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.