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Top 10 Cloud Computing Trends For The Decade

Posted on Monday, Dec 27th 2010

By Sramana Mitra and Shaloo Shalini

Elaborating on our Top 10 Tech Trends for the Decade post last week, today we drill down into the top 10 cloud computing trends. The research and interviews can be found on our Cloud Computing Trends and Opportunities page. Let’s take a closer look.

1. Collaboration

Cloud-based collaboration is moving to the cloud in a big way across industry verticals. We see this as a major trend that is catapulting the cloud – be it tech, medical, high-performance computing (HPC), automobile, consulting, and so on. We’ve been hearing this for a couple of years from CIOs, and we believe that cloud collaboration apps will become dramatically more powerful and less expensive over the coming decade. Forecasting with a significant dose of wishful thinking, affordable desktop telepresence is what we are waiting for. If you are an entrepreneur with a good understanding of multimedia communication technologies, this is your holy grail.

2. Hard Cost Savings

CIOs are talking about expected or realized cost savings of 30%–40%. This varies widely depending upon cloud adoption scale. Infrastructure-as-a-service (IaaS) adoption cases typically make it higher. Private cloud adoption cases make it lower. “I don’t want to be in the business of running a data center ” is a common statement from CIOs. Of course, the altered business model of moving IT from capex to opex has become an accepted principle in justifying cloud strategies.

3. Private Clouds in Large Enterprises and SMEs

We were somewhat surprised to learn how robust the private cloud adoption trend is becoming in large enterprises. We are stunned to learn about private cloud adoption in SMEs. Infrastructure vendors like IBM, HP, and Cisco are creating packaged private cloud stacks with fully designed architecture, and enterprises do not have to reinvent the wheel. As the packaged private cloud products penetrate the market, the trend of private cloud adoption should gain significant momentum.

4. Hybrid Clouds in Large Enterprise and SMEs

Of course, we expect to see both private clouds and public clouds coexist. Both applications and infrastructure will continue to exist in the public cloud, and enterprises and SMEs will broadly adopt them. Storage and CRM are just two examples that come to mind, both of which have significant public cloud adoption. Analytics and long tail applications specific to verticals or enterprises will see more adoption in the private cloud.

5. Flexible Infrastructure as a Service

Flexible IaaS adoption is rising. Either planned or already implemented in a wide variety of companies, both enterprises and SMEs, this trend makes so much sense that its momentum is unstoppable.

6. ERP No, CRM Yes

We hear that companies don’t have much incentive to move to cloud-based enterprise resource planting (ERP). Especially where there has been substantial investment in integrating and customizing ERP systems, there is absolutely no urgency to move to the cloud. CRM is a different story. Largely due to the market-leading efforts from Salesforce.com, CRM is seeing the highest adoption among cloud applications.

7. Security

The cloud is now seen as physically more secure than internal data centers. Contrary to popular belief, cloud security concerns are not very high among CIOs. They have come to terms with the fact that cloud vendors are better equipped to handle complex security issues than they are in their private IT organizations.

8. Analytics

We were surprised to learn that analytics is moving to the cloud at a faster pace than we expected, but mainly in the private cloud for large enterprises. Analytics requires voluminous data movement, which is an Achilles’ heel for public clouds.

9. Gaps in Vertical Apps

We observe many gaps in vertical offerings for cloud apps in industries like education and healthcare and gaps in long tail business apps at enterprises and SMEs. This may be one of the most fertile areas for entrepreneurs for the coming decade. A promising combination to rapidly bring products to market would be the combination of a Platform-as-a-Service (Paas) and a vertical/long tail app to address specific pain points.

10. IO-Intensive Apps

IO-intensive applications (be they digital media, medical research, or some HPC apps) cannot move to the public cloud yet. We view this also as an opportunity for this decade. Couple that with the broader trends of mobile and social apps, and we can certainly expect to see interesting changes in both prosumer and consumer behavior.

Please free to add your thoughts and observations. We will be happy to talk about them. Especially those 1M/1M entrepreneurs addressing these trends – we very much look forward to hearing your thoughts.

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Few comments –

1. On #6 – is Cloud ERP that much lagging? Dennis Gaughan of Gartner Research recently published an article entitled – Will Core ERP Move to the Cloud? (http://blogs.gartner.com/dennis-gaughan/2010/12/13/will-core-erp-ever-move-to-the-cloud/)

It seems like – discussions about Cloud ERP are happening –
– First, many are interested.
– Second, people are thinking beyond the standard pricing and security issues.
– Third, people are thinking creatively about how to benefit from the technology.

Regarding adoption – I guess Microsoft Dynamics ERP SaaS is one example of online accounting.

2. Would you comment further on enabling of public/private/hybrid cloud interoperability? What about projects like openstack in this context?

3. Could you pls. elaborate on the analytics part (#8)?

Rajarshi Chaudhuri Monday, December 27, 2010 at 10:27 AM PT

Well, there seems to be no real driver or urgency behind cloud ERP adoption in cases where enterprises have made significant investment in a legacy ERP system. Where there is a natural change – like moving upstream from Quickbooks to a more sophisticated system, for example, people are considering cloud ERP. But not gratuitously.

Public/Private/Hybrid cloud interoperability issues are not quite sorted out yet. I would leave this as a TBD area for the time being. No real standards apparent yet. We will keep probing as we interview further in 2011.

Analytics – I suggest you read the IBM interviews to get a more detailed perspective.

sramana Monday, December 27, 2010 at 11:59 AM PT

On #9 – I totally agree that there are verticals/long tails appls that constitute an opportunity.
Yet, how would you market profitably a "specific pain point" application ?
How to make a niche app reach the point where (ARPU) revenue per user exceeds market spend per new user ?
Andrea

aparmegg Tuesday, December 28, 2010 at 12:13 AM PT

You market through cost effective mechanisms like SEO, PPC, and Tele-websales. Definitely not direct field sales forces.

sramana Tuesday, December 28, 2010 at 9:37 AM PT

regarding #3, I don't completely agree. This topic should be separated into 2 separate trends:
1) Private Cloud Adoption of large enterprises – whereby enterprises are renting more IT on demand from outsourcers and managed hosting providers, with a trend to more standardization, automation and less customized solutions.
2) Public/shared (not private) Cloud adoption of SME's. -> This is a pretty unknown area by many thought leaders for cloud computing. Existing ISP's and especially HSP's ((web)hosting service providers) that traditionally hosted HUGE customer bases for just email, presence and virtual computing instances for SME's and that move now more and more into offering the complete IT-stack for SME's, fully managed – but fully automated and more and more commoditized.

Lukas Hertig Monday, January 3, 2011 at 4:00 AM PT

Public/Shared cloud adoption in SMEs is not news. I maintain, that we're stunned to hear that there is actually private cloud adoption going on in the SMEs.

sramana Monday, January 3, 2011 at 10:12 AM PT