Abstract

As we enter 2011, the expectations surrounding the growth of cloud based services are very high. In spite of the unwarranted hype and FUD surrounding the cloud based services in 2008 and 2009, the past year saw some level of maturity in both the cloud services itself and, also, in the discussions surrounding cloud computing. Since the noise is somewhat filtered out and we have agreements on the various definitions in this space, including the very definition of cloud computing itself, it is time to do some trendspotting. In this research report, we briefly look at the evolution of cloud marketplace in 2010 and offer our outlook for 2011 and beyond.

Introduction

As computing evolved past the initial hype, we are seeing strong adoption not just from the SMBs but also on the enterprise level. Even though enterprise adoption of public clouds is still weak, we are seeing a stronger adoption of private clouds. Since it is our belief that the enterprise path to public clouds is through the hybrid clouds, we see this trend as encouraging for the future of public cloud services. In fact, in 2010 alone, we saw a rapid increase in cloud adoption among the enterprises. In fact, different surveys taken at different times of the year confirmed this increase even after taking into account various biases inherent to these surveys [1, 2, 3, 4].

As enterprises warm up to cloud computing and as the cloud services mature, we are going to see a steep increase in the interest for cloud services. Whether it is infrastructure or platforms or applications, we are going to see a significant jump across various industries and in many different countries around the world. It is important for the existing and potential customers of cloud services to understand where we are headed in the market and make strategic decisions that will help maximize the benefits for their investments. Based on our industry experience, we are trying to extrapolate the trends into 2011 and beyond to help our readers understand these trends. We sincerely hope that this research report serves this purpose.

Setting the stage

Before we discuss the trends in 2011 and beyond, we would like to briefly explain our take on the basic concepts of cloud computing so that there is no ambiguity in the future discussions.

Definition

We believe that NIST definition of Cloud Computing is a very good starting point for our discussions [5]

Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.

Essential Characteristics

Some of the characteristics of cloud computing are

• On-Demand access through the network. In the case of public clouds, the access is through the internet.
• Device independence
• Location independence
• Multi-tenancy or Resource pooling
• Elasticity
• Metered service

Delivery Models

Cloud services delivery can be broadly classified into three models. This is commonly called as SPI model.

1. Software as a Service (SaaS): Software applications delivered from the cloud using multi-tenancy and accessible by various devices using a web browser. The vendor controls the entire stack from hardware to applications with users having the control over their data.
2. Platform as a Service (PaaS): Application platform that completely abstracts all the complexities of the underlying infrastructure and delivered as a service for the users to deploy applications that can be accessed over the network. There are striations inside the PaaS itself with IDE as a service on one end to pure middleware as a service on the other end. For the sake of simplicity, we stick to the SPI model and consider various types of platform services within the PaaS categorization itself. The provider controls everything from hardware till the platform layer and users have complete control over their applications.
3. Infrastructure as a Service (IaaS): Raw compute power and storage offered as a service with a metered billing where users can deploy and run different software from operating systems to platforms to applications. Compared to PaaS, the abstraction is taken to a lower level in the infrastructure and users get more control over the configuration of platform itself. The provider manages the hardware and other infrastructure needed to run the virtual machines and the users get to control everything from OS to applications.

Even though we have three different delivery models, it is not uncommon to see different providers converging on the PaaS layer. As infrastructure gets more and more commoditized, we see IaaS providers move up the stack and offer services at the platform layer. We also see many application providers going down the stack offering a platform on which users can build applications using point and click, mainly targeted towards business users without any programming experience.

Deployment Models

Here we, once again, agree with NIST’s take on the four deployment models for cloud services.

1. Public Clouds: Public Clouds, also called as the real cloud by some purists, is the availability of cloud infrastructure to general public and accessible through the Internet. The infrastructure is owned by 3^rd party service provider and is present outside the firewall of organizations using it. Multi-tenancy is the key differentiating factor here, which results in what we now call as Cloud Economics.
2. Private Clouds: Private Clouds are cloud infrastructure operated solely for an organization either by the IT of the organization or 3^rd party. The infrastructure can be present inside of the organization’s firewall or operated in a 3^rd party datacenter. Cloud economics will not be in play here but organizations can take advantage of other cloud characteristics like better utilization and elasticity.
3. Community Clouds: Community Clouds are cloud infrastructure shared by different organizations that supports specific community or verticals with shared needs. One or more of the participating organizations or a 3rd party may manage the infrastructure. The infrastructure can be present either inside the firewall or with 3^rd party datacenters.
4. Hybrid Clouds: Hybrid Clouds are cloud infrastructure made up of two or more clouds (public, private, community) with one of them leveraged from a public cloud provider. These are independent cloud deployments that are bound together by standardized or proprietary technology that enables data and application portability. Usually, enterprises with a private cloud infrastructure tap into public clouds to push certain non-critical workloads in order to meet their sudden resource requirements

We strongly believe that in long term, enterprises will move most of their workloads, if not all, to the public clouds. As we saw in 2010, more and more organizations are deploying private clouds in their datacenters to take advantage of better resource utilization and elasticity. This strategy helps them understand how cloud infrastructure works, leverage some of its advantages and, also, save some money through better resource utilization. Over a period, as public cloud services mature and these organizations get comfortable with such services, we will see certain non-critical workloads getting pushed into public clouds. This results in a hybrid cloud environment that will eventually pave way for large-scale public cloud adoption.

