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The network is the platform for cloud services

30 Aug 2010
00:00
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If we ignore the out-of-control cloud computing services hype machine for a minute, enterprises truly are facing an IT technology sea change, with cloud and managed services poised for growth for the right applications at the right time. The caveat is that we're in the early -- and we mean early -- days of cloud market development, which the machine usually glosses over.

Triggered by the down economy and other perfect storm forces that include fast-changing technology like virtualization, regulations and the need for increased IT skills, this really is the time for cloud computing services adoption, Forrester Research says, because enterprises and their CIOs have multiple reasons to change their traditional ways of doing business.

But beyond positive messages about the future of cloud computing services, Forrester's VP and principal analyst Ellen Daley is also bullish on the service provider cloud opportunity that stems from owning a high-performance IP network and the expertise to operate it. She added one caveat, however: Service providers don't have cloud dominance locked down, which means they will have to do a lot of due diligence with CIOs to ensure that they have the expertise on the applications end of the cloud and can prove a good ROI.

"Network assets are going to be very important in this market; this isn't going to be a traditional over-the-top game," Daley said.

The network advantage often gets left out in cloud discussions that focus on over-the-top (OTT) players.

Daley recently offered some interesting statistics about the growth of the cloud computing services market and views on the fledgling industry. The numbers came from a custom study sponsored by Cisco Systems.

First, a look at the numbers. Even in the dark days of 2009's economic downturn, managed and cloud computing services saw a 13% uptake in the enterprise, often because businesses had to be more sensitive to cost, Daley said.

In 2010 and going forward, Forrester projects double-digit growth for global managed and cloud computing services through 2016, with 15.4% year-over-year growth in the data center services segment expected over the next six years to create a market segment worth an estimated $100 billion by 2014.

NOTE: Data center services include baseline collocation and hosting services, as well as Compute as a Service (CaaS), which includes Software as a Service (SaaS) and Infrastructure as a Service (IaaS).

Cisco's Will Scott, senior director of the company's service provider segment, added that growth in cloud and managed services is nearly double that of the IT equipment market.

CIOs are kicking the tires of cloud computing services, not flocking to them in droves, and any cloud provider has a lot to prove to the customer before enterprises are convinced. Among other things, they have to bring assets to the table that address CIOs' serious concerns about security, cost, performance and network reliability.

"You need to give CIOs models and show what the ROI of cloud services really is, then partner with other companies to provide the assets you don't have," Daley said. "It will take a while for buyers to understand the advantages, but telecom providers have a strong story because the network is so critical for data center and cloud services."

Business and government technology investment trends go in large wave cycles of 20 years, Daley said, which means eight to 10 years of tech investment followed by eight to 10 years of tech digestion and refinement. If history is any indication and Forrester's models are right, we're entering a new period of tech innovation and growth. At the center of the next tech wave is the ability to make sure cloud computing services have a low-cost, efficient delivery model that's secure and reliable.

Weighing in on what enterprises want, Joseph Crawford, executive director of IT solutions product management for Verizon Business, said the answer is often the reliability of traditional service models but in a flexible and secure way to consume compute resources.

"Visibility is also key," Crawford said. "Customers need to know what types of audits and certifications the service provider has gone through." Verizon's Compute as a Service platform was developed with knowledge about the kind of audits financial-services and pharmaceutical companies have performed for years on other Verizon services.

Link to “Verizon cloud computing services meet SaaS provider's expectations”

Enterprises also have more flexibility than they think in terms of buying an on-demand service from a networking company, Crawford said. "We can make it look like it's just another node on the customer's private network, which is where we're seeing our biggest adoptions, particularly for test and development purposes and new applications."

The IT sea change also includes changes in who's buying the services, Daley said. Technology traditionally has been the domain of IT departments, but with any form of X as a Service except IaaS, the buyer is often from a line of business rather than from IT and doesn't have as much tech savvy.

"This is where the value equation has to be clear, not just a vague promise of saving money," Daley said. "The CIO's role in the future will be more that of a deliverer or aggregator of services. We see the CIO's role increasingly focused on helping the business with its goals rather than functioning as a cost center."

For now, an enterprise's adoption of cloud computing services depends on what type of CIO it has. In many cases, there is a technology-triggering event like a merger or acquisition, Crawford said. "We see those types of customers go almost by necessity to some type of consumption or pay-as-you-go model."

A second type of CIO is starting to transform the IT department to emphasize business analytics and looks at different divisions as customers. "Having the business unit performing well is what's important there," he said. "For the really progressive CIOs, it's not about server uptime but about application performance and availability."

Crawford cautions that enterprises are not talking about shutting down their data centers and moving everything to the cloud. "We see mostly triggering events, and enterprises need to understand the importance of the application, because not all applications are good to run in the cloud."

If OTT cloud providers are to be successful, they may have to build network partnerships to gain access to the intelligent network that can address security, visibility, reliability and application performance. When it comes to what could inhibit the adoption of cloud computing services, Cisco's Scott believes you can't abstract the cloud from the network, because the network is the platform.

See the related article: Verizon's cloud computing services platform meets SaaS provider needs

This article originally appeared in SearchTelecom.com

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