Friday, April 4, 2014

Why Cloud Services Spending will Exceed $174B in 2014

The CEOs of leading companies are already striving to create an agile business model -- one that responds quickly to competitive pressures and shifting market demands. Commercial agility often requires a corresponding accelerated business technology deployment. Meaning, the IT requirement is for applications to be provisioned in hours -- not weeks or months.

That's a tall order for many corporate IT departments. Regardless, it must be done. More often than not, it's accomplished via a cloud services-based methodology.

Savvy executives that proactively migrate their IT infrastructure to a cloud-centric architecture will generate new revenue that could surge by a factor of three from 2011 to 2017, according to the latest market study by IHS.

Global business spending for infrastructure and services related to the cloud will reach an estimated $174.2 billion this year -- that's up by 20 percent from $145.2 billion in 2013. By 2017, enterprise spending on the cloud will reach $235.1 billion -- that's triple the $78.2 billion in 2011.

"With the cloud touching nearly every consumer and enterprise around the globe, spending for cloud-related storage, servers, applications and content will be dedicated toward building a framework that is rapidly scalable, highly dynamic, available on-demand and requiring minimal management," said Jagdish Rebello, senior director and principal analyst at IHS.

Evolution of Cloud Services Demand

Spending on cloud services, applications, security and data analytics will account for a larger portion of total IT expenditures undertaken by enterprises -- which are currently valued at $2 trillion.

The cloud is becoming a critical cornerstone in the strategies of those wishing to offer online storage, computing, analytics and provisioning services. This is because the vast amounts of content now being consumed on mobile devices -- such as smartphones and tablets.


All business vertical market sectors are now adopting public or private cloud services. Also, the number of global consumer subscriptions to the cloud will jump to 730 million in 2014 -- that's up from 630 million in 2013, representing a potentially vast base of new users.

Amazon, as an example, offers a huge range of offerings. Transforming even a casual user of the online giant’s cloud services could result in an endless stream of future revenue as the user becomes a loyal and permanent client.

The Next Wave of Cloud Service Adoption

According to IHS, among the various stakeholders involved in delivering cloud offerings, wireless network service providers are viewed as being well-situated to provide online cloud storage.

Armed with a cloud capability, wireless providers can reduce their subscriber churn and seek out demographic information to help them create new tailor-made offerings. By using big data and associated data-analytic tools, they could use their market insight to provide truly differentiated services.

But wireless providers have lagged behind in cloud. As a result, these network operators are missing out on cloud-related revenue -- which is going instead to rival factions of the mobile value chain.

A new Open Hybrid Cloud paradigm will likely lead the next wave of cloud service adoption. IHS says that issues of security and compliance must be fully addressed. All told, cloud services are definitely on an upward trajectory during the remainder of 2014.

Wednesday, March 26, 2014

Open Hybrid Cloud: Private vs Public Debate is Resolved

As an informed senior executive, you already know that it's no longer a question of whether cloud service adoption is the right forward-thinking business technology strategy, but rather how you will leverage the abundance of new resources to outpace your competition.

More companies will be working within very heterogeneous cloud service environments, thereby putting more pressure on IT organizations that must deal with these additional complexities, according to a recent market study by Cloud Connect and the Everest Group.

Their latest market study reveals the increasing influence of cloud services on IT budgets, staff skills and business strategy. Moreover, the findings within the "2014 Enterprise Cloud Adoption Survey" report debunks hyped-up perceptions with key facts.

"The new reality our research points to is that the modern enterprise will not be defined by public, private or hybrid but rather all of the above," said Steve Wylie, cloud connect general manager.


Highlights from the global market study include:


Hype: The CIO role is dead.
Fact: While the CIO role and the overall IT organization have been under fire over the last couple of years -- as cloud has enabled people outside of the CIO/IT organization to source their own technology -- more than 75 percent of the enterprises surveyed believe its critical for the cloud services ecosystem.

Hype: Cloud is relevant only for technology needs.
Fact: Historically, moving to the cloud has been viewed primarily as a technology cost savings – providing cheaper computing and storage.

Today 56 percent of enterprises consider cloud service adoption to be a strategic business differentiator that enables operational excellence and accelerated commercial innovation.

Hype: Enterprises are hardly spending on cloud services.
Fact: As the value proposition of cloud is increasingly being realized, the study found that 58 percent of the enterprises spend more than 10 percent of their annual IT budgets on cloud services.

