Doubled in three years. Expected to almost triple in the next four. That's the rate of spending on cloud computing as momentum continues to grow. According to a Goldman Sachs report published in January 2015, spending on cloud computing platforms and infrastructure is projected to increase to $43 billion in 2018, up from $16 billion in 2014.
Many enterprises are still using on-site owned infrastructure, but that's quickly changing. According to CenturyLink’s 2014 Global IT Trends report, as the cloud computing market grows rapidly during the next five years, so will the prevalence of outsourced IT. "Within five years, companies will have outsourced approximately 70 percent of their infrastructures," states the report. "This represents almost a complete inverse of today's owned/outsourced equation."
Jonathan King, vice president of cloud strategy and business development at CenturyLink, sees this shift as the next stage of a data consolidation movement that began a decade ago. "What we started to see five or 10 years ago was a virtualization movement,” he said. That meant companies consolidating their data centers and virtualizing physical infrastructure, he explained. "The next evolution of that is, 'Why not take it to the next step, move this to the cloud, and get it managed on-demand with low-cost ownership?'"
Indeed, the Global IT Trends report notes that 36 percent of companies see improved quality of service upon outsourcing their IT to a service provider. Since outsourcing IT often reduces costs, the report adds, that extra money can be invested in other areas of the business that accelerate company growth.
For companies today, that combination—reduced cost and improved quality of service—appears to be the cloud computing Holy Grail and the biggest factor behind the move to outsourcing IT.
"Cloud computing will continue to expand and will continue to become a utility that is widely embraced," King said. "A lot of that you can conceive outright—a consolidation of platforms for new workloads, a consolidation environment for existing workloads, or actually becoming a place to run high-production workloads."
This means businesses of all kinds must work hard to keep up with the Joneses—and their rapid adoption of cloud computing—or find themselves at a competitive disadvantage.
King recommends the following approach for businesses to determine risk vs. reward when outsourcing IT services:
- Understand what your physical IT infrastructure looks like and what business applications you have in place.
- Identify which projects you can start to move into a cloud environment, and document what your team learns from the project.
- Look at the skills and expertise you have in your organization and determine what your overall strategy should be before attempting an all-in approach.
"This doesn't happen overnight. It takes time. But as you start to move certain functions to the cloud, you don't have to maintain infrastructure, and you can start to focus your resources on staff and closing business," King said.
But after the switch to cloud computing and outsourced IT, what's next? According to King, it's examining the impact of data.
"I think the parts that are interesting to think about in the next five to 10 years are the things that are harder for us to conceive, which is the impact of [big] data," he said. "It's a correlation of data and data analytics.” Most importantly, how big data can improve the way companies delight their customers, improve productivity and the way they conduct business overall.
