Kris Bliesner is the co-founder and CTO of 2nd Watch
Without a doubt, demand for public cloud services is growing. In its third quarter earnings report, Amazon reported that the “North American Sales, Other” category, which includes AWS, had sales of $1.34 billion, up from $960 million in the third quarter of last year. CFO Tom Szkutak said AWS saw close to 90 percent growth in usage. Microsoft reported that its commercial cloud revenues, which includes Office 365, Azure and Dynamics CRM, grew 128 percent in its latest quarter.
The cloud growth trend will continue into next year and our latest survey showed that most companies will spend at least 15 percent more on public cloud infrastructure in 2015. We believe that with the maturity of public cloud IaaS services, CIOs should consider the following trends for planning in 2015 and beyond.
Advancement of Hybrid Cloud Services and Tools
Many companies have data center components that can’t move to the cloud, such as with ERP upgrades that are pending. Next year, companies will have better options for integrating systems between their existing data center and public cloud.
There’s less concern about security and compliance in the cloud and more talk around where data is stored. For example, it is more common for a U.S. company to want to keep its data inside the U.S.
With considerable innovation in privacy and security, even financial services and insurance providers are moving their data to the cloud. The decision is more about where to best manage the workload, internally or in the cloud.
It’s now becoming possible for organizations to invest in monitoring and management solutions that can work on-premise and in the cloud. As an example, the AWS OpsWorks product is now available for managing on-premise servers as well as cloud servers. The integration isn’t tight yet, but it’s a step in this direction. Companies like Microsoft are also investing heavily in hybrid cloud solutions to enable more seamless hybrid environments. We believe that the hybrid cloud infrastructure is a transition phase. It might take 10 years, but hybrid is not the end state. We’ll continue to see companies move entire data centers to the public cloud.
Disenchantment with Private Cloud
The 2nd Watch survey indicated that private cloud was one of the least popular enterprise IT trends for 2015. Although private clouds make it easier and faster to deploy software and services, they’re still expensive to manage. Additionally, if your competitors are moving more assets to the public cloud and running on less expensive hardware, your business is at a disadvantage.
Earlier this year, at AWS re:Invent, the CIO of Johnson and Johnson told audience members that private cloud couldn’t give the company what it was looking for. Because of that, Johnson and Johnson is on a public cloud trajectory – for a large enterprise, that’s quite telling.
Security Gets Better
Due to virtualization and the cloud, it is easier than ever to provision servers which means a company can triple its footprint overnight. A larger footprint, however, means managing more moving parts. Because of that, we will see more security software companies focusing on endpoint security next year. In fact, I’m confident that several security companies will be among the top 10 successful software startups next year. We will see innovation focused at the logical layers. As well, many of our customers are looking at third-party providers that can deliver Security-as-a-Service to take advantage of expertise around the ever-changing security space.
Designing Natively for Public Cloud
Emerging trends like the Internet of Things (IoT) and the sharing economy have created more complex infrastructure problems to solve. IT infrastructure management will require better automation but also new developer skills and knowledge that’s specific to the cloud. Companies are most interested in IT workers that possess experience managing public cloud workloads, according to our survey.
Innovation will come from companies big and small. McCormick, for example, recently released a recipe app which helps users find new recipes based on the flavors they find enticing. The company mashed together different data sets to deliver this unique customer experience. Similarly, one of our customers is doing great work with cloud-based mobile pricing apps which is impressive for a multi-billion dollar company.
Companies also need specific expertise on each platform, such as Azure or AWS, as there are currently no standards among the cloud IaaS providers regarding how they provision their architecture or the endpoints to access services. CIOs will need to hire experts, retrain staff and consider outsourcing. The world of people with these cloud native development skills and platform-specific cloud skills is very narrow. But if you can do this well, your company will have a competitive advantage.
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