The cloud computing industry is dominated by different services including public, private and hybrid models. Although all three are enjoying increasing success and adoption rates, private solutions in particular appear to be striking a chord with businesses worldwide, as the demand for these suites is expected to increase at a consistent rate in the coming years.
A recent TechNavio report projected the global private cloud industry to expand at a compound annual growth rate of 22 percent between 2013 and 2018. The research firm explained private tools are "secure and distinct," delivering powerful "-as-a-Service" functionality through a virtual environment with the support of physical equipment. Private services also include data, hardware, storage and applications.
Public clouds differ from private counterparts because of accessibility. The former model involves cloud systems shared by multiple tenants. Private platforms are only used by a single business. This is important to many organizations, especially those concerned over keeping unauthorized parties from viewing sensitive data and other resources.
Private cloud users outsourcing maintenance
Companies no longer have to manage every facet of their IT departments if they adopt cloud computing. This is because vendors handle these tasks, enabling customers to refocus on internal corporate goals, building their brand up in the process.
A Technology Business Research report found the cloud market will be worth $41 billion in 2014. Through 2018, the industry will experience compound annual growth rate of 14 percent to $69 billion.
Of the organizations polled, 70 percent rely on third-party service providers to manage their private clouds, while 30 percent perform these tasks on their own. In the next two years, TBR expects more companies to partner with vendors due to security and complexity challenges with their cloud environments.
Overall, 59 percent of companies cited security as their No. 1 concern or pain point regarding using cloud solutions. Nearly 20 percent expect to hire third-party vendors to address these challenges, TBR found.
"As private cloud matures, growth is entering a different phase that is driven more by the flexibility and ease of management than by just security or cost savings. The skills gap in implementing, migrating and managing private cloud is driving customers to seek vendors that deliver clear and end-to-end migration road maps," said TBR Cloud Practice Manager and Principal Analyst Allan Krans.
Clients want personalized service
Customers interested in adopting cloud computing do not want any type of model – they desire environments suited to their specific operational needs. Cloud vendors that try to offer all types of services may struggle to attract new clients and keep them on board for a long time. This is especially important given that cloud solutions are available through subscription-based pricing models. If a client is not satisfied with the results, it can simply take its business elsewhere.
Cassandra Mooshian, a cloud analyst at TBR, said some of the world's largest cloud vendors have some of the lower customer satisfaction scores compared to other service providers that offer "more focused portfolios.
"Trying to be all things to all people deters customers that want those tailored and specialized solutions; think of Walmart versus a grocery store," Mooshian added.
Organizations that want a secure and functional cloud model should feel right at home with a private deployment. First-time adopters should make sure they conduct some extensive research before selecting a vendor to avoid partnering with a service provider that only offers broad suites. Otherwise, businesses will have to put in more work to find a company that can, rather than experiencing the advantages of the technology itself.
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The fact that small businesses and startups can use cloud computing is a reason behind the technology's overall success. Local stores without robust IT departments can still take advantage of similar functionality found within large enterprises without wasting resources on on-site equipment that may never be used to full capacity.
A new brand that can enter a market fast is essential for establishing a presence right out of the gate. Since management tasks are outsourced to the cloud vendor, customers can go about their business and focus on the finer details of hopefully generating short- and long-term success. Should a company need additional resources, the service provider can add such functionality quickly and easily without disruption.
CNBC recently highlighted how some small businesses have benefited from cloud-based environments. Corning, New York-based Tough Pups – a pet daycare and training facility, relies on the technology for all types of purposes, including bookkeeping. Leo Sanders, founder of the company, receives payroll alerts directly to his phone.
"I don't have a lot of time to sit down and dedicate specific blocks of time to do certain tasks – it can be very disruptive to my day," Sanders told the news provider. "When it comes to companies that almost automate tasks like this, it levels the playing field."
If more small companies like Tough Pups embrace the cloud, the global industry may reach even greater heights than current projections, which are still impressive in of themselves. Gartner believes 33 percent of organizations relying on office solutions will implement the cloud in some capacity by 2017, up from only 8 percent in 2013. By 2022, this percentage could achieve 60 percent penetration, totaling nearly 700 million end-users and annual investments exceeding $400 billion, CNBC reported.
