Technology_Forecast_Paper_(Cloud_Computing)

Technology Forecast Paper: Cloud Computing [This page is intentionally left blank] Table of Contents Executive Summary 1 Introduction 3 Industry Overview 3 Financial Forecast of Cloud Computing 5 Growth 7 Business and Organization Application 7 Conclusion 8 References 9 Table of Figures Figure 1: Cloud Computing 4 Figure 2: 6 Figure 3: Cloud Computing Financial Forecast (5 Years) 6 Figure 4: Growth of Cloud Computing 7 [This page is intentionally left blank] Executive Summary There are many reasons for organizations to move from traditional IT infrastructure to cloud computing. Cloud computing represents a new way, in some cases a better and cheaper way of delivering IT services. One of the most cited benefits of cloud computing is its economic benefits. Cost savings through cloud computing can be realized by lowering the opportunity cost of running technology, lowering the total cost of ownership of technology, and giving organizations the ability to add business value by renewing focus on core business areas or creating new business areas. This paper will describe in detail the cloud computing industry, as well as illustrate how the industry has grown, and will continue to grow over the next 5 years. Many large IT companies like Amazon, Google, and Apple have entered the cloud computing market by providing services to traditional non-IT industries like healthcare, insurance, and manufacturing. Adoption from these industries will help sustain cloud computing’s market growth and financial outlook. [This page is intentionally left blank] Introduction In today’s economic environment a company’s survival depends on its ability to focus on core business and adapt quickly. Traditional business models can’t be counted on to translate into sustained or future business growth. In an environment where companies operate with limited resources for financial, people, technology, and power – IT needs to help the business find new ways to respond. Since the early 2000’s individuals and businesses have begun using “Cloud” infrastructure or “Cloud computing.” While there are several different definitions and interpretations of cloud computing, Merriam- Webster defines it as “the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server or personal computer.” While there are lots of technical considerations with cloud computing, the fundamental principle is an economic and business solution. This paper will discuss the growth the development of the cloud computing industry through 2015. Industry Overview Most companies are familiar with the traditional data center and IT service delivery, where companies purchase and manually deploy applications and services. For example, a typical traditional organization will purchase the Microsoft office suite and install it on every employee’s workstation, or install more storage on workstations of users that may need it. In a cloud infrastructure, the “cloud” is a set of hardware, networks, storage, series and interfaces that enable the delivery of software, infrastructure, and storage over the internet. In the same example, that same company under a cloud infrastructure – the users can request resources like applications and storage on demand, and release those same resources when they no longer need them. The cloud computing model provides a more efficient, cost effective IT service delivery. Hurwitz explains the cloud can eliminate many of the complex constraints from the traditional computing environment, including space, time, power, and cost. (Hurwitz, Kaufman, Halper, & Bloor, 2010) Figure 1: Cloud Computing The cloud based infrastructure has immediate benefits, including the ability to add new infrastructure capacity quickly and at lower costs. Therefore, cloud services allow the business to gain IT resources in a self service manager, thus saving time and money. By purchasing the right amount of IT resources and making them available on demand, the organization can avoid purchasing unnecessary equipment. A company may significantly reduce IT and operational expenses by moving to the cloud, while other companies view IT as their primary business and therefore will view IT as a revenue source. California based technology companies Sanmina and Google are at the forefront of a fundamental shift in the way companies obtain software and computing capacity. A host of providers including Amazon (AMZN), Salesforce.com (CRM), IBM (IBM), Oracle (ORCL), and Microsoft are helping corporate clients use the Internet to tap into everything from extra server space to software that helps manage customer relationships. Assigning these computing tasks to some remote location—rather than, say, a desktop computer, handheld machine, or a company's own servers—is referred to collectively as cloud computing (BusinessWeek, 4/24/08). Clouds generally take two forms: private and public. Private clouds are built within a company’s data center and are designed to provision and distribute virtual application, infrastructure and communications services for internal business users. These service components are designed to use the available IT assets in a highly efficient way. In contrast, public clouds extend the customer’s data center’s capabilities by enabling the provision of IT services from third-party providers over a network. For example, software-as-a-service (SaaS), platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS), all of which offer virtualized solutions based on a variable, pay-as-you go pricing model, are emerging as important elements of next-generation IT service capabilities. Financial Forecast of Cloud Computing Cloud computing is real, it’s here now, and it’s growing fast. In 2009, cloud services made up 5 percent of worldwide IT spending