By 2020, cloud will be ‘like having a Formula 1 team running IT’

Commodity, on-demand IT will disrupt the market to create new ways of doing business, continuous innovation and ‘Formula 1 standard’ engineers

There is no doubt that cloud computing is changing the way organisations operate. 

By 2020, many industry watchers believe the easy availability of commodity, on-demand IT will have dramatically disrupted the market to the extent of creating new ways of doing business.

However, there are issues such as security, open standards and culture, which need to be addressed before cloud can achieve its full potential.

Roy Illsley, principal analyst at Ovum, says cloud in 2020 will be a standard part of the IT sourcing that CIOs use in their delivery of services, but he says the question of what adoption and use will look like depends on a couple of pivotal transformations – how cloud will be consumed and paid for; and the industry agreeing on an open standards approach.

“Will the funding of IT be transformed from the current centrally funded pot, to a more transparent pay-as-you-use approach? This depends as much on the organisation being ready to adopt a new way to pay for IT, as well as new skills in the IT department to think of internal IT as providing a service that competes with public/hybrid cloud computing,” says Illsley.

This potential cultural barrier is matched by an external barrier – the industry’s willingness to agree an open standards-based approach versus a small number of different vendor-specific approaches.

“If we have a single standard, like what happened in the browser wars of the 1990s, then adoption will become easy and will see greater acceptance. If the market remains fragmented then adoption will be slower,” says Illsley.

Just another source

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But overall, cloud will just become another source of IT and people will not be overly concerned by the label.

Emma Rodgers, senior analyst at Clearwater Corporate Finance, believes cloud will be so pervasive that it almost doesn’t exist. “Everyone will adopt cloud and security issues will have been addressed by a range of technologies,” she says.

Peter Chadha, founder of advisory firm DrPete, is a fervent fan of cloud, as a user and as an analyst, and believes we will no longer be talking about “cloud”, just as we no longer talk about “e-commerce”.

However, he predicts there will be new approaches to cloud to suit different businesses. Although 90% of firms will be fine with public cloud, there will be some global corporations that will have their own cloud and other organisations in highly regulated environments that will form mutual clouds.

“Some organisations will never be satisfied with the data issues, and have hardcore reasons to stay as they are," says Chadha. 

"Where IT forms a small amount of cost, there may be no huge advantage to be gained. For example, an insurance company in shipping where the minimum claim is £500,000 – IT is practically irrelevant as an expense. It may have an archive of 20 years of data and it is doubtful whether it would benefit from moving to the cloud. However, it might benefit from having a mutual cloud with other insurance companies, where the same degree of diligence and controls are mutually applied."

There are diverse views about how exactly cloud will evolve, but there is broad agreement on how businesses must be agile and efficient to survive – and cloud will play a role in this.

“Business in 2020 will be much more focused on controlling the cost levers and agility aspects,” says Illsley. 

“The business landscape is changing fast and at different rates in different geographies and verticals, so businesses will need to move faster and change things faster – expand and contract. So any IT used must be scalable and capable of meeting local political regulations. Cloud will play a part, but will be only one such source of IT.”

Push towards BYOD

Much of the thrust for change will come from users, as the spread of IT consumerisation increases.

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James Herbert, managing partner, innovation and delivery at consultancy Methods, believes the browser will be the operating system by 2020.

“People talk about shared services and a multi-tenanted platform and there will be an even bigger push towards BYOD (bring your own device) from non-technical people. Employees will want to be able to use any device and for cloud to be successful in this scenario, you should just be able to log in via your browser, regardless of device,” he says.

Large business that have many on-premise business applications will move towards delivering applications via the web browser, and having a clear architecture and vision will present a challenge in the run-up to 2020, says Herbert: 

“Organisations will gradually swap applications out from on-premise into the cloud, and the browser becomes viable on any device, but you need a good architect.”

Evolvement of cloud

Disruptive technologies will play their part in how cloud develops by 2020.

Illsley says the evolution of software-defined datacentres (SDDCs), where all infrastructure is virtualised and delivered as a service, will be particularly disruptive.

“It will change the way organisations view the value of the underlying physical infrastructure. Within the datacentre space, there will be the complete abstraction of services from infrastructure,” he says.

Simon Wardley, a researcher at the Leading Edge Forum, says the growth in innovation that cloud is undergoing is following a perfectly normal pattern of evolution, driven by competition by suppliers and users, which will lead to cloud becoming a commodity.

“We are in a state of punctuated equilibrium and a period of rapid change, where as a result of competition things will evolve to become even more efficient,” he says.

Fight for survival

Preparing an exit strategy for the cloud

Peter Chadha, founder of analyst firm DrPete, believes there is a danger for many organisations embracing cloud services that may end up tied into a supplier or cloud service by future market consolidation.

The reasons for moving to cloud – to save money and become more efficient and flexible – may be undermined as the big cloud players have users locked in.

“The cost of systems may rise as competition is diminished and the bigger boys get bigger,” says Chadha. He points to the dominance of Visa and MasterCard, which almost have “a licence to print money” in their sector.

“This is the way cloud may go. Today cloud is economic, but it may not be as economic as it is now, and once you’re hooked in, it’s difficult to leave,” says Chadha.

He stresses that cloud is a powerful enabling technology which his business relies upon, but it is important to look at future implications for anyone subscribing to cloud services.

“It allows small businesses to behave as large businesses with great uptime, but once data is in the cloud, how easily can you exit?” he says.

While suppliers are scrambling for market share, it is not an issue that is prominent in organisations’ thinking, but by 2020, having an exit strategy will be an important consideration.

“It is all down to an economic decision, and the organisation’s risk profile. An insurance company may consider its own private cloud – where everything is under their control – to be the better option, for example,” says Chadha.

“Cloud is easy to go into, but the problem is getting out."

The new commodity systems will enable the building of innovative new services, but there will also be a fight for survival, so the period until 2020 will witness new entrants and the collapse of some well-known names.

“There will be explosions of higher-order systems and explosions of big data, new practices and new forms of organisation. Lots of companies will get disrupted as they have failed to plan for change,” says Wardley.

Although such a shift is predictable in terms of what will happen, it is not predictable in a precise way, as new products will be commodity-driven by consumers and suppliers.

“The platform shift to infrastructure utility has been clear, but we will reach an age of wonder and the genesis of new higher-order systems. We can say what will happen over the next few years, but we can’t say what will be generated,” says Wardley.

New things will be built using the components built in this era – the “age of wonder” has already begun, but there will be more casualties along the way.

“Look at Blockbuster and Netflix. Blockbuster is bankrupt because it was held back by its legacy of DVD shops, which is why Netflix could storm ahead with online rentals,” says Wardley.

A compelling proposition

Cloud will generate new levels of innovation because it is going to attract the most skilled people, says Chadha, which makes it a compelling proposition. 

“Cloud will be better because it is like having a Formula 1 team running IT compared to having the local garage – at the end of the day no organisation could afford to employ these people. You see innovation on a daily basis and organisations will go to the cloud because that level of innovation can’t be matched,” he says.

It is not just the technical innovation cloud allows organisations access to – it’s the sheer scale it offers.

Chadha concludes: “The big cloud providers have points of presence all over the world as well as continuous innovation and Formula 1 standard engineers, which makes it irresistible in the run-up to 2020 and beyond.”

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