Startups can hit the ground running
Entrepreneurs looking for ways to quickly get their shops up and going may not have a better solution than cloud computing. The technology's affordability, flexibility and accessibility make the service ideal for any type of business. A joint survey of 1,300 U.S. and U.K, organizations conducted by Rackspace, Manchester Business School and Vanson Bourne discovered nearly 90 percent of adopters experienced the cloud's cost advantages. Another 56 percent generated revenue and 49 percent increased operations.
Brian Nicholson of the Manchester Business School noted how valuable the cloud is, especially among startups.
"Cloud computing is heralding a boon for startups at a time when they are most needed. By making high-end computing resources available on flexible payment terms at the push of a button we are significantly reducing the level of investment required to set up shop," Nicholson said.
First-time adopters can't rush or wait too long
Companies that have not integrated cloud services into their operations should not rush to do so. Businesses that do not do their due diligence when comparing the available cloud solutions on the market and the vendors offering these services will not make the most informed decision pertaining to their unique needs.
However, while firms cannot rush the implementation process, they should not wait too long to get onboard the cloud bandwagon. As each year passes, more organizations launch cloud environments. In a few years, those not relying on the technology may be in the vast minority, struggling to keep pace in their respective markets.
Few technologies are available to the masses. Cloud computing fits this bill. First-time adopters that want to get their implementation right the first time can use migration solutions and conduct thorough testing to determine the best fit for their companies.
There's a strong chance that most companies have at least heard of cloud computing by now. There's also a strong possibility that many businesses worldwide have already adopted the technology or are planning to do so in the near future, as a way to replace antiquated IT systems, promote employee collaboration and reduce operating costs, all while outsourcing management of these environments to a third-party vendor. Now, firms can focus on their brands instead of tech-related maintenance.
Organizations that have kept cloud solutions at arm's length are doing themselves a disservice if they continue down this path. The fact of the matter is that more companies will be cloud users soon enough, meaning those on the outside looking in will be in this position until they make the switch. Businesses assertive in their stance that their on-site systems are fine don't have to move all in with a cloud deployment – migrating mission-critical data and a few applications to a hosted environment to put the solution through its paces.
Firms not happy with the technology can simply end their subscription with the service and go back to normal. But organizations owe it to themselves to at least give the cloud a chance because, before long, they will be in the minority when it comes to using the technology.
North Bridge Venture Partners, Gigaom Research and 72 collaborating firms found adoption of the cloud has never been higher during its research that spans four studies over four years.
"With four years of data, we're now really beginning to see some interesting trends, such as the five-fold increase in SaaS adoption to 74 percent and the nearly six-fold increase in PaaS adoption to 41 percent." said Michael Skok, founder of the Future of Cloud program and general partner at North Bridge.
Businesses, execs hoping cloud delivers results
Decision-makers must always be ready to establish long-term roadmaps that set their businesses on a successful path. The survey found nearly 50 percent of respondents are using the cloud to create new products and generate revenue. Another 45 percent of participants plan to or already operate their companies from a cloud-based environment.
David Card, vice president of Gigaom, said "long-suffering IT execs" are benefiting from the latest cloud innovations, especially in terms of offloading functions and instead focusing on new business objectives.
Data security is perhaps the only inhibitor of the cloud's momentum at the moment. The survey found 49 percent of respondents cited this concern as a problem area. The report indicated vendors that rise above the competition and communicate with customers about their corporate safeguards can set themselves apart from their rivals by gaining client trust.
Are the security concerns overblown?
The cloud's security is often a hot debate topic, due primarily to the fact that information is no longer stored at a company's office. Such content is now located at an off-site location and managed by another company. However, the locale of this data is actually its greatest strength.
For example, data backed up on disks, tapes and external hard drives can be misplaced, stolen or damaged during natural disasters. Companies that migrate information and applications to a cloud environment do not have to worry about such incidents if these resources are accessible through the Internet.
Any cloud vendor that wants to remain in business for the long run will undoubtedly offer encryption services to safeguard customer content, allowing only authorized personnel to access data and apps.
It's never easy for an organization so used to operating a certain way to make a major corporate shift. However, the knocks against cloud computing no longer hold as much weight as they used to, making the technology a perfect way for companies to sustain success for years to come.
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