and are expected to account for 10 percent by 2013, (Accenture, 2011) These services are helping organizations reduce costs, enhance scalability, increase implementation speed and improve applications and business processes. But the real promise of cloud computing lies in developing new markets and services that give clients competitive advantage in rapidly changing markets. Some analysts say cloud computing represents a drastic change in the way computing is done in corporations. Merrill Lynch estimates that within the next five years, the annual global market for cloud computing will surge to $95 billion. In a May 2010 report, Merrill Lynch estimated that over 20% of the worldwide software market would go to the cloud in that period (BusinessWeek, 2010). CEO of IT giant VMware, Paul Maritz speaks of the technology industry, "we're shifting to more of a people- and information-centric world," For the $3.4 trillion global tech industry, this shift offers a path out of the economic hardships many other business sectors face. In fact, it may be the largest growth opportunity since the Internet boom. According to market researcher Gartner.com expects the overall global tech market to shrink by 3.8% this year, forecasters have high hopes for portables, wireless networks, and cloud computing over the next five years. Gartner predicts the market for cloud products and services will vault from $46.4 billion last year to $150.1 billion in 2013. In October of 2008, IDC, another IT Market researcher performed a 5 year growth forecast of cloud computing and IT cloud service spending. Figure 2: Using the same conservative forecasting approach, the following is a five year (2012-2016) forecast of cloud computing and spending. Figure 3: Cloud Computing Financial Forecast (5 Years) The calculations presented above, can be further validated by a recent article from Coda research. “Skepticism about cloud computing abounds, yet despite the critics, there’s a new prediction that in the next six years (2015), Cloud Computing will make up 17% of all IT expenditure worldwide.” (Coda Research, 2011) Growth According to Bloomberg Newsweek, who has published several reports on cloud computing, the greatest growth in expenditure upon cloud services will be around collaborative applications, IT management applications, personal and business applications and storage. Figure 4: Growth of Cloud Computing Business and Organization Application As stated earlier, the application of the cloud infrastructure can be used in one of two ways; to enhance, optimize, and make a company’s IT infrastructure more efficient – or consider cloud computing as a business line and revenue stream. For the latter, several large- “big names” in the information technology arena have become popular cloud providers. Some of those companies include, GOOGLE, Microsoft, Amazon, IBM, VMware, and most recently (while writing this paper) Apple Corp. Cloud service delivery among providers is usually modeled in three different ways, Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and the most popular Software as a Service (SaaS). Until the most recent Apple revelation, Amazon was one of the most high profile IaaS operations. Through Amazon’s cloud it provided a web interface that allows its customers access to their networks through virtual machines, while only requiring the customer to pay for resources by the hour –as they are used. In its trademark “First to Market” fashion, Apple recently entered into the cloud market, by offering a hybrid model of cloud service. Apple’s iCloud will in theory combine Infrastructure, platform, and software delivery in one package. Unlike existing consumer-focused cloud-based services offered by others, including Google’s Music Beta digital locker, iCloud will automatically store content in cloud and wirelessly pushes them out to all devices. Apple’s iCloud will basically be able to store any digital content its user can think of, while also providing an infrastructure robust enough to support its huge API library for its App Store and giving customers the ability to instantly stream music directly from their iTunes library. Conclusion In conclusion, there are significant economic and operational benefits to be gained from cloud computing. These benefits accrue to a business in two distinct ways; directly through reduced cost and indirectly by allowing the organization to become more efficient and focus on core business areas. Not only has IT companies realized the benefits, but other non-IT companies have begun to see what a cloud infrastructure can do for them. In order to sustain its growth and financial forecast, the non-IT industries, like insurance and manufacturing, will have to continue to adopt the cloud. References Apple wwdc 2011: can icloud help iphone 5 beat android'. (2011, June 9 ). International Business Times , Retrieved from http://sanfrancisco.ibtimes.com/articles/160062/20110609/iphone-twitter- facebook-ipad-itunes-3g-android.htm Digital Walkabout, (2009, May 24). Cloud computing growth predicted by coda research [Web log message]. Retrieved from http://charltonb.typepad.com/weblog/2009/05/cloud-computing- growth-predicted-by-coda-research.html Hurwitz, J, Kaufman, M, Halper, F, & Bloor, R. (2010). Cloud computing for dummies. Hoboken, NJ : Wiley Publishing Kepes, B. (2011). Cloudonomics; the economics of cloud computing . Cloud U, King , R. (2008, August 4). How cloud computing is changing the world. Bloomberg Businessweek, Retrieved from http://www.businessweek.com/technology/content/aug2008/tc2008082_445669.htm Revere Data LLC., (2011, January 28). Cloud computing: poised for robust growth' [Web log message]. Retrieved from http://seekingalpha.com/article/249436-cloud-computing-poised-for-robust- growth