When I think about forecasting for the cloud computing industry, one word springs to mind; innovation.
Cloud technology, the way we use it, and even the way we talk about it, has matured hugely over the past year. While we do still talk about “cloud” as some abstract technology choice (“should you or should you not use “the cloud?” we debate), I predict that this year, the conversation will get subtler and the use cases more sophisticated.
We’ll make a big shift away from explaining the basics and debating cost benefits to exploring the amazing things this type of computing allows us to do. It won’t be about dry definitions and reduction of IT bottlenecks but about innovation, agility, and tailoring cloud architectures to better address challenges and enable new ideas. As a result of this maturation, we’ll see many more examples of disruption, even in non-technology industries.
So here’s my overarching prediction: 2015 will be a year of cloud-driven innovation. From the service providers (such as Amazon and Google) to the software vendors, to the end users that consume it, innovation will abound. Here’s why.
Adoption Will Rocket
This one is obvious. Cloud computing has already transformed the way many businesses, and indeed whole industries, operate. With recent stats showing 86% of CISO’s (Chief Information Security Officers) now saying their organizations are moving to the cloud, this transformation will continue across many more businesses, even the traditional laggards. In fact, it’s these more traditional companies and industries that I expect to make the largest strides towards cloud in 2015, in order to avoid being caught behind the eight ball. The idea that it’s only startups and tech companies that can benefit from cloud technology, is long gone. Cloud computing is modern computing and for many, it is now essential to business. The high level benefits are so widely understood, few companies can afford to ignore it.
In addition, many more businesses will recognize the opportunity to aggressively compete or entirely disrupt their industries by leveraging cloud technology. By essentially becoming software companies at their core, the most innovative companies in industries as diverse as retail, music, and even transportation, have been able to revolutionize the way they do business. Netflix is a classic example of this. Just think how they turned the video industry on its head through the use of cloud technology.
In 5 years time, I don’t expect we’ll still be talking about whether certain services are cloud-based or not. They just will be.
Price Wars Will Intensify
There is much talk in the cloud industry about the so-called ‘race to zero’. With so much competition in the cloud industry today, providers are essentially locked in a continuous price-slashing war, even as storage limits increase.
I believe this price war will drive innovation throughout the whole industry, for a number of reasons. It will cause the cloud services providers to innovate to differentiate, rather than compete on price alone. This race has to end somewhere: presumably zero, or somewhere close to zero. In the meantime, cost savings from the IaaS and PaaS guys (that’s Infrastructure as a Service and Platform as a Service respectively) get passed down the cloud chain to the software vendors. These vendors in turn pass savings onto their customers, ultimately making cloud solutions more compelling for the end user, and cheaper for new SaaS players to get up and running. This, along with a reduction in upfront fees from some of the major cloud providers in 2014, should mean greater competition and innovation in the SaaS market too.
There is a potential downside though. Only the biggest companies can afford to take part in these kinds of price wars, which could deter new players from entering the IaaS space and eventually stifle competition and innovation.
Will we see cost of cloud services hitting zero in 2015? It’s unlikely. However we will see the effects of the price race this year.
Speed of Software Innovation Will Increase
As even the largest organizations gain experience in cloud computing, we’ll see it applied in more sophisticated ways to address more complex challenges. We’ve moved beyond the purely experimental, bleeding edge phase and now have established best practices for building cloud software, deploying it, designing and maintaining cloud environments.
This is driving an unprecedented pace of software innovation.
We can set up new a cloud environment in minutes. We can scale it up or down with a few mouse clicks. We can iterate frequently and deliver new solutions quickly, so we are better able to react to customer feedback and anticipate changing market conditions. We can experiment more and fail fast. This agility is making the customer feedback loop much, much shorter, so in 2015 those companies that truly listen to their customers, and embrace agility (with all its uncertainty), will win.
Data-Driven Insight Will Increase
Cloud computing has given us the capacity to manage and process huge amounts of data. It has also provided the means for a new generation of cloud-based analytics tools to help make sense of it all.
Becoming a data-driven enterprise will be essential in order to compete in the years to come. Data drives innovation. The ability to analyze your marketplace, to spot trends and predict what lies ahead is key to knowing where to apply innovation efforts in the first place. As organizations becoming increasingly confident with storing data in the cloud (and they will, despite ongoing security concerns), so their ability to innovate will also increase.