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Public cloud market grows, but private clouds prevail

More IT shops are seeing the benefits of cloud computing, particularly PaaS, but security concerns keep private clouds at the forefront.

As enterprises seek ways to improve IT operations, they continue to outsource infrastructure and platforms to the public cloud while running sensitive data in private clouds.

Cloud computing gives enterprises a productive way to do things, and it can be a cost-effective alternative to buying and maintaining a data center infrastructure, analysts said.

"The trend is people don't want to spend money on hardware," said Mark Szynaka, cloud architect at CloudeBroker based in New York City. "People are focusing on core competencies. They're looking at IT services more as a commodity that they can purchase from the cloud."

Cloud market revenue will increase at a 36% compound annual growth rate (CAGR), just short of $20 billion, by the end of 2016, according to the 2013 Cloud Computing Overview Report published by 451 Research, a data analysis firm based in New York. The study included over 300 respondents from different segments of the cloud computing market.

Cloud's elasticity is a benefit as data grows and shrinks, Szynaka said. And cloud offers technology to enterprises without the ability or money to support a lot of data in-house.

"With cloud, you can rent IT as opposed to owning it," said Greg Zwakman, research director for quantitative services at 451 Research. "From [an executive's] perspective, you don't have to make that huge capital expense. It's like renting a car instead of owning one."

Infrastructure as a Service (IaaS) accounted for the majority of the cloud market revenue in 2012, with more than half of the public cloud market share and a 37% CAGR through 2016.

Platform as a Service (PaaS) adoption hasn't been as high as IaaS, but it accounted for 24% of the total public cloud revenue in 2012, the report stated. PaaS adoption is projected to grow 41% through 2016, mainly because of its ease of use.

"You're able to build on PaaS without [employing] someone who knows how to design a database or run a database on a server," Szynaka said. "It's already configured for you. You don't have to support or design it."

This gives enterprises the time to focus on applications and their business needs, he added.

Indeed, the cloud has become a big part of IT. Sixty out of 100 IT professionals from large and midsize enterprises interviewed for TheInfoPro's recent cloud report view cloud computing as a natural evolution of IT service delivery and do not allocate separate budgets for cloud computing projects. Of those that do have separate budgets for cloud, 69% expect their spending to increase in both 2013 and 2014 compared with the prior year.

Despite the increased cloud adoption, 83% of those interviewed by TheInfoPro, a service of 451 Research, said they face significant roadblocks to deploying their cloud computing initiatives, a 9% increase since the end of 2012. IT roadblocks have declined to 15%, while non-IT roadblocks have increased to 68% of the sample, mostly related to people, processes, politics and other organizational issues, according to the report.

Public cloud drawbacks lead to private clouds

One of the roadblocks to cloud computing is portability -- the ability to go from one cloud to another, Szynaka said.

"If you start using one particular cloud vendor, you want to know if you can move your data to another vendor quickly and without any issues, especially if they go out of business or choose to move in a different direction," he said.

Another persistent concern is security. IT pros could gain confidence and trust in cloud providers if there is greater transparency and security, the report stated. Twenty-five percent of the respondents suggested better transparency between the cloud provider and the customer before moving to the cloud, while 19% suggested security be improved.

Szynaka also noted the issues of whether the cloud provider can look at data and what could happen if information gets into the wrong hands. News that the National Security Agency collects phone records and emails heightened concerns of the government meddling in an enterprise's affairs.

"The government eavesdropping is definitely a concern," Szynaka said. "Some questions that might be asked are, 'What can I do about them looking at my data?' and 'Are they looking without me knowing?'"

Szynaka believes that cloud will continue to grow -- particularly in private cloud computing.

Thirty-five percent of respondents to TheInfoPro's study use private cloud today.

"Public cloud has been a testing ground for technology and it has proven itself to a point where enterprises are building their own private cloud," Szynaka said. "The idea is you want strategic business plans in the private cloud. If you're a finance company, you wouldn't put trading information on the public cloud."

That sector of business is huge, and more money will be spent on a private cloud, he added. But enterprises will also put commodity IT in the public cloud.

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