Looking back at 2010

Before we talk about the trends in 2011 and beyond, it is important to understand how the cloud marketplace shaped up in 2010. 2010 is the year Cloud Computing moved from hype into reality. This year saw widespread acknowledgement about cloud computing by both enterprises and traditional IT vendors. Business leaders took an active interest on the role of cloud computing inside their organizations. This is one of the key factors, along with the grass roots bottoms-up adoption, in pushing cloud computing deep into the enterprise discussions.

Some of the key trends from 2010 are:

• Public clouds moved from hype to reality with enterprises clearly understanding the strategic advantages of using them as a part of their IT. Even though public cloud adoption among the enterprises is still low, we confidently say that the “breaking the ice” phase is over in 2010.
• Private clouds gained lots of momentum in 2010 and became part of the IT strategy for many enterprises. They clearly understood that traditional approaches to IT leads to large-scale wastage of resources and highly inefficient. Even though they are still not completely at ease with the public clouds, they have, however, realized that cloud technologies can help them greatly optimize their existing IT, leading to large-scale interest in private clouds.
• Amazon continued with their rapid innovation and, in the process, consolidated their position as the leader in the IaaS market. They increased their marketshare manyfold in spite of many new smaller entrants and regional providers. Netflix moved their infrastructure to AWS and became an excellent case study for AWS, in particular, and public clouds, in general.
• US Federal Government took a more aggressive approach to cloud adoption. Not only some critical external facing web properties moved into public cloud, they also took cloud first approach to IT. According to this policy, every agency will identify three “must move” services within three months, and move one of those services to the cloud within 12 month and the remaining two within 18 months. More government properties moved to public clouds. This will accelerate the use of cloud computing at all government levels and help increase the trust in cloud services for the enterprises.
• High Performance Computing (HPC) in the cloud gained quite a bit of traction this year. Slowly, a realization set in about the potential of cloud computing to meet the needs of HPC users.
• Traditional IT vendors including CA, VMware, Redhat, Dell, etc. realized the dawn of cloud era and jumped into it through acquisitions. This is just a beginning and we will see a more aggressive acquisition strategy by these vendors in the next 2 years.
• 2010 saw the emergence of regional cloud and this trend is going to accelerate as more and more hosting providers see the ground shifting underneath them and embrace cloud strategy. Cloud platforms like Eucalyptus, Cloud.com, Cloupia, 3Tera Applogic, etc. will help in this trend.
• The importance of open source in the cloud era became even more important with the announcement of OpenStack project by Rackspace and NASA.
• PaaS gained lot of attention in 2010 as the realization set in about the fact that PaaS is the future of Cloud Services. Developers love the idea of PaaS and, slowly, enterprise managers are seeing the usefulness of PaaS in both cost reduction and business agility.
• Every major cloud provider is plotting their way towards PaaS layer of the stack and we are seeing the launch of more and more startups in the PaaS space focusing on different language stacks. Salesforce’s acquisition of Heroku signaled an impending wave of acquisitions in this space and expect to see more action in this space.
• Big Data and increasing adoption of tools like Hadoop made BI and Analytics even more sexier.
• Data Warehousing saw large-scale consolidation with big players buying or attempting to buy promising startups in the space.
• Collaboration and Social became fashionable among the SaaS providers partly due to the high profile evangelism by Marc Benioff, CEO of Salesforce.com. Slowly, organizations using SaaS are recognizing the importance of collaboration and social tools not just to break down the silos but also to increase the productivity within the organization. 2010 can be seen as the year when organizations realized the potential for collaboration and social features integrated into applications.
• Social CRM became a hot trend empowering users in ways not imagined even a few years back.
• Widespread SaaS adoption has put integration services as a crucial part of IT buying checklist.

In 2010, we saw traction in all the three layers of the cloud computing stack, a clear indication of the maturity and acceptability of cloud based computing.

What to expect in 2011 and beyond?

Based on our extensive interaction and survey with both the users and providers of cloud computing services and, also, based on our own observations and deeper analysis, we have identified some trends in 2011. In this section, we will list out the trends and keep any detailed analysis for future blog posts.

