%) say the ROI generated from cloud services has increased since adopting a managed cloud provider. More than half (55%) also believe that using a third-party managed cloud provider frees IT staff to focus on innovation.
* Calculation: (Average global revenue of respondent organizations ÷ 100) X Average percentage of global annual revenue lost due to a lack of cloud expertise. Calculation in numbers: (5,254,875,750 ÷ 100) x 4.91330891330891 = $258,188,279
Major Trends Impacting How Companies Invest in Cloud in 2018
According to CloudAcademy, cloud skills—today a very broad and expanding set of skills—will be the most important asset for staying competitive in your market. The major trends impacting how companies invest in the cloud in 2018 are as follows:
Cloud-enabled software is the next big shift in the enterprise
Public cloud vendors are essentially becoming software vendors. This represents a huge shift in how we think about the role of cloud providers and cloud computing inside an organization. 2018 will be the year that enterprises deploy new technologies inside their organizations to redefine processes, skills, and speed in response to updates and changes. Companies will need to continue to get better at the process of building and deploying software to remain competitive.
As cloud becomes more and more about software and primitives that offer new capabilities, this is triggering the need for new skills across the organization.
Skills strategy and investments will grow exponentially
How will the enterprise compete in a digital world where software is a key component of products and services? Having the right skills in-house is an essential place to start.
The demand for advanced skills in cloud and software development is already several times larger than the current pool of talent and resources can support. There’s no indication that this gap will shrink in 2018.
Of the leading public cloud vendors, AWS led the pack in 2017 with an average of 3.5 new feature releases per day. Companies that use any AWS, Microsoft Azure, or Google Cloud Platform components in their infrastructure can’t risk development and maintenance delays due to a skill gap. Even more unacceptable to management will be an inability to implement new security services or to deliver on costs.
As a result, companies must be able to keep their teams’ skills up to date to maintain their software and to take advantage of the latest services and technologies that platforms offer.
As skills continue to be a critical asset and as the competition for tech talent continues to heat up, companies will need to make an even greater investment in building these skills from within and rely less on outsourcing. Investing in existing teams will pave the way for the growth and scale needed tomorrow.
Enterprise companies will double down on building their own certification paths
An increasing number of options across the cloud ecosystem has brought increasing complexity for enterprises. Internal requirements for performance and cost savings are driving more and more companies to adopt multi-cloud environments. Doing so allows companies to apply a best tech / best-fit approach that enables flexibility for teams. Enterprise teams will need to build highly customized environments with specific tool and technology combinations in order to maintain legacy applications, deal with regulatory compliance, and to limit/modify the way their developers and teams consume services on AWS, Azure, or Google.
On top of this, companies are using cloud technologies to build their services and products and frequently have specific requirements for the skills and capabilities that they want on their teams. As cloud environments become more customized, teams will need skills that meet the needs of their business and not necessarily the requirements of a single vendor’s platform.
For these reasons and more, in 2018 we will see companies double down on building their own certification paths that align with specific skill requirements by technology, domain, and job function.
Enterprise transformation success will boil down to designing and executing a sound, multi-year cloud transformation strategy
In 2018, companies will invest more time and money in the people and tools that support the design and implementation of cloud migration strategies. On the people side of the equation, an effort will emerge to consolidate external and internal training solutions into a single solution that supports companies’ full paths to transformation. Companies are already moving in this direction, and more companies will follow with their own cloud transformation strategy establish dedicated technical teams to support it.
What’s driving the migration?
2016 was notable as the year in which spend on cloud services overtook spend on hardware and software used to build public and private clouds, and in 2017 the gap widened, according to research from Synergy. Cloud service markets are now growing over three times more quickly than cloud infrastructure hardware and software.
According to a report from the IBM Institute of Business Values, 80 percent of organizations are budgeting money for cloud projects, and 74 percent say that cloud adoption has significantly improved their customers’ experience.
66% of IT professionals say security is their greatest concern in adopting an enterprise cloud computing strategy. Despite security concerns, the adoption of Cloud services continues to rise due to the benefits of mobility, increased efficiency, cost-effectiveness, streamlined collaboration, and speed of connectivity.
Several data points worth noting:
- Nearly three-quarters of IT decision makers (71%) believe their organizations have lost revenue due to a lack of cloud expertise. On average, this accounts for 5% of total global revenue, or $258,188,279* per organization. — The Cost of Cloud Expertise Report, 2017.
- Public cloud platforms, business services, and applications will reach $236B — growing at a 22% CAGR between 2015 and 2020. The cloud application market will grow faster, with the 2020 total being 17% higher than the 2014 projection. — Forrester.
- 48% of IT decision makers already report seeing a positive return on investment (ROI) from migrating part or all of their IT environment to the cloud, with 39% expecting to see positive returns in the future. — The Cost of Cloud Expertise Report, 2017.
- New data from Synergy Research Group shows that across six key cloud services and infrastructure market segments, operator and vendor revenues for the four quarters ending September 2017 reached $180 billion, having grown by 24% on an annualized basis. — Synergy
- Enterprise cloud spending is growing at a 16% CAGR between 2016 and 2026. —SiliconANGLE
- At least half of IT spending will be Cloud-based in 2018, reaching 60% of all IT infrastructure, and 60–70% of all software, services, and technology spending by 2020. It is also predicted that in the same year, cloud will be the preferred delivery mechanism for analytics. — IDC
- Cloud computing spending is growing at 4.5x the rate of IT spending since 2009 and is expected to grow at better than 6x the rate of IT spending through 2020. —IDC
- IaaS & PaaS services had the highest growth rate at 47%, followed by enterprise SaaS at 31% and hosted private cloud infrastructure services at 30%. — Synergy
- The market revenue of Global Cloud IT is predicted to increase to $390B in 2020, attaining a CAGR of 17%. — Bain & Company
- Spending on IT-as-a-Service for data centers, software and services will reach $547B by the end of 2018. — Deloitte
Cloud migration is not a “cut and paste” operation. You’ll need to rely on the skills and experience of your best people to deal with challenges of migration of mission-critical systems to the cloud to mitigate risk and determine what apps are best suited. The move requires advanced skills and detailed knowledge of the “to be” environment.
Sources referenced and quoted in the compilation of this article:
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