Hype: Security concerns are a thing of the past.
Fact: Enterprises still consider better security and greater control over assets and data to be some of the most important factors in choosing a cloud service solution.

While this used to mean that they would automatically choose private cloud for security, this scenario is expected to change as public cloud providers are making considerable investments to strengthen their security architecture. That being said, Open Hybrid Cloud is expected to be the way forward.

Hype: Cloud consumption is simple. External help is not needed.
Fact: In actuality, more than 65 percent of enterprises believe they need help to deploy cloud solutions as most lack the internal IT skills and expertise needed for effective deployments.

Most companies are likely to engage third-party service providers and so it will be important for these providers to adopt a business process-oriented approach, while assisting in the cloud adoption journey.

Monday, March 3, 2014

2014 Business Technology Security Threat Assessment

If you thought that cyber security threats were troubling in 2013, then you should brace yourself for the onslaught that's very likely in 2014. A new generation of security threats stemming from progressive business technology trends -- such as BYOD, mobility and cloud services adoption -- will expose organizations to a multitude of new risks.

According to the findings of a global security survey sponsored by Dell, the majority of IT leaders around the world say they don’t view these threats as top security concerns and they're not prioritizing how to find and address them across the many points of origin.

Apparently, what you don't know can be very harmful. When respondents were asked to look at long term priorities, only 37 percent ranked "unknown threats" as a top security concern in the next five years.

Epidemic threats come from all perimeters, and are often hidden in poorly configured IT account settings or permissions, and ineffective data governance, access management and mainstream employee usage policies.

“Traditional security solutions can defend against malware and known vulnerabilities, but are generally ineffective in this new era of stealthy, unknown threats from both outside and inside the organization. These threats evade detection, bypass security controls, and wreak havoc on an organization’s network, applications, and data. But despite these dangers, our study found, among those surveyed, organizations are just not prepared," said Matt Medeiros, vice president and general manager, Dell Security Products.


Key findings from the market study include:
  • 64 percent of respondents agree that organizations will need to restructure/reorganize their IT processes, and be more collaborative with other departments to stay ahead of the next security threat. Of those surveyed in the United States, 85 percent said this approach is needed, contrasting with the U.K. (43 percent) and Canada (45 percent), which were the least convinced this would be necessary.
  • Nearly 90 percent of respondents believe government should be involved in determining organizations’ cyber defense strategies, and 78 percent in the Unites States think the federal government plays a positive role in protecting organizations against both internal and external threats, which underscores the need for strong leadership and guidance from public sector organizations in helping secure the private sector.

Beware of Unknown Security Threats


The dramatic spike in social engineering, malicious and/or accidental internal attacks, as well as sophisticated, advanced persistent threats means the organization is vulnerable from all directions.

According to the Dell assessment, all stakeholders must immediately take action to strengthen access to points inside and outside the perimeter, and help users prevent such attacks.

  • 67 percent of survey respondents say they have increased funds spent on education and training of employees in the past 12 months; 50 percent believe security training for both new and current employees is a priority.
  • 54 percent have increased spending in monitoring services over the past year; this number rises to 72 percent in the United States.

Among the IT decision-makers surveyed, bring your own device (BYOD) programs, cloud and the Internet were the top areas of concern for security threats.

  • BYOD ─ A sizable number of respondents highlighted mobility as the root cause of a breach, with increased mobility and user choice flooding networks with access devices that provide many paths for exposing data and applications to risk.
  • 93 percent of organizations surveyed allow personal devices for work. 31 percent of end users access the network on personal devices (37 percent in the United States).
  • 44 percent of respondents said instituting policies for BYOD security is of high importance in preventing security breaches.
  • 57 percent ranked increased use of mobile devices as a top security concern in the next five years (71 percent in the U.K.).
  • 24 percent said misuse of mobile devices/operating system vulnerabilities is the root cause of security breaches.
  • Cloud ─ Many organizations today use cloud computing, potentially introducing unknown security threats that lead to targeted attacks on organizational data and applications. Survey findings prove these stealthy threats come with high risk.
  • 73 percent of respondents report their organizations currently use cloud (90 percent in the United States).
  • Nearly half (49 percent) ranked increased use of cloud as a top security concern in the next five years, suggesting unease for the future as only 22 percent said moving data to the cloud was a top security concern today.
  • In organizations where security is a top priority for next year, 86 percent are using cloud.
  • 21 percent said cloud apps or service usage are the root cause of their security breaches
  • Internet ─ The significance of the unknown threats that result from heavy use of Internet communication and distributed networks is evidenced by the 63 percent of respondents who ranked increased reliance upon internet and browser-based applications as a top concern in the next five years.
  • More than one-fifth of respondents consider infection from untrusted remote access (public wifi) among the top three security concerns for their organization.
  • 47 percent identified malware, viruses and intrusions often available through web apps, OS patching issues, and other application-related vulnerabilities as the root causes of breaches.
  • 70 percent are currently using email security to prevent outsider attacks from accessing the network via their email channel.

