IDC: Cloud Services a $42B Market by 2012

FRAMINGHAM, Mass., Oct. 20 -- Cloud computing is reshaping the IT marketplace, creating new opportunities for suppliers and catalyzing changes in traditional IT offerings. Over the next five years, IDC expects spending on IT cloud services to grow almost threefold, reaching $42 billion by 2012 and accounting for 9 percent of revenues in five key market segments. More importantly, spending on cloud computing will accelerate throughout the forecast period, capturing 25 percent of IT spending growth in 2012 and nearly a third of growth the following year.

"A recent IDC survey of IT executives, CIOs, and their line of business (LOB) colleagues shows that cloud services are 'crossing the chasm' and entering a period of widespread adoption," said Frank Gens, senior vice president and chief analyst at IDC. "Moreover, IDC expects the cloud adoption trend to be amplified by the current financial crisis. The cloud model offers a much cheaper way for businesses to acquire and use IT -- in an economic downturn, the appeal of that cost advantage will be greatly magnified. This advantage is especially important for small and medium businesses, a sector that will be key target in any plan for recovery."

To determine how big the cloud computing opportunity might be, and what it will take to capture that opportunity, a broad group of IDC analysts collaborated on the development of a formal point of view on just what cloud computing is.

When people talk about cloud computing, they are usually referring to the online delivery and consumption models for business and consumer services. In most cases, however, the "computing" lies behind a more recognizable service, like banking or shopping or online storage. Accordingly, IDC believes it is important to distinguish between cloud services and the cloud computing environment that enables these services.

• Cloud services are the consumer and business products, services, and solutions that are delivered and consumed in real time over the Internet. (IDC identifies eight key attributes that more clearly define the new generation of commercial cloud services.)
  
  
• Cloud computing is an emerging IT development, deployment, and delivery model, enabling real-time delivery of products, services, and solutions over the Internet.

The attributes of cloud services make the consumption of goods and services easier and cheaper -- and often better -- than through traditional delivery modes. These attributes also lower costs, simplify and accelerate access, enable fine-tuned provisioning, greatly increase the number and variety of available services, and improve the potential to integrate these services.

As the foundation for cloud services, cloud computing consists of a growing list of technologies and IT offerings that enable cloud services, including infrastructure systems (servers, storage, networks), application software, system and application management software, IP networks, and pricing agreements.

The shift toward cloud computing is being driven by three market forces: the search for growth (and revenues) in important new segments, including emerging markets like Brazil, Russia, India and China (BRIC) as well as the small and medium business (SMB) sector; the shortcomings of traditional approaches in capturing the growth in these increasingly important markets; and competitive pressures from new players with little to lose and everything to gain from pushing the new model.

IDC believes there are two principal opportunities for IT suppliers from the growth of cloud services. One area of opportunity for the IT supplier is to consider delivering its own IT products or services to customers via the cloud model. This means considering whether to get into the software-as-a-service (SaaS) business, the storage cloud business, the server cloud business, etc. The other area of opportunity for IT suppliers to consider is how its current and future offerings can support its customers' development, deployment, and delivery of a wide variety of business and consumer cloud services. In other words, providing the tools for others to get into the cloud services business.

To succeed, cloud services providers need to address a mixture of traditional and cloud concerns. According to survey respondents, the two most important things a cloud services provider can offer are competitive pricing and performance level assurances. These are followed by the ability to demonstrate an understanding of the customer's industry and the ability to move cloud services back on-premises if necessary.

More information about IDC's cloud services research can be found online at www.idc.com/research/cloudcomputing. Current postings include IDC's definitions of cloud services and cloud computing, results of the cloud computing survey, and the IT cloud services forecast.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

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Top 10 strategic technologies for 2009

Analyst house Gartner has tipped its top 10 strategic technologies and trends for next year, with virtualization, cloud computing and social networking all making the grade.

The analysts believe all 10 technology trends have the potential to have a significant impact on businesses over the next three years. David Cearley, vice president and distinguished analyst, said companies should look at them as "opportunities"--and evaluate where each can add value to their business' services and offerings.

The 10 technologies/trends are:

1. Virtualization
Not just server virtualization but storage and client devices too. For instance, Gartner says virtualization can significantly decrease the cost of holding information by eliminating duplicate copies of data on real storage devices.

2. Cloud computing
The analyst says smaller companies especially can benefit from cloud computing because of built-in elasticity and scalability which can help them grow quickly while also reducing barriers to entry. Gartner also believes there are opportunities here for larger organizations, especially as certain IT functions become less customised.

3. Servers--beyond blades
Servers are evolving in a way that will simplify the provisioning of capacity, according to the analyst, so organizations will be able to track an individual resource type--such as memory or processing power--and replace that as needed, rather than having to pay for all resources every time an upgrade is needed.

4. Web-oriented architectures
Web-centric technologies and standards will continue to affect enterprise computing models, says Gartner--leading to greater use of service-oriented environments in the business over the next five years.

5. Enterprise mash-ups
Quirky Web mash-ups are inspiring businesses to investigate how mash-ups can be added to enterprise systems to help deliver and manage applications. The analyst says application architects and IT leaders should therefore look to further explore enterprise mash-ups.

6. Specialized systems
Heterogeneous server systems are an emerging trend in high performance computing--to cope with the most demanding workloads--where previously a dedicated appliance may have been used. Gartner says it eventually expects this specialized system approach to filter down to the general-purpose computing market as well.

7. Social software and social networking
The analyst says organizations should consider adding a social dimension to a conventional Web site or application--and, to avoid being left behind, should adopt a social platform sooner rather than later or risk seeming "mute" while rivals get talking to communities and customers.

8. Unified communications
Expect massive consolidation in the comms industry as apps shift to common off-the-shelf server and operating systems, says Gartner. This means formerly distinct markets and vendors will converge--so organizations must plan to take account of comms functions being replaced or converged and adjust their own admin teams accordingly.

9. Business intelligence
BI was the top tech in Gartner's 2008 CIO survey and the analyst continues to back its potential for boosting and transforming business performance. It says such tools are particularly valuable in a difficult business environment like the current global credit crunch.

10. Green IT
Companies should think about shifting to more efficient products and processes as environmental scrutiny increases, and cut energy use. Green regulation is on the rise and this especially has the potential to seriously limit how businesses build data centers so organizations should have alternative plans for capacity growth.

Resource - ZDNet Asia