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While the tipping point for cloud computing adoption is still out on the horizon, the accelerated pace of adoption in 2016, and the even faster acceleration forecasted for 2017, indicates cloud deployment has clearly turned the corner.
Most large IT shops still hesitate to move their most important business applications to the cloud, as they still believe the cloud broadly lacks security. These same companies are also hobbled by the inherent inertia that comes when faced with a migration from an established platform over to something new. But more recently, IT professionals say they have cast these fears aside and awakened to the new reality that if they don't embrace the cloud, their businesses could be in peril.
"We see this rapidly increased interest in the cloud, especially the public cloud, as companies go through the process of a digital reinvention of their businesses," said Don Boulia, general manager of cloud developer services at IBM. "They realize they have a clear choice: They can be the disruptor in their market with more aggressive use of the cloud, or face the prospect of being the disrupted."
One corporate IT professional with a Chicago-based financial and commodity exchange backs up Boulia's view. Improved migration tools and more reliable security have emboldened his department to make a stronger financial commitment to plant more workloads in the public cloud.
"Some of the new tools that have come on the market are making it easier to slide more workloads to the public clouds," he said. "And some of the cloud-based security we have been testing is as good as anything I am using on premises, which makes my boss and, more importantly, customers confident."
For a growing number of IT shops, the "lift-and-shift" strategy is the easier, and now preferred, way to migrate workloads to the cloud, but may be at the expense of other more interesting capabilities, said Jason McKay, CTO at Logicworks.
Carl Brooksanalyst, 451 Research
"We see a lot more lift and shift of workloads rather than things like refactoring to take care of cloud native services," he said. "There is no major transition of the apps, or much refactoring so as to be microservices-based, as opposed to the more traditional path."
This new realization is borne out in the numbers compiled by a handful of analyst firms. Since 2013, the percentage of enterprises that have deployed cloud has risen from 10% to 33%, and 49% of enterprises with more than 100 employees now use public cloud, according to Forrester Research. 451 Research forecasts that IT shops will spend an average of 34% of their overall budgets on hosting and cloud services in 2017, up from 28% last year, with increased reliance on infrastructure, applications management and security. And market research firm IDC predicts that 23% of IT infrastructure and application workloads will reside in the public cloud in two years, up from today's 14%.
"Over the past year, questions from our clients have shifted from, 'Is cloud cheaper than my data center?' to 'Is cloud better than my data center?'" said Dave Bartoletti, principal analyst at Forrester. "That question is pretty much answered now. For many it's only a matter of, 'How do I get there?'"
Not everyone is cloud-bound
Not every large company, of course, is racing toward the public cloud. Vertical industries now approach cloud computing adoption at a leisurely pace, particularly those that handle sensitive information, such as healthcare organizations that guard mountains of sensitive information.
"Some organizations won't move certain workloads [to the public cloud] unless they have more control by wrapping more security and resiliency around them," said Shawn Hakl, vice president of networking and innovation at Verizon. "Others are pushing market volumes with an open agenda, but I suspect as they mature they'll come back to multiple modes of connectivity."
A legitimate argument can be made for large companies to keep 80% of their data on premises and to use cloud bursting for just web-scale workloads.
"I just don't see a world that's 100% in the public cloud," said Patrick Harr, CEO of Panzura, a cloud storage provider based in Campbell, Calif.
Not enough users fully appreciate the speed and agility offered by today's technology to help move data between on premises and the cloud, he said. The recent VMware-AWS deal is a prime example of how the combined technologies of those two companies allow IT shops to work more efficiently with hybrid environments. Similarly, Microsoft's upcoming Azure Stack also promises to help more consistently shuttle data between on premises and the cloud.
Yet, many shops appear steadfastly determined to conduct business as they always have.
"I still think the biggest competitor [to cloud adoption] is status quo," Harr said. "This kind of thinking, from the enterprise perspective, is driven not from the technical side but by those on the process side of the equation."
One good cloud deserves another
Further evidence many enterprise users have moved well beyond their first cloud implementation is the growing interest and comfort level with various multicloud strategies.
"In 2016, we had twice the bookings we had last year (2015), and we do nothing but operate internal and external compute capabilities," said Jason Stowe, CEO of Cycle Computing. "That to us is a pretty strong indicator that cloud is getting a lot of adoption."
In a dramatic shift, a growing number of Stowe's customers look to Microsoft Azure cloud or Amazon Web Services to host their environment instead of more IT investments for on-premises hardware.
"Before the last round of hardware was purchased two-and-a-half years ago, it was an easy decision to buy more hardware," Stowe said. "But when those systems fully depreciate, I expect we'll see an even more rapid cloud adoption. [Customers] would much rather buy a web console."
Stowe's company this year managed 360 million hours of compute time, which has skyrocketed sevenfold every two years, with the lion's share of that in the cloud -- and he sees no let-up in the foreseeable future.
Upper IT management has been increasingly pressured to help their companies access as much useful data as possible, but has struggled to give that data to more users inside their businesses. Increasingly, cloud appears to be the most efficient way of doing that.
"That's why you are seeing agility, and not cost, as the primary driver," said Prat Moghe, CEO of Cazena, a big-data-as-a-service provider that works with AWS and Azure. "It's not that they (IT executives) don't spend the money, they just don't want to spend that money in the wrong place where they don't get a return on it."
IT execs no longer wrestle with whether they should pursue cloud computing adoption, but instead what is the best plan for their business. Another key question, Moghe said, is where to place their bets: "How do I construct my analytics on a platform so I'm not locked into any one provider? AWS sounds great, but what happens if AWS US East goes down and how do I protect myself from that?"
Over the past few months of 2016, Moghe has seen a major shift in attitude among companies in the retail, marketing, telecommunications and financial markets to migrate data from on premises to the cloud.
"For the first time banks are saying to me, 'Hey, when are you going to think about public cloud? Next year or the year after that?'" he said.
The rising fever to deploy more clouds echoes that of other breakthrough technologies, such as client-server adoption which significantly shifted the focus away from mainframe-class systems and changed the face of computing for many large IT shops.
"These trends move in cycles," said Carl Brooks, an analyst at 451 Research. "First it was client-server where everyone was screaming, 'Get me a server and software.' Now it's, 'Someone get me into the cloud.' The exact same dynamic is happening again right now," he said.
Brooks estimates overall cloud adoption growth in 2017 will be in the 20% to 30% range compared with last year, and closer to 40% for the public cloud. He expects Amazon to maintain its dominant position in the public cloud with Microsoft comfortably in second place, as IBM, Google, VMware and Salesforce continue to lag behind.
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