Can Cloud Computing Help Enterprises Weather the Economic Storm? (Market Focus)

Published by: Datamonitor

Published: May. 1, 2009 - 107 Pages

Table of Contents

Overview

Catalyst

Summary

Table of Contents

Table of figures

Table of tables

Introduction to Cloud Computing

The term cloud computing is quickly becoming ubiquitous

Cloud computing is a new pattern of IT consumption but it is proving elusive to define

Cloud computing overlaps with many adjacent categories, rendering the definition difficult

Cloud computing: an IT consumption pattern based on the delivery of commoditized resources as a service

IT commoditization has occurred through the history of computing

Cloud computing may resemble the mainframe era, but it is a fundamentally different phenomenon

Cloud computing marks the culmination of the commoditization process

Outsourcing, hosting and ASP services persist with the management of identifiable resources

Electricity provides the most powerful analogy with cloud computing

Both electricity and IT are enabling technologies that went from strategic to commodity assets

Unlike electricity, computing is a far more complex phenomenon and far less fungible resource

The cloud computing taxonomy

Software-Platform-Infrastructure (SPI) model offers the basic cloud computing classification

Further refinement of the SPI model should not rely on the proliferation of 'as a Service' neologisms

Detailed taxonomy schemas focus on segmenting the infrastructure layer

The fabric/instance spectrum captures variations in the granularity of computing services provision

Do private clouds exist?

Ownership should not be the central tenet of cloud computing

Technologies enabling local or hybrid cloud infrastructures are readily available

Economies of scale dictates that the public/private gap will matter, but bridging the divide will be possible

Benefits of cloud computing

The benefits of cloud computing are the benefits of services over products

Cloud computing allows enterprises to focus on their core business processes

Cloud computing closes the gap between IT capacity and IT demand

Elasticity is not built into the cloud computing model but ease of provisioning mitigates this effect

Variable costs and usage-based models are the principal benefits of cloud computing pricing

Capex/opex accounting strategies do not describe the full range of cloud computing pricing models

Cloud computing is associated with a broad range of pricing models based on variable cost

Cloud computing could act as a deflationary force in the enterprise technology IT market

The combination of elasticity and utility pricing engenders IT new economics

Inhibitors to cloud computing adoption

Trust and migration to an unfamiliar model are the primary inhibitors to cloud computing

The substitution of products with external services renders the issue of trust extremely acute

The question of trust in cloud service providers also relates to the emotional issue of lock-in

Until legal implications are better understood trust issues will continue to be raised

Each cloud service model is associated with a specific set of trust challenges

Cloud service adoption and management challenges are currently potent inhibitors

Matching workloads with the optimal mode of IT delivery may be difficult

The business case for cloud computing is often compelling, but may be hard to formulate with precision

Enterprises' procurement and spend management practices will have to evolve to accommodate the cloud

The migration of business processes to the cloud is not frictionless

Cloud services need to remain dynamic without disrupting existing enterprise IT architectures

Conclusion: benefits and inhibitors of the cloud computing model

Competitive Landscape

The roll-out of cloud infrastructures is an opportunity for commodity hardware vendors

Migration into the cloud will boost thin clients, netbooks and handhelds

Cloud infrastructure services

Online retailer Amazon.com has emerged as the early leader in infrastructure provision

GoGrid leads the wave of hosting providers offering instance-based cloud computing infrastructure

Others could offer cloud infrastructure services, but may prefer to compete in software or platform layers

Infrastructure management platforms have emerged as the critical part of the cloud infrastructure stack

Cloud platform competitive landscape is particularly vibrant

Proprietary development platforms backed by SaaS vendors are proving popular with ISVs and users

Platforms supporting generic development frameworks may lend more control to developers

A long tail of standalone platforms relies on intuitive proprietary development and execution environments

SaaS vendors now feature in virtually every segment of the enterprise application market

Datamonitor Opinion

Those that manage to harness the cloud computing model stand to benefit

Cloud computing is here to stay, albeit not as the sole model of IT consumption

The Global Recession will accelerate the adoption of cloud computing

An elastic model that relies on flexible, usage-based pricing will be particularly attractive in the downturn

Unchecked proliferation and inadequate management of cloud computing services can fuel the backlash

Successful vendors will capitalize on short-term opportunities and prepare for long-term implications

Vendors may not have to venture into cloud services, but strategic adjustments will be necessary

Recommendations

Action points for enterprise technology vendors

Action points for enterprise IT decision makers

APPENDIX

Definitions

Methodology

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: A selection of SaaS vendors by solution area, presented in alphabetical order

List of Figures

Figure 1: Only one in three CIOs are comfortable with their department's maintenance workload

Figure 2: Cloud computing appeared in the market in 2007 and has risen quickly to universal prominence

Figure 3: Cloud computing overlaps with a range of related terms

Figure 4: Cloud computing as an IT consumption model

Figure 5: Cloud computing can be contextualized as the ongoing service-based commoditization of IT

Figure 6: Software-Platform-Infrastructure (SPI): the basic cloud computing taxonomy model

Figure 7: A reference cloud computing taxonomy combining the SPI and Youseff-Butrico-DaSilva models

Figure 8: Cloud computing services are floating along the fabric/instance provision spectrum

Figure 9: A private cloud is analogous to an intranet; public clouds are approximate the scale of the internet

Figure 10: Adopting a service-based IT consumption strategy allows greater focus on strategic issues

Figure 11: Gap between IT capacity and demand creates inefficiencies

Figure 12: Non-concurrent peaks in demand increase the utilization rate of cloud infrastructures

Figure 13: The balance of the principal elements of service provider trust shifts with the mode of provision

Figure 14: Outline of the cloud computing competitive landscape segmented by the SPI model

Figure 15: Enterprises are likely to blend locally managed resources with public clouds

Abstract

• Defines cloud computing, describes its model of operation and provides a classification of cloud computing services.
• Considers drivers and inhibitors of cloud computing adoption in the context of the current global recession.
• Outlines the emerging competitive landscape for cloud computing services and related technologies.
• Recommends the stance that enterprises, technology vendors and service providers should adopt regarding cloud computing.

• Gain a clear, detailed and comprehensive understanding of the emerging cloud computing paradigm.
• Identify dominant market trends in order to evaluate opportunities created by the shift to cloud computing.
• Optimise your cloud computing strategy to capitalize on the short, medium and long-term opportunities cloud computing will create.

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