Tuesday, February 18, 2014

Global IT Spending Outlook to Reach $3.8 Trillion in 2014

The top predictions for 2014 business technology investment, according to Gartner Inc., include a focus on disruptions brought about by digital business, the Internet of Things, smart machines and the onset of what they call the Digital Industrial Revolution.

That forward-looking view can be balanced by their current IT expense outlook. Worldwide IT spending is forecast to total $3.8 trillion in 2014 -- that's a 3.1 percent increase from 2013 spending of $3.7 trillion, according to the latest market study by Gartner.

In 2013, the traditional IT market experienced flat growth, growing 0.4 percent year over year.

Spending on devices contracted 1.2 percent in 2013, but it will grow 4.3 percent in 2014. Gartner analysts said convergence of the PC, ultramobiles (including tablets) and mobile phone segments -- as well as erosion of profit margins -- will take place as vendor differentiation will be based upon the price of a device.

Software Applications Investment Remains Constant

According to Gartner's assessment, enterprise software spending growth continues to be the strongest throughout the forecast period. The 2014 annual growth rate is expected to grow 6.8 percent.

"Investment is coming from exploiting analytics to make B2C processes more efficient and improve customer marketing efforts. Investment will also be aligned to B2B analytics, particularly in the SCM space, where annual spending is expected to grow 10.6 percent in 2014,” said Richard Gordon, managing vice president at Gartner.


Last quarter, Gartner's forecast for 2014 IT spending growth in U.S. dollars was 3.6 percent, a 0.5 percentage points higher than the current forecast.

"A downward revision of the 2014 forecast growth in spending for telecom services -- a segment that accounts for more than 40 percent of total IT spending -- from 1.9 percent to 1.2 percent is the main reason behind this overall IT spending growth reduction," said Mr. Gordon.

Exploring the Key Worldwide IT Market Drivers

A number of factors are involved, including the faster-than-expected growth of wireless-only households, declining voice rates in China and a more frugal usage pattern among European customers. The latter coincides in Western Europe with a breakout of fierce price competition among communications service providers to retain customers and attract new ones.

The data center systems spending growth outlook for 2014 has been cut from 2.9 percent in Gartner's previous forecast to 2.6 percent. They say that this is mainly due to a reduction in the forecast for external controller-based storage and enterprise communications applications.

Together, these segments represent 32 percent of total data center system end-user spending.

Moreover, Gartner has revised the IT services compound annual growth rate between 2012 and 2017. The largest contributor to this revision comes from reductions in IT outsourcing -- specifically, in colocation, hosting and data center outsourcing growth rates.

"We are seeing CIOs increasingly reconsidering data center build-out and instead planning faster-than-expected moves to cloud computing. Despite these small reductions, we continue to anticipate consistent four to five percent annual growth through 2017," said Mr. Gordon.

Monday, February 10, 2014

The Smart Mobile Apps and Open Hybrid Cloud Trends

Savvy executive leaders are already prepared for the shift to more progressive business technology deployments throughout the enterprise. Open hybrid cloud architectures, big data analytics and mobile applications are high-growth platforms at the center of this shift.

In particular, the emerging mobile applications must be integrated, flexible, and adaptable to constantly changing business conditions. This is the new normal in many fast-paced industries. That being said, are you ready for the mobile data deluge that's inevitable?

According to the Cisco Visual Networking Index global mobile data traffic forecast for 2013 to 2018, worldwide mobile data traffic will increase nearly 11-fold over the next four years and reach an annual run rate of 190 exabytes by 2018.

