UPDATED 15:00 EDT / FEBRUARY 18 2014

Enterprise cloud spending to triple by 2017 : New markets emerge for software, analytics

cloud leap transitionCloud spending continues to accelerate as large organizations move beyond test and development in pursuit of business agility and cost savings, a recent report by IHS Technology has reaffirmed. The research firm predicts that the market for “online storage, computing, analytics and provisioning services” will be worth $174.2 billion by the end of the year, a 20 percent increase from $145.2 in 2013.

“With the cloud touching nearly every consumer and enterprise around the globe, spending for cloud-related storage, servers, applications and content will be dedicated toward building a framework that is rapidly scalable, highly dynamic, available on-demand and requiring minimal management,” noted Jagdish Rebello, a senior director and principal analyst at IHS.

Enterprise cloud adoption leads to new trends

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IHS sees the enterprise cloud market gaining even more momentum over the coming years and eventually reaching a massive $235.1 billion in 2017, triple the $78.2 billion CIOs spent on their deployments in 2011. Rebello points at the the rise of unstructured data – and in particular digital media – as the main driver behind this tremendous growth, which underscores the need for greater access to information among both consumers and decision makers. That in turn will contribute to the adoption of analytics, which Wikibon predicts will become a $50 billion-plus market by 2017. That’s compared to $18.6 billion in 2013, which saw major milestones in the quest for the first truly enterprise-ready Big Data platform.

“The concept of Hadoop-based Big Data analytics and applications moving beyond MapReduce-style batch analytics existed before 2013, but this was the year that the structural foundation to such a transition was laid in the form of YARN,” Wikibon Principal Research Contributor Jeff Kelly highlighted in the latest installment of the annual Big Data Vendor Revenue and Market Forecast. “Complementing YARN were a number of moves by Hadoop and non-Hadoop vendors to better integrate the open source Big Data framework with existing data management infrastructure and legacy databases.”

With global cloud subscriptions set to hit 730 million this year, up from 630 million in 2013, IHS believes that mobile providers are particularly well positioned to take advantage of advances in analytics. Rebello says that telcos have an opportunity to “offer truly differentiated services to subscribers” by tapping into new data sources such as embedded sensors.

Open source trends are really helping to drive cloud adoption in the enterprise, and despite ongoing obstacles related to firewalls, privacy and end-user access, interest in making the enterprise operate more like the public cloud remains high. And the conversations regarding cloud services in the enterprise are moving past the CIO’s desk. Cloud providers must now angle with CFOs and CMOs as well, in order to consider company-wide demands and also to stay on budget. Open source can help the enterprise achieve that economy of scale, as Peter Krey noted in a recent presentation at the Open Compute Project Summit.

“Another way to look at this is talk to COOs, CFOs and the people responsible for multimillion-dollar budgets in some big organizations; from a non-technical Opex and Capex perspective, there’s also a huge potential impact here,” said Krey.

He added: “While it is difficult to get senior enterprise colleagues to disclose networking Opex and Capex percentages of their total cost structures, let’s make some conservative assumptions: it’s not hard to imagine that some of these enterprises consume 20-30 percent of their total Opex and Capex from networking. In many organizations is one of the top five line items.”

Read more on Krey’s presentation here for a full understanding of how cloud is impacting the enterprise, as well as what’s still missing from this massive market opportunity.

photo credit: Martin Gommel via photopin cc

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