The global market for cloud-based architecture and related services and applications is expected to surge through 2017, analysts say. Demand for a variety of virtualized “as a service” capabilities such as infrastructure, software and security also will increase.
Worldwide spending on cloud-related technologies and services will be in the range of $174.2 billion in 2014, a 20 percent increase from the $145.2 billion spent in 2013, states a recent report by IHS Technology. According to IHS, by 2017 the cloud market will be worth $235.1 billion, triple the market’s $78.2 billion in 2011.
This strong projected global growth includes both the commercial and government sectors, says Dr. Jagdish Rebello, the senior director and principal analyst for the cloud and big data at IHS. He notes that many commercial and public enterprises gradually are moving their databases to the cloud, have cloud strategies or are considering migrating their data and services to the cloud.
But despite cloud’s growth, regional and market differences exist in cloud services, Rebello reports. For example, regions with poor broadband infrastructure will see slower cloud growth/access, while more developed regions of the world have faster cloud adoption rates, he explains.
Security is another issue for organizations adopting cloud strategies. For example, Europe’s stringent rules for data security mean that organizations on the continent will migrate to cloud services more slowly than those in the United States, Rebello says.
In consumer and retail markets, Rebello sees two types of growth: customer engagement and access to media content. Growth in the first area is in the form of messages and subscription information sent to customer’s computers and mobile devices—an area where cloud-based applications are very useful, he says. The other area is access to entertainment content such as movies, games and music stored in the cloud.
While worldwide cloud growth is surging, some sectors, such as medicine, still lag. Rebello notes that the medical industry has had difficulty understanding and deploying cloud-based tools and applications. There are some signs of change, with small health maintenance organizations and medical groups looking into cloud-based services and data storage, but their approach has been slow and cautious, he explains.
The financial industry also is very interested in cloud-based services. Finance requires both secure data storage and access to sophisticated analytical applications. But banks and brokerage firms also do not want to move their data to a public cloud, Rebello says. Two solutions are to store data on in-house private clouds or to use hybrid clouds, which combine both public aspects for consumer data with in-house privacy for sensitive information.
Other sectors moving to cloud-based storage and applications are energy firms, which use cloud-based analysis tools to measure their sector’s performance, and the automotive industry, which wants to increase the onboard data connectivity in current and future generations of vehicles.
Private-sector mobile device use and broadband access also continue to grow globally, Rebello says. Companies constantly are looking for new tools and methods to engage with their customers, and the cloud is ideal for this, he explains. Firms are looking to export some application program interfaces to the cloud, and in certain markets working with third-party developers to make cloud-based secure applications. Large information technology and Internet service companies such as Amazon, Microsoft and Google have become major cloud providers to commercial firms and government agencies. Small businesses also are using cloud-based services to cut costs associated with data access and analysis, he adds. “It’s becoming extremely prevalent, and it is the new way companies are doing business with their customers,” Rebello explains.
The ongoing adoption and growth of mobile device use also are creating a transition in the global cloud market. About 3.4 billion people use mobile services for voice and broadband data access globally, with an additional 3.5 billion people still unconnected to mobile networks, Rebello says. He notes that the Global System for Mobile Communications Association (GSMA) has a goal to connect another billion people by 2020. As more customers enter the market, there is a growing shift from simple cellular voice phones to smartphones and tablets, he says.
However, the next billion mobile users represent undeveloped markets and will mostly will use basic mobile services such as voice and text. But as users become more acquainted with online services, Rebello predicts they will see connectivity to the Internet as a necessity rather than a luxury. As a part of this trend, he notes, low-level voice and text users usually upgrade to low- and mid-end smartphones.
Government agencies around the world also are looking into cloud-based technologies for large-scale data storage. Concerns about security remain, but there is considerable interest to harness the technology, Rebello says. The U.S. government is the top global user of information technology systems, he adds, noting that the federal government wants to spend up to 10 percent of its future information technology costs on cloud-based technologies. The U.S. government continues to look at new ways to harness the cloud, but without compromising security, he says.
