Cloud computing share oftech wallet to quadruple by 2020, growing nearly six times faster through endof decade than spend on legacy hardware and software: according to Bain &Company study
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Survey of nearly 500 CIOsfinds business-savvy CIOs new on job most likely to adopt cloud computing;tenured IT decision-makers least likely
15 July, 2012
With strong tailwinds from high-growth companies andfirst-generation business-savvy CIOs, revenue from sales of cloud computingproducts and services are poised to surge from their current base ofapproximately $20 billion to nearly $150 billion by 2020, accounting for 8 percent of all technology spend—this according to “TheFive Faces of the Cloud” study released today by Bain & Company,the global business consulting firm.
“Cloud computing is at the intersection of two verypowerful trends that have been playing out for some time: greater use ofcapability sourcing across the business value chain and the shift from capitalintensive computing models to variable-use ones,” said Michael Heric, aBain partner and lead author of the study. “Once financial and strategicvalue proves to be repeatable, cloud will become a standard part of thebusiness toolkit.”
In Bain’s survey of 494 North American CIOs and ITdecision-makers, representing companies of all sizes across a wide range ofindustries, there is clear evidence that broad-based cloud adoption isunderway. To date, just 10 per cent ofcompanies have driven nearly 50 per cent of the market for cloudsolutions. This is changing: over the next three years, nearly 65 per centof the approximately $20 billion in growth in this market will come fromcompanies that make little or no use of cloud today.
Other findings from Bain’s CIO survey and in-depthinterviews include:
· Faster growing companies(greater than 10 per cent per year) use 144 per cent more cloud services thanslower-growing companies.
· A CIO that has entered theirposition within the last year will have 141 per cent more of their environmentin the cloud than a longer tenured CIO (greater than 6 years).
· CIOs with diverse businessexperience (entrepreneurs, business school graduates, business unit operators)use 82 per cent more cloud services than thosewho have spent their professional careers predominantly in IT.
· Cloud adoption isaccelerating as the technology comes down the cost curve. Bain estimates thatin the next 3 to 5 years, for certain workloads, cloud pricing will be 30 to 40per cent lower than legacy technology.
Bain has identified five distinct cloud user profiles,enabling providers to better tailor their offerings while addressing a broaderspectrum of companies:
· Transformational—Early adopters that are already heavy users of cloud computing. They are lookingfor comprehensive, game-changing solutions that will enable their business togrow in ways not possible without cloud.
· Heterogeneous—Companies that typically have an exceptionally diverse mix oflegacy systems and newer technologies. While their CIOs understand thecompelling value that cloud can provide, they must use the benefits with thelimiting realities of their environments.
· Safety-conscious—Companies that are particularly concerned with the security and reliability oftheir IT environments. Private cloud and hybrid public-private cloud modelshave the most appeal.
· Price-conscious—Bottom-line focused companies that purchase cloudtechnologies and services primarily for the cost savings. They are less interested in the strategic benefits that cloudcan offer than they are with achieving a 15 - 20 per cent reduction in cost.
· Slow and Steady—These companies, for a range ofreasons, do not yet appear ready to adopt cloud computing in a meaningful way,although they express interest in exploring offerings if a provider can slowlyand steadily take them down the migration path.
“Cloud providers have thus far been largely focusedon developing solutions for the earliest adopters,” added Mr. Heric.“There is no guarantee that today’s cloud leaders will remain ontop. If they cannot broaden the appeal of their solutions to meet theneeds of new cloud adopters, other providers will step in to fill thevoid.”