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Over the course of the past decade, cloud computing has evolved from being something service providers told companies they should be adopting to becoming the technological lifeblood that runs through most modern enterprises.
For CIOs, it is no longer a question about whether or not cloud is something they should be doing, but how quickly they can get there and how much of their IT estate could and should be shifted off-premise.
Huge changes in the way CIOs approach their IT purchases, both from a billing and supplier perspective, have made this possible – as well as the acceptance that the IT department may no longer be the only place in the company where technology procurement happens these days.
Here, we take a look over some of the major milestones in the history of cloud computing and its impact on the enterprise IT and supplier landscape over the years.
Who invented cloud computing?
Cloud computing has evolved through a number of phases that include grid and utility computing, application service provision and software as a service (SaaS), but the overarching concept of delivering computing resources through a global network is rooted in the 1960s.
The idea of an “intergalactic computer network” was introduced in the 1960s by JCR Licklider, who was responsible for enabling the development of the Advanced Research Projects Agency Network (ARPANET) in 1969.
His vision was for everyone on the globe to be interconnected and accessing programs and data at any site, from anywhere, says Susan Bowen, vice-president and general manager at managed service provider Cogeco Peer 1.
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“It laid the foundation for grid computing, an early forerunner of cloud, which linked together geographically dispersed computers to create a loosely coupled network. In turn this led to the development of utility computing which is closer to what Licklider originally envisioned,” she continues.
“It’s also closer to what we think of as the cloud today, with a service provider owning, operating and managing the computing infrastructure and resources, which are made available to users on an on-demand, pay-as-you-go basis.”
Cloud computing: The 1960s and beyond
Other experts attribute the cloud concept to computer scientist John McCarthy, who proposed the idea of computation being delivered as a public utility, similar to the service bureaux that date back to the 1960s.
Since the 1960s, cloud computing has developed along a number of lines, with Web 2.0 being the most recent evolution. However, since the internet only started to offer significant bandwidth in the 1990s, cloud computing for the masses has been something of a late developer.
One of the first milestones in cloud computing history was the arrival of Salesforce.com in 1999, which pioneered the concept of delivering enterprise applications via a simple website. The customer relationship management giant’s services paved the way for both specialist and mainstream software firms to start delivering applications over the internet as well.
Today, Salesforce is a major player in the wider SaaS market, along with a number of other born-in-the-cloud companies that are also jostling for share with the legacy software providers, such as Microsoft, Oracle and SAP.
Another big milestone in SaaS came in 2009, as Web 2.0 hit its stride, and Google and others started to offer browser-based enterprise applications, through services such as Google Apps, which has since been renamed G Suite.
Microsoft has also emerged as a force to be reckoned with here, as the firm has looked to retain its hold on the business applications market by going head-to-head with G Suite over the years with its own cloud-based Office 365 offering.
Legacy providers vs. cloud native suppliers
Legacy software providers, such as Microsoft, Oracle and SAP, have all made a concerted effort over the past decade to encourage users of their on-premise software offerings to upgrade to their cloud equivalents that they usually subscribe to on a pay-as-you-go basis.
This, in turn, has seen IT departments gradually shift away from treating their software and hardware purchases as “big bang” capital expenditures that happen once every so often (or as the upgrade cycle dictates).
As enterprises have become increasingly accustomed to the pay-as-you-go cloud billing model, treating IT purchases as more of a day-to-day expense has become the norm, and – where SaaS is concerned – there is still a lot of room for market growth.
Particularly, there are still plenty of enterprises yet to join the cloud software bandwagon, points out John Dinsdale, chief analyst at IT market watcher Synergy Research Group.
“Traditional enterprise software vendors like Microsoft, SAP, Oracle and IBM still have a huge base of on-premise software customers and they are all now pushing to aggressively convert those customers to a SaaS-based consumption model,” he says.
“At the same time, born-in-the-cloud software vendors like Workday, Zendesk and ServiceNow continue to light a fire under the market and help to propel enterprise spending on SaaS.”
IaaS and the public cloud
Another important milestone in the development of the cloud market as we know it today was the emergence of Amazon Web Services (AWS) in 2002. The company provided a suite of cloud-based infrastructure services including storage, computation and even human intelligence through the Amazon Mechanical Turk.
Then, in 2006, Amazon launched its Elastic Compute Cloud (EC2) as a commercial web service that allows small companies and individuals to rent computers on which to run their own computer applications.
Today, the firm is the undisputed leader of the infrastructure as a service (IaaS) market, the company continues to add thousands of new services and features to its cloud services portfolio each year, and is a bone fide multibillion dollar enterprise.
