A fascinating view of the development of Cloud delivery services as an integral part of the overall world of IT utilisation has come from Stephan Kaiser, a senior VP for Consulting Services as Pierre Audoin Consultants (PAC). His point was clearly made too – Cloud is moving fast from being a light industry dabbling at the edges of IT, and becoming the new heavy industry.
Speaking at last week’s Fujitsu Forum in Munich, he defined Cloud as `an elastic execution environment involving multiple stakeholders and providing a metered service at multiple granularities for a specified level of quality’.
While it seems counter-intuitive to the standard storyline of Cloud marketing, calling it capital intensive then does raise some interesting points for discussion. For example, Kaiser suggested that this would be one of the key differentiators between private and public Cloud services. With the latter the users do not see the capital investment, which is only reflected in their due portion of the service costs. With current views of what constitutes a private Cloud – essentially on-premise cloud-architect solutions – the capital cost still has to be borne by the user business. This can change the thinking behind any choice users make.
He sees Cloud as the strong emerging force in the overall IT services marketplace, which is currently worth some $500bn. Outsourcing services currently account for some $200bn of that, including Cloud base services. He predicts, however, that cloud’s growth rate means that by next year the outsourcing market without the Cloud component will actually shrink. This is because Cloud GAGR growth between 2011 and 2015 is expected to be 30%, from $159bn to $433bn, while the overall IT market CAGR is predicted at 5% over the same period.
The big market sector in the public Cloud sector of service delivery is going to continue to be SaaS. Currently worth some $12bn, it is expected to grow over 26% to reach over $30bn by 2015. It will not show the fastest growth, however, being well beaten by PaaS at 65.5% and IaaS at 71.4%. Both of these are, of course, starting from a much lower base.
When it comes to private clouds he has divided the market into two camps – hosted services and on-premise.
With hosted services the two big sectors by 2015 are seen as IaaS and Business Process as a Service (BaaS). IaaS should grow 22.5% to close on $50bn and BaaS around 7.8% to close on $30bn. PaaS is expected to show the biggest growth in this sector, though in practice it will only rise from `hardly anything’ to `just a little bit’.
The on-premise private Cloud sector will be a strong market out to 2015, with many of the services that are considered normal IT still taking a goodly share of the business – though with a definite Cloud spin to the work involved. For example, infrastructure implementation will be a big business opportunity that Kaiser expects to grow to close on $40bn by 2015, with growth of 33%. This will, however, now also include integration and orchestration services.
Application implementation, customisation, integration and orchestration is expecting the biggest growth – 54% up to $25bn. Its close cousin, application migration, is also predicted for high growth – 42% and around $10bn, though this does also include applications development work, which is likely to represent a good share of that revenue.
It would be easy to pour just a little tepid water over some of these market predictions, particularly the preponderance of on premise private Cloud development. As Kaiser pointed in his presentation, however, there are significant differences in what he called the `Cloud readiness’ of different countries, with the USA and UK far further along the road to widespread Cloud adoption than most of Europe. Germany and France – both of which are big IT markets – are lagging well behind, according to his research.
In addition, PAC is a strongly European-oriented consultancy business, so its figures will naturally reflect that lag.
That being said, the natural conservatism of most businesses when it comes to adopting new technologies means that the strength of the on-premise private Cloud sector is likely to show through in the UK, at least for a while. The rate at which it is supplanted by hosted services will be a far more interesting prediction, I feel.