The projected increase in mobile traffic is partly due to continued strong growth in the number of mobile Internet connections -- such as personal devices and machine-to-machine (M2M) connections -- which will exceed 10 billion by 2018 and be 1.4 times greater than the world’s population (the United Nations estimates 7.6 billion people on the planet by 2018).


Exploring the Global Mobile Data Traffic Drivers

From 2013 to 2018, Cisco anticipates that global mobile traffic growth will outpace global fixed traffic growth by a factor of three. The following trends are driving mobile data traffic growth:
  • More mobile users: By 2018, there will be 4.9 billion mobile users, up from 4.1 billion in 2013.
  • More mobile connections: By 2018, there will be more than 10 billion mobile-ready devices/connections -- including eight billion personal mobile devices and two billion M2M connections, up from seven billion total mobile-ready devices and M2M connections in 2013.
  • Faster mobile speeds: Average global mobile network speeds will nearly double from 1.4 Mbps in 2013 to 2.5 Mbps by 2018.
  • More mobile video: By 2018, mobile video will represent 69 percent of global mobile data traffic, up from 53 percent in 2013.

Smart Devices and Open Cloud Applications

Globally, 54 percent of mobile connections will be smart connections by 2018, up from 21 percent in 2013. Smart devices and connections will have advanced computing capabilities and a minimum of 3G connectivity.

Smartphones, laptops, and tablets will drive about 94 percent of global mobile data traffic by 2018. M2M traffic will represent five percent of 2018 global mobile data traffic, while basic handsets will account for 1 percent of global mobile data traffic by 2018. Other portable devices will account for 0.1 percent.

Mobile cloud traffic will grow 12-fold from 2013 to 2018 -- that's a 64 percent compound annual growth rate (CAGR). Hybrid (public/private) cloud technology will gain momentum as more cloud service deployments include open standards-based technology.

Key Regional Growth Projections

In terms of mobile data traffic growth rates over the forecast period, the Middle East and Africa region is projected to have the highest regional growth rate. Below is how each of the regions ranks in terms of growth rate by 2018:
  1. The Middle East and Africa will have a 70 percent CAGR and 14-fold growth;
  2. Central and Eastern Europe will have a 68 percent CAGR and 13-fold growth;
  3. Asia-Pacific will have a 67 percent CAGR and 13-fold growth;
  4. Latin America will have a 66 percent CAGR and 13-fold growth;
  5. North America will have a 50 percent CAGR and eight-fold growth; and
  6. Western Europe will have a 50 percent CAGR and seven-fold growth.

In terms of mobile data traffic generation, the Asia-Pacific region is projected to generate the most mobile data traffic.

"Global mobile data traffic will continue its truly remarkable growth, increasing nearly 11-fold over the next five years, to reach an amount in 2018 that is more than 57 times the total amount of mobile data traffic just a few years ago in 2010. Such growth is not only indicative of mobility becoming a critical characteristic of almost every network experience and the value consumers and businesses alike place on it, but it also represents the immense opportunities ahead for service providers who sit at the center of the Internet of Everything," said Doug Webster, Vice President of Products and Solutions Marketing at Cisco.

Thursday, January 30, 2014

Demand for Digital Business Technology Transformation

2014 will likely be a year of dual business goals for forward-thinking senior executives. Responding to ongoing needs for business efficiency and growth, but also adapting to exploit a fundamentally different digital commerce paradigm.

Commercial digitalization, based upon the latest and most effective business technology advances has already begun, but most chief information officers (CIOs) do not feel prepared for this next era, according to a global survey of IT leaders by Gartner, Inc.

Their latest market study showed that many CIOs feel overwhelmed by the prospect of building digital leadership while renovating their core of IT infrastructure. The Gartner survey found that 51 percent of CIOs are concerned that the digital transformation is coming faster than they can cope -- and 42 percent don't feel that they have the employee talent to face this future.

"2014 must be a year of significant change if CIOs are to help their businesses and public sector agencies remain relevant in an increasingly digital world," said Dave Aron, vice president and Gartner Fellow.

The worldwide survey was conducted in the fourth quarter of 2013 and included 2,339 CIOs, representing more than $300 billion in CIO IT budgets in 77 countries.