IaaS

• One of the important trends this year is about cloud federation. Unlike the traditional economic thinking where few cloud infrastructure providers are expected to get monopoly like power, we will see an open federated cloud ecosystem in the future. 2011 will be the year when this trend will accelerate further bringing in more players into the field. We will see more and more traditional webhosts repositioning themselves as cloud infrastructure providers. We will see the emergence of regional clouds emphasizing on local support as well as compliance to regulatory needs. More importantly, OpenStack will unleash a cottage industry of cloud service providers while other cloud platform providers will also gain traction worldwide.
• We will see emergence of cloud infrastructure providers emphasizing on High Availability, stronger SLAs with better coverage for liabilities, managed support services, etc. in 2011. While this model may not be sustainable in the long term as it will go against the cloud economics, this will definitely be on the rise in the short term as cloud computing matures and organizations slowly start trusting the public clouds. Eventually, features like HA, Strong SLAs, etc. will become standard features in any infrastructure offering.
• 2011 will see further maturation of OpenStack code and we will soon start seeing organizations setting up pilot projects based on OpenStack. I expect to see this trend gain further traction towards the end of the year and 2012 will be the year when OpenStack broke out becoming dominant cloud platform supporting enterprises and service providers of all sizes and shapes.
• Governments all over the world will start using cloud computing as a way to cut wasteful government expenditure.
• 2011 will be the year when the marketplace for excess or unused capacity will take off. Even though there are a handful of providers in the space right now, expect to see more vendors jumping in with emphasis on SLAs, security, etc.. This takeoff can be attributed to many traditional webhosts wanting to gain foothold in a cloud based world and, with the emergence of a federated cloud ecosystem, smaller cloud players will get a channel to monetize their unused capacity. Users will also gain more confidence in using this model to achieve more cost savings. Expect to see government agencies coming out with a similar model for their own consumption.

Cloud Security

• Major data breach or some security mishap will force public cloud providers to focus more on security this year. The market pressure will force them to be more transparent on the security front. Expect to see CloudAudit gain some traction among the public cloud providers.
• As more and more data gets into the cloud, the importance of governance and compliance will gain more visibility. Integrated Cloud Management providers who were focusing mainly on management, monitoring and automation will add support for governance and compliance in this year and the next, thereby, offering a more comprehensive set of solutions than what they offer now.
• Managed services will pick up steam but not for infrastructure management in the traditional sense but in a more focused niche like security [6]

Cloud Storage

• Cloud storage providers offering block or file based access will gain traction in short term because of the reliance on traditional applications in many organizations.
• Cloud storage gateways are going to be crucial in 2011 and in a short term to help with cultural changes inside the organizations before they get more comfortable with the idea of cloud based storage.

PaaS

• As I have pointed out in my blog posts at CloudAve [7], PaaS is the future of Cloud Services. 2011 will be the year when this idea will get a widespread acceptance and see a push towards consuming platform services.
• The general purpose programming PaaS will get fragmented with different types of PaaS services entering the field. With seemingly infinite platform compute resources like Heroku on one side and with Azure and Google App Engine kind of services in the middle and Amazon way of packaging of finite chunks on the other end, we are going to see a debate on what constitutes a PaaS in the first half of 2011, much like the private cloud vs public cloud debates of 2009 and early 2010.
• We will see PaaS services mature further and another wave of consolidation taking place this year. Expect to see some moves by Salesforce.com and Amazon.com to further expand their PaaS offering. While I expect PaaS providers to support multiple programming languages in the future, Microsoft will end up as a single trick pony gaining widespread adoption only among the .NET developers.
• Expect to see enterprises adapting to PaaS with more and more players offering support for Java. Expect VMware using its Spring Source acquisition to good use and shake up the enterprise PaaS market.
• Don’t discount Redhat as yet. With Makara acquisition, they will get back to the enterprise market with an offering that is more palatable in the short run. Expect a closer cooperation (or a possible acquisition) between Redhat and Eucalyptus, converging in a strong enterprise PaaS strategy in 2012.

SaaS

• Expect to see collaboration and social becoming part of many applications. Sooner than later, users will realize that SaaS doesn’t tackle the “silos problem” well enough and demand collaborative features and social integration. Expect to see SaaS vendors tap into services like Chatter and Yammer, to make their apps more social.
• Social CRM will take off in a big way this year pushing players without a proper social strategy to either implement such features or lose out. Also, we are going to see much deeper integration between mobile address books with social networking services, thereby, taking the social data much closer to the users for easy consumption.
• This year we will see some traditional enterprise collaboration vendors embracing clouds as they realize that their customers are already using cloud services heavily.
• SaaS ERP will slowly gain further traction this year getting ready to a more widespread adoption in 2012.

Conclusion

If 2010 was the year when cloud computing turned from hype to reality, 2011 will see maturation of services and widespread adoption. On the infrastructure front, we will see enterprises taking a hybrid route to public clouds. On the platforms front, we will see further consolidation among the providers paving way for widespread adoption in the coming years. Enterprise PaaS will gain traction this year. Collaboration and social will be the key trends on the application side this year.

References

[1] Leaders in the Cloud – Expanded Report, Sandhill.com, March 2010

[2] Enterprises sneaking into public clouds, CloudAve, April 2010

[3] Cloud Barometer Survey 2010, Mimecast, July 2010

[4] The Arrival of “Cloud Thinking”: How and Why Cloud Computing Has Come of Age in Large Enterprises, CA Technologies, Dec 2010

[5] Nist Definition of Cloud Computing, NIST.gov, Version 15, July 2010

[6] The 451 Group considers enterprise security – the legacy of 2010 for 2011, Rich Miller, Cumulations, Jan 2011

[7] PaaS is the future of Cloud Services, CloudAve, 2008-10

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