Hybrid and private cloud deployments have emerged not only as cost savers but also stimulants for top-line business growth, according to Hosting and Cloud Go Mainstream: 2014, a Microsoft-commissioned study conducted by 451 Research.
The study, which surveyed more than 2,000 IT professionals in 11 countries, found that more than 45% of organizations have moved beyond cloud pilots, and that nearly one third have integrated formal cloud computing plans into their overall IT and business strategies. In an interview, Marco Limena, VP of Microsoft's Hosting Service Providers business, said corporate cloud adoption is "accelerating one year ahead of a two-year prediction" established by earlier research.
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Michelle Bailey, a senior VP at 451 Research who worked on the study, told InformationWeek, "There is a misconception that cloud is about saving costs. That's true -- cost is a driver. But customers see hosting and cloud as a way to grow their IT portfolios again."
The cloud facilitates the launch of new line-of-business apps that can crunch through big data on the fly, Bailey said. She added that the cloud hosting market has invaded territory that once belonged to outsourcers, making it particularly ripe for growth.
"Companies can buy cloud services that get them [to their goals] faster, particularly if they're doing something new," she said -- such as a launching a web-based, consumer-targeted marketing campaign. Bailey added that hosted cloud services enable companies to react to changing market conditions without overly investing their own IT staffers.
"A lot of these new applications move very quickly," she observed. "They have a short ramp-up cycle, but they also die quickly. [Hosted cloud services] are a way customers can launch business initiatives quickly, without a lot of risk and upfront cost."
451's report found that on-premises, private cloud adoption accounted for 26% of on-premises infrastructure spending last year. The research firm predicts hosted private clouds will achieve the highest growth rate over the next two years. "There is certainly a ton of growth in public clouds, and a good portion of IT resources living in public environments," Bailey said. “But the mass will gravitate to private clouds, which are seen as more secure and business-ready."
This explains why private clouds will dominate in the near term. “There’s been a lot of talk that the whole world will go public, and that everyone will use shared resources," she continued. "Maybe -- but not for 20 years."
Bailey predicted that "private-to-private" hybrid models will become popular, with companies moving data between on-premises private clouds and private hosted services.
For as long as modern cloud services have existed, companies have been leery of entrusting important data to someone else, and such concerns have only escalated in the wake of the NSA scandal. Limena said cloud services must become a "trust business" to combat security worries. Bailey agreed, adding that pervasive security concerns are actually an opportunity for cloud vendors. A majority of companies surveyed for 451's report said they would be willing to pay a premium for extra security features, though Bailey pointed out that in order to convince diligent skeptics, cloud hosting providers will need to embrace more transparent policies with their customers.
Microsoft wouldn't promote this report if the data didn't support its business goals, of course. Limena said the company is well-positioned to capitalize on current trends due to its Cloud OS model, which emphasizes interoperability and standard tools across clouds, including between local private clouds and private hosted services.
"What Microsoft does uniquely is, we can implement the cloud in different flavors," he said, adding over the last year, the company has added 5,000 new hosting service providers to its partner network. He said Microsoft boasts the largest hosting community of any vendor.
Bailey didn't address Microsoft's prospects specifically but said companies want a flexible hybrid model that allows them to "mix and match applications and data based on comfort levels with risk, availability, and cost."
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