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Top 10 cloud stories of 2016

Here are Computer Weekly's top 10 cloud stories of 2016

The cloud news agenda in 2016 has been largely dominated by how enterprise attitudes towards off-premise services are maturing, and the impact this is having on the wider IT market and its activities.

Evidence of this can be seen in the efforts the US cloud firms have put into addressing the data residency concerns of CIOs, in the wake of last year’s Safe Harbour ruling, as IT decision makers continue to grapple with how to safely and securely make full use of off-premise services.

Furthermore, the change in IT buying behaviours the move to cloud has brought about has forced a number of legacy hardware providers to rethink their business strategies to account for the fact that fewer enterprises are embarking on like-for-like refreshes of their datacentre infrastructure anymore.

With all this in mind, we take a look at the top 10 biggest cloud stories of 2016.

1. Analysts highlight cloud-induced change in IT buying habits

IDC’s cloud IT infrastructure tracker in April 2016 highlighted the impact the rise in cloud use amongst enterprises is having on hardware manufacturers, with the market watcher predicting a steady downturn in sales of on-premise storage, servers and networking kit in the years to come.

Fellow analyst house Gartner released its quarterly server market tracker in June 2016, which shed a little more light on the situation by suggesting the softening demand for servers from enterprises is being counteracted by the activities of hyperscale cloud firms looking to kit out their datacentres.

2. Cloud giants help enterprises embrace innovation

This year saw the likes of Amazon Web Services, Microsoft, Google and IBM make a concerted effort to change the focus of the enterprise cloud conversation to account for the fact enterprise expectations around what the technology can allow them to do is changing.

While enterprises have waxed lyrical for years about how downsizing their datacentres – by tapping into public cloud resources – has saved them money and boosted their business agility, CIOs are now looking to build on this work to accelerate their digital transformation efforts.

In response, the big four cloud infrastructure giants have spent much of 2016 talking up the work they are doing to expand their product portfolios beyond their infrastructure services and into big data analytics, machine learning, artificial intelligence and beyond.

3. The concept of multi-cloud gathers momentum

As enterprises have grown evermore comfortable with the idea of using public cloud, the idea that firms may want to source services from multiple providers has gathered pace.

Instead of going all-in on one supplier, analysts claim companies are becoming increasingly better educated about their cloud choices, and talking about running workloads in a variety of environments to avoid supplier lock-in and increase business agility.

Google was amongst the cloud giants to outline details of how it is benefiting from the trend this year, and claims to be feeling the benefit of early AWS adopters looking to widen their pool of providers.

4. Government competition chiefs campaign for fairer cloud terms

Dropbox and Google were among the cloud storage firms to support the Competition and Markets Authority’s work in securing a fairer deal for users who entrust their data to online service providers.

Along with BT, Mozy, LiveDrive, JustCloud and Dixons Carphone, the companies all publicly pledged this year to join the CMA’s clampdown to prevent users getting caught out by sudden price hikes or service terminations.

5. Openstack adoption accelerates in enterprise

The number of businesses building cloud environments on the Openstack platform continued to increase this year, prompting those championing the open source initiative to declare it enterprise-ready.

The Openstack Foundation has seen the number of household names using the platform increase in recent times, with Santander, HMRC and Volkswagen among the roll-call of firms now using it. So too – the foundation claims – has the number of people using to run production workloads.

In line with this, analyst house 451 Research shared details of how the use of Openstack within the enterprise is growing, with small-scale deployments now giving rise to huge, multi-core environments that are delivering value to the bottom line.

6. Rackspace sells up to private equity house

After seeing its attempts to go head-to-head with Amazon and Microsoft in the public cloud flounder, Rackspace has spent the best part of the last two years repositioning itself as a purveyor of managed services for both firm’s off-premise platforms.

During this period, the company has found itself at the centre of speculation about its future as a publicly traded, independent company, after senior management made an abortive attempt in 2014 at finding a buyer for the firm.

However, in August 2016, the company confirmed it is set to be acquired by private equity house, Apollo Global Management for $4.3bn, allowing the company to hone its managed cloud strategy away from the prying eyes of shareholders.

7. EU-Privacy Shield focuses CIO minds on data residency

Following the abolition of the long-standing Safe Harbour transatlantic data transfer agreement at the end of 2015, the start of the 2016 saw the European Commission start to flesh out details of what legal mechanism would be brought in to replace it.

The agreement had previously been relied on by American firms to transfer data belonging to European citizens to the US for processing, prompting concerns about how its these companies would continue to operate without it in place.

This led to a raft of declarations from cloud firms about their plans to build out their European datacentre presence to negate the need to transfer data back to the US in the months that followed.

Safe Harbour’s replacement – the EU-US Privacy Shield – was announced in February 2016, and approved for adoption by the Article 29 Working Party of European privacy regulators in July, but US firms seemed slow to adopt the framework over concerns about its long-term viability.

8. The highs and lows of G-Cloud

Government’s efforts to ramp up the use of cloud services within the public sector has continued apace this year, with the Cabinet Office confirming in February 2016 that more than £1bn of IT purchases have been transacted via the Digital Marketplace.

The G-Cloud procurement framework was responsible for the bulk of these sales, but feelings that more could be done to channel sales through the framework (particularly where local government is concerned) continued to be shared by industry watchers and analysts regardless.

The framework has also come under fire on several other fronts over the past 12 months, for not doing enough to champion the use of web accessible services, while some suppliers spoke out about the problems they have run into when trying to secure business through it.

9. Two-week SaaS outage leaves insurance brokers struggling to trade

On 26 August 2016, insurance software provider SSP Worldwide suffered a datacentre power outage that triggered a chain of disaster recovering failings that left 300 of its customers unable to use its cloud-based Pure Broking platform for two weeks.

The system – which is used by insurance brokers to track renewals and issue quotes – is relied upon by brokers to carry out a number of day-to-day tasks, and the downtime left many of them struggling to trade and having to turn away customers.

Further outages blighted the platform several months after the original issues were addressed, and brokers rejected SSP Worldwide’s offer to refund the service fees they paid while the service was out of action.

At the time of writing, brokers were still awaiting news of the Financial Conduct Authority’s take on whether they would face enforcement action from the regulator for being unable to do their jobs during the August-September outage period.

10. Brexit sees cloud prices rise for UK consumers

The fallout from the UK’s vote to leave the European Union had an instant impact on the pricing of some cloud services, thanks to the propensity of US cloud firms to bill customers in dollars for using their offerings.

According to 451 Research’s Cloud Price Index data, the fall in the value of the pound in the wake of the Brexit vote means UK-based customers now facing having to pay thousands more for the same compute resources they did a year ago because of currency fluctuations.

In line with this, Microsoft confirmed a round of price rises in October 2016 that will see new subscribers to its cloud services having to pay 22% more from 1 January.

Read more on Infrastructure-as-a-Service (IaaS)