According to figures published by IT analyst house Gartner in 2017, many enterprises now spend more than $5m of their IT budgets on Amazon’s cloud services a year.
“With an accelerating pace of innovation on top of an already rich portfolio of services, and an expanding impact across a range of IT markets, [AWS] is the provider most commonly chosen for strategic adoption,” stated Gartner in its 2017 IaaS Magic Quadrant report, which ranks the runners and riders of the cloud infrastructure sector.
“While not the ideal for every need, it has become the ‘safe choice’ in this market, appealing to customers that desire the broadest range of capabilities and long-term market leadership.”
Cloud service providers: The runners and riders
Amazon, in particular, initially started out pitching its wares to startups, hailing the public cloud as way to get their businesses up and running without having to shell out tens of thousands of pounds to acquire on-premise servers, storage and networking equipment.
Unburdened by the capacity, cost and maintenance constraints that come from having to rely on traditional, legacy, on-premise hardware, this eased the path from startup to scaleup for many of these early cloud-adopting companies.
So much so, “cloud-native” organisations (as they came to be known) started to emerge that were able to out-innovate their longer-established (and oftentimes better-funded) peers because the business agility cloud afforded them.
The Google Cloud Platform, which is the coverall term used for its IaaS offerings, has also followed a similar path, by starting out focusing on winning over startups, before ramping up the enterprise-readiness of its services to boost their appeal to a wider range of users.
Keen to prevent their hold on whatever market they’re operating in from weakening, enterprises soon followed the lead of their nimbler, cloud-native contemporaries and began looking for ways to reduce their reliance on on-premise technologies too.
And it is here that Microsoft, with its Azure public cloud proposition and its sizeable enterprise install base, has found itself with something of an advantage over its startup-focused competitors.
While Amazon and Google have both sought to increase the enterprise-readiness of their offerings, as they have set their sights on conquering the world of corporate IT, Microsoft has years of experience in knowing what CIOs look for in a prospective IT provider.
Originally pitched as Microsoft’s take on platform as a service (PaaS) at launch in 2012, the remit of Azure was extended to include IaaS in spring 2013 with the general release of Azure Virtual Machines around that time.
On the back of long-term users of the Redmond giant’s on-premise technologies upgrading and migrating workloads to Azure, Microsoft is now regularly cited by the analyst community as being the second biggest IaaS provider (after AWS) in the world.
“Microsoft is frequently chosen as a strategic cloud provider by customers that are committed to Microsoft technologies or that like Microsoft's overall cloud strategy, which spans IaaS, PaaS, SaaS and on-premises solutions,” said Gartner, in its 2017 IaaS Magic Quadrant report.
Microsoft is leveraging its tremendous sales reach and ability to bundle Azure with other Microsoft products and services to drive adoption. It is steadily growing the size of Azure customers; many are beginning to spend more than $500,000 a year, and a few exceed $5m in annual spending.”
The evolution of cloud
Cloud has also prompted a number of other service providers to tweak their product offerings and wider business strategies to account for the change in enterprise IT buying behaviour this industry mega-trend has brought about.
HPE, Dell and VMware, for example, initially set out to go head-to-head with Amazon, Google and Microsoft before calling time on their public cloud initiatives at various points over the past five or so years, citing competitive pressures.
While some have opted out of the game altogether, VMware and Rackspace have taken a slightly different route, with both positioning themselves as organisations that can help enterprises manage the applications and workloads running in their competitors’ public clouds.
In the case of Rackspace, it ended up ceding its initial early lead in the IaaS market to AWS, and since 2015 (or thereabouts) has moved to help enterprises manage their Amazon, Microsoft and Google cloud deployments.
This pivot has paid off for the firm, with its AWS managed service offering regularly flagged by the firm as being one of the fastest-growing parts of its overall business.
VMware, meanwhile, sold off its public cloud business to French IaaS challenger, OVH, in April 2017, having spent a couple of years before that repositioning itself as a hybrid cloud provider that can help enterprises manage and applications in the AWS and Microsoft clouds.
Where next for cloud?
In light of all this, it is fair to say the next 10 years of cloud are likely to be just as eventful, as enterprise appetites for the technology (and their expectations about how it will benefit their organisations) continues to grow, adds Synergy Research’s Dinsdale.
“Major barriers to cloud adoption are now almost a thing of the past, with previously perceived weaknesses such as security now often seen as strengths,” he says.
“Cloud technologies are now generating massive revenues for cloud service providers and technology vendors and we forecast that current market growth rates will decline only slowly over the next five years.”
Additional reporting by Caroline Donnelly.