Gartner says that during the first era of enterprise IT, the focus was on how IT could help do new and seemingly magical things -- automating routine operations to create massive improvements in speed and scale, and providing business leaders with management information they never had before.


Preparing for the Next Era of Business Technology

The last decade has represented the second era of enterprise IT, an era of industrialization of enterprise IT, making it more reliable, predictable, open and transparent. However, while this second era has been necessary and powerful, tight budgets and no appetite for risk left little room for meaningful innovation.

Entering the third era of enterprise IT technological and societal trends -- such as the evolving Internet of Everything phenomenon -- is transforming what savvy business leaders do to make there operations faster, cheaper and inherently more scalable.

In 2014, CIOs must face the challenge of bridging the second and third eras. They have to build digital leadership and bi-modal capability, while renovating the core of IT infrastructure and capability for the digital future.

Most businesses have established IT leadership, strategy and governance but have a vacuum in digital leadership. To exploit new digital opportunities and ensure that the core of IT services is ready, there must be clear digital leadership, strategy and governance, and all business executives must become digitally savvy.

The survey showed CIOs expect their IT budgets to remain essentially flat -- increasing 0.2 percent on average -- in 2014. CIOs report that a quarter of IT spending will happen outside the IT budget in 2014 -- and that is the spending they know about. Meaning, the reality may be significantly higher.

This re-assignment of budget is a direct result of the new digital opportunities that are more entwined with customer and colleague experiences, and may reflect concerns that the traditional IT organization is not prepared for more digital opportunities.

CIOs Must Prepare for Significant Change in 2014:

  • A quarter have already made significant investments in public cloud, and the majority expect more than half of their company's business to be running over public cloud by 2020.
  • Seventy percent of CIOs plan to change their technology and sourcing relationships over the next two to three years, and many are seeking to partner with agile small companies and start-ups.
  • Forty-five percent of companies have implemented agile methodologies for part of their development portfolio, although most need to go further to create separate, multidisciplinary teams, with lightweight governance, new digital skillsets and alternative sourcing models.

"If this transition succeeds and CIOs and their businesses 'tame the digital dragon,' massive new value for businesses can be created, and with it, a renewed role and greater credibility for the CIO and the IT organization," concluded Aron. "However, if the dragon isn't tamed, businesses might fail and the relevance of the IT organization will almost certainly disappear."

Monday, January 6, 2014

Digital Commerce Applications will Reach $4.1B by 2017

The ongoing convergence of digital and physical commerce has become a driving force in the success of today's leading B2B and B2C companies. Savvy senior executives are utilizing channel agnostic business technologies that enable them to give customers what they want -- an exceptional, integrated buying experience.

The digital commerce applications market will grow at an 18.8 percent compound annual growth rate (CAGR) to $4.1 billion through 2017, according to the latest global market study by International Data Corporation (IDC).

Although there are multiple scenarios that could unfold, IDC believes the market will exhibit strong growth over the next five years -- as digital commerce apps are one of the fastest growing segments in the overall enterprise applications software market.

"New commerce offerings and vendors are launched continually, with retail being only one part of the story as organizations across every industry look to add commerce solutions to their products, services, and offerings and tap into new revenue opportunities," said Christine Dover, research director at IDC.


Enterprises are looking to replace aging, custom-developed software with more modern and nimble applications that allow them to move quickly into new markets with pop-up stores and omni-channel solutions.

IDC says that these digital commerce offerings provide consumers and business buyers with a consistent experience regardless of where they research, shop, buy, and return goods -- while online, mobile, in the store, or through the call center.

"The digital commerce applications market is strong and growing rapidly. While much of the current market is focused on North America and Western Europe -- where strong growth is expected to continue -- Asia-Pacific, Latin America, and Central and Eastern Europe, and Africa are also expected to be fast growing throughout the forecast period," added Dover.

Additional findings from the market study include:
  • Market sizing, derived from detailed company-level analysis and top-down IDC analysis, places worldwide digital commerce applications revenue at $1.7 billion in 2012, representing an increase of 18 percent over the $1.5 billion in 2011.
  • The top five vendors in 2012, based on worldwide revenue, were IBM, Oracle, Digital River, hybris, and Demandware, accounting for 45.6 percent of the market total.
  • Cloud solutions are increasingly popular as they provide enterprises with the ability to pop-up a new store, quickly enter a new market, create a new revenue stream, and more.