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Cloud Adoption Rises by 67 Percent, Revenue to Reach $158.8B in 2014: Study

TMCnet Feature

June 20, 2013

Cloud Adoption Rises by 67 Percent, Revenue to Reach $158.8B in 2014: Study

By Erin Harrison
Executive Editor, Cloud Computing

Cloud adoption has been on a steady incline for the past several years and is expected to see its largest growth rate by 2014. In fact, cloud adoption has continued to rise in 2013, with 75 percent of IT decision makers and C-level executives shifting to some sort of cloud platform – up from 67 percent last year, based on the results of a new study.

This growth is consistent with forecasts that expect the total worldwide market for cloud computing to reach $158.8 billion by 2014, an increase of 126.5 percent from 2011, according to the third annual Future of Cloud Computing Survey, conducted by SilverSky, North Bridge Venture Partners, GigaOM Research and 56 other organizations.

The study found that agility and scalability are the primary drivers for cloud adoption. However, the need for cloud services to support mobility and the ability for continuous innovation to drive competitive advantage through more integrated business processes are all key drivers for the future, according to Andrew Jaquith, chief technology officer and senior vice president of cloud strategy at SilverSky.

“CIOs are moving their critical workloads to the cloud to cut their costs, simplify their architectures and enable new opportunities. But security has always been a key concern. Customers are essentially entrusting services they can’t do without to someone they don't know,” Jaquith said in a statement. “Fortunately, this year’s survey suggests that cloud vendors have an opportunity to provide more clarity, transparency and assurance about customer data protection than ever before. Customers may find that vendors are doing things better in the cloud than they can in-house. If this is the case, the time to switch is now.”

The study also revealed several shifts as to why and how cloud computing is being used, obstacles to adoption, where cloud decision-making resides within organizations, and how the vendor landscape is changing. It also serves as a barometer for the industry’s progression. In addition, the survey reveals that business is driving the revolution deriving clear benefits from cloud adoption in the form of continuous innovation and business agility to yield competitive advantage.

        Highlights of the study include the following:

  •  Organizations average 52 percent current use of applications that advance business priorities, compared with an average 36 percent that use applications that advance IT priorities – underscoring the increasing value placed by organizations on facilitating the delivery of services beyond IT via the cloud;
  • Of the 16 cloud application areas tracked (eight business cloud applications and eight IT cloud applications), four business cloud applications (file sharing, business productivity, CRM/marketing and social business/collaboration) are in use by more than half of all organizations, yet not a single IT cloud application is in use by more than half of all organizations;
  • Still, going forward respondents stated that six out of the top seven fastest areas of growth in cloud applications will be in IT areas: big data, mobile, systems management, backup/DR/BC, helpdesk and security
  • Over two-thirds (68 percent) see greater migration to the cloud as bringing equal or better total cost of ownership (TCO) to the organization

 SaaS (News - Alert) remains the most popular form of cloud service, used by 63 percent of organizations, up from 55 percent last year. However, the fastest growth today is in IaaS, with usage rising from 35 percent to 45 percent, a 29 percent increase over the prior year

The top cloud companies cited are brand name, infrastructure players, including Amazon, Microsoft, Google (News - Alert) and Rackspace, but 300 companies had less than two percent of responses each, indicating that there are a large number of up and coming companies, and no single company has captured all of the momentum.

While security has been cited as the most common inhibitor of cloud adoption, security is starting to lose its label as the primary blockade to cloud adoption as other significant adoption issues arise. While security is still the top inhibitor, security is declining year-over-year from 55 percent of respondents in 2012 to only 46 percent in 2013.

In response to the inhibitors to cloud adoption, a majority of respondents (55 percent) expect hybrid or multi-cloud providers to emerge to challenge the current cloud ecosystem in the next two to three years.

Edited by Jamie Epstein

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