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The Shifting Buying Patterns of Cloud Service Adopters

IDC believes that concerns about security will dissipate over the next two years

We’ve certainly come a long way. Over the last couple of years, we’ve witnessed the trials and tribulations of the early-adopters of managed cloud services, and we’ve observed how the offerings have matured to attain broad-based market acceptance.

Cloud computing has become pervasive within today’s forward thinking companies. It’s already a transformative force throughout the global networked economy. Every enterprise that uses Business Technology is either considering or implementing cloud solutions -- to create a strategic advantage over their late-adopter industry peer group in the marketplace.

According to the latest market study by International Data Corporation (IDC), about 77 percent of North American companies were already using at least one public cloud service in 2012. IDC believes the companies that are spending on cloud-based capability have reached a deployment pace that’s unmatched by any previous business technology transformation.

Moreover, they say that those leaders who have adopted services are exploring cloud computing from two primary perspectives: either to move their existing internal IT capabilities to the cloud or to respond to a pressing internal business need -- thereby enabling a new capability quickly and effectively.

Put simply, cloud-based solutions empower IT organizations to offer a more complete set of capabilities to their internal constituency -- without the hardware, software, support, and maintenance headaches that are typically inherent with an in-house IT solution.

The Apparent Shift to Public Cloud Solutions

IDC research demonstrates that IT buyers are rapidly shifting their spending patterns from private cloud to hybrid or public cloud. The public cloud and virtual private cloud models are both built and delivered from a service provider's site.

IDC expects IT buyer patterns to shift as follows:

  • 31 percent of companies will source greater than half of their IT spend from public cloud by 2016.
  • U.S. businesses will spend $43 billion on cloud-delivered IT in 2016.
  • During 2012–2016, SaaS spending will increase by 123 percent, PaaS spending will increase by 48.5 percent, and IaaS spending will reach $31 billion.
  • In 2016, a majority (80 percent) of Global 2000 businesses will have 30 percent of their IT capability residing offsite.

Remaining Barriers to Increased Cloud Service Adoption

IDC’s latest research has uncovered that security is still the single-largest IT buyer concern of public cloud services -- as it has been for the past six years. However, IDC believes that concerns about security will dissipate over the next two years -- as potential new cloud users better understand the technical and business process implications of moving their applications to the cloud.

IDC believes that by 2015, the three most important aspects of IT buying decisions will be the overall cost, internal management of cloud services, and identifying which applications to run on the cloud.

Moreover, network latency of service delivery can lead to poor performance for users. Therefore, broader distribution of 1GbE-capable networks and development on new browser protocols – such as HTML5 -- are believed to be significant issues confronting cloud service providers and enterprise users.

IDC says that those same issues will likely continue to have an impact on performance, and thus the ongoing adoption, of managed cloud services.

What are the key demands of these prospective cloud service adopters? Customers say that they want to be able to access all their external services across a consistent performance platform, and the Web browser is the most common denominator to achieve that objective.

Future Outlook for Managed Cloud Service Buyers

So, what’s next for the cloud services marketplace? According to IDC’s assessment, the CIO and IT manager focus is increasingly being directed toward a greater cloud adoption model.

In summary, the typical cloud applications buyer is becoming an IT broker of physical or virtual application services. They’re seeking new choices for integrating and managing across public, private, and hybrid cloud scenarios -- plus incorporating any preexisting legacy environments.

Meanwhile, IDC analysts expect that cloud service developers will evolve towards the major growth opportunities – such as enterprise mobility, big data, and social commerce applications.

To learn more about their available IT buyer guidance, visit the IDC website.

More Stories By David H Deans

David H. Deans is the Managing Director at the GeoActive Group. He has more than 25 years of experience in the Technology, Media and Telecom sectors.

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