Government cloud computing markets vary nationally and regionally, says Rishi Sood, a vice president and analyst at Gartner Incorporated specializing in research into U.S. local, state, federal and global public sector programs. The U.S. federal government’s cloud computing efforts are dynamic and ongoing. Its Cloud First policy, for example, orders agencies to move their nonclassified, publicly available/accessible data over to cloud data storage formats.
Many agencies in the U.S. federal government have software-as-a-service pilots underway, and they are moving to provide infrastructure as a service, Sood says. Key agencies making this wholesale, holistic move to the cloud include the Labor Department and Department of Homeland Security.
Internationally, the United Kingdom’s government had been active in adopting cloud technologies. Taking a top-down approach focused on building a national cloud architecture, the British government is bringing its various agencies into this structure through a number of modernization efforts, Sood says.
In addition to the United Kingdom, nations such as Australia, New Zealand and Singapore are embracing cloud computing efforts. However, Sood notes, the size and relative wealth of these nations have an effect on how they approach cloud deployments. In comparison, he explains that some state governments in the United States are comparable in size and scope to many nations.
Depending on the specific security needs, government organizations can choose public, private or hybrid cloud options, Rebello says. For more security-conscious organizations, private and hybrid clouds offer the most advantages; however, security for applications goes beyond data in the cloud. Devices such as desktops or mobile handhelds are the weakest link and have to be protected. The need to secure expanding cloud services and connected devices, for both government and commercial customers, is making security a growth market as well, the IHS reports.
Mobile applications for government and their interaction with cloud-based data systems are part of the changing information technology landscape. Mobile device use is constant ly in flux and hard to predict, Rebello says. Currently, bring-your-own-device (BYOD) policies are popular in some government agencies and businesses, but security is a key concern. Organizations that allow such programs will have to partition secure information into trusted zones in the parts of their cloud architecture that can be accessed via mobile devices.
However, while mobile access provides government agencies with increased productivity, they also will have to review their security policies, Sood says. An important factor will be the choice of device approach, whether via issued devices or BYOD policies and the permissions required for user devices to access data in government clouds, he says.
Another dynamic in government cloud deployments revolves around content and collaboration tools such as email. Many agencies are now are moving on to Web hosting, enterprise resource planning and other information management approaches, which are more in-depth methods for cloud computing use, Sood says.
While cloud computing has improved accessibility and security for government data, what it has not really done is saved much money, Sood observes. Cloud computing and virtualization have been touted as lower-cost approaches to managing data and running computing facilities, but this has not paid out over time for governments. However, cloud computing does make it much easier for governments to deploy software effectively. This as-a-service approach moves funds from capital budgets to operations budgets. While making it easier to finance new deployments, it does not effectively reduce the cost of delivering them, he shares.
One ongoing trend is the virtualization of a variety of information technology functions, Rebello says. As software-defined networking and services continue to grow, chief information officers will need to be aware of what is happening on their networks. One part of this trend is virtualizing network functions. “If it is handled well, it has the potential to really drive down capital expenditure,” he says.
Cloud-based systems allow users to combine enterprise resource planning tools with outside data analysis sources, making data analytics part of more decision making. The firms and organizations that combine these capabilities can use analysis to react to market changes quickly, he says.
Although the government sector cloud market is dynamic, especially in the United States, it is subject to the inertia found in any large organization, Sood says. Specifically, he notes, new programs and technologies cannot be implemented and cycled through with the same speed as commercial entities. The move to the cloud will be a decade-long transition, with some governments being early adopters. “It sort of happens in waves rather than all at once,” he says.
Likewise, Sood sees some organizations leading the way in enterprise technology adoption by working with cloud service providers acting as brokers. This type of relationship will dovetail into a broader set of shared services across multiple agencies. “It doesn’t have to be one agency doing just one thing with the cloud. It can be lots of agencies sharing resources,” he says.
One example of intra-agency cloud resources sharing is the Defense Information Systems Agency (DISA), which manages and runs the Defense Department’s communications and computer network infrastructure. DISA provides shared cloud-based services to the military services and defense agencies such as email and collaboration tools.