The Second Wave of Cloud Computing

This second wave is really more of an evolution than another inflection point.

In a new study from Cisco (CSCO) and IDC, called “Don’t Get Left Behind: The Business Benefits of Achieving Greater Cloud Adoption,” IDC surveyed more than 3,600 enterprise executives about their current and planned cloud usage. The study found that 53 percent of companies expect the cloud to drive increased revenue over the next two years. Of those surveyed, 64 percent of respondents are either using or planning to use a hybrid cloud strategy, with 44 percent using or planning to use a private cloud for their business.

Keep in mind that Cisco has a private and hybrid cloud “dog in the hunt,” so the results are not surprising. However, given the explosive numbers from public cloud providers, such as Amazon Web Services, and what seems to be a general acceptance among enterprises that cloud-based platforms don’t have the same amount of risk as once thought, cloud computing is currently undergoing what has been termed “the second wave.”

Enterprises are joining the second wave to stop spending millions on hardware and software infrastructure by moving to the cost efficiencies of cloud-based platforms.  A 2013 study by CDW of 1,242 IT professionals found that more than half of their organizations are moving a variety of capabilities to the cloud. And a majority of them are already recognizing cost savings and increased profits.

The CDW study found that 88 percent of cloud users saw cost savings, and 56 percent of those polled agreed that cloud services have helped increase profits. Additionally, 60 percent of respondents said cloud computing has reduced the need for infrastructure maintenance by their IT team.

Beyond cost saving, enterprises pursue cloud computing to become more agile and decrease time-to-market. The use of public cloud-based platforms, for example, can provide almost instant provisioning of compute and storage resources as they’re needed by the business. This eliminates months of hardware and software procurement cycles, so the enterprise can stand up applications and databases that allow them to move quickly into a new market, or make needed shifts in the business. In other words, cloud-based platforms are giving enterprises the ability to operate at the “speed of need.”

Upsides and Downsides

What will have the biggest impact on cloud adoption going forward? We’ve already talked about tactical drivers, such as cost savings, and strategic drivers, such as agility and time-to-market. The current drivers are largely initiated by the success of other enterprises in the cloud.

The level of cloud adoption is fast reaching a “tipping” point, where inhibitors such as security and privacy concerns fall off the radar screen, as enterprises see the successful adoption by others, including competitors.

Security is still a concern, but not like it once was. Starting in 2012, security issues around cloud-based platforms began to disappear, as private and public cloud providers invested heavily into tightening security. Cloud security now is actually better than current enterprise IT security, best practices, and technology.

For instance, according to Alert Logic’s Fall 2015 State of Cloud Security Report, the variations in threat activity are not as important as where the infrastructure is located. IT systems that can be accessed from outside — whether enterprise or cloud — have equal chances of being attacked. The attacks are opportunistic in nature, and outside access provides opportunity.

The report further finds that Web application-based attacks hit both service provider environments (53% of organizations) and on-premises environments (44%). However, on-premises environment users or customers actually suffer more incidents than those in service provider environments. On-premises environment users experience an average of 61.4 attacks , while service provider environment customers averaged only 27.8. On-premises environment users also suffered significantly more brute force attacks compared to their counterparts in service provider environments. This places the cloud and traditional IT platforms on equal footing when it comes to security.

However, many still believe that clouds are largely unsecure. A new report from Ovum and managed service provider FireHost concludes that companies aren’t exactly confident in their cloud providers’ ability to offer the right level of security. In the survey of IT pros, 92 percent are concerned about the shared cloud infrastructure’s security, 92 percent are concerned about a lack of control over where the data resides, and 91 percent are concerned about a lack of visibility into security controls.

Other issues that hinder adoption include a lack of understanding of governance processes and technologies for the cloud, as well as how to properly manage those environments when in production. Moreover, there have been some differences in the ROI promised by cloud providers and the actual ROI realized by enterprises. This has been due to a lack of experience and/or understanding about the cloud’s impact on labor costs, the cost of changing the organization, and the need to operate both cloud and non-cloud systems at the same time the switchover is occurring.

Still, the outlook for public and private clouds shows a very steep upward curve. The emerging industry seems to be working out the kinks, and the successes outweigh the failures.

There is a long learning curve ahead for most enterprises. Similar to the shift to the Web that occurred in the 1990s, cloud computing is even more systemic and far reaching. It will take at least 10 years before cloud adoption can demonstrate its full value.

Other Drivers

Other drivers for the second wave of cloud computing are the use cases and applications the technology enables. The Internet of Things (IoT), for instance, is about data coming from sensors, and the processing of that data in near real time. The platform requirements make the IoT a natural application for the cloud. Food producers are looking at cloud-based IoT applications to provide better insights into irrigation and production. That’s just one example of where the cloud’s cost savings make the development and production of IoT applications a cost effective proposition.

These innovations are not lost on the cloud providers, with Google, Microsoft, and Amazon Web Services all offering IoT services within their public clouds. Indeed, the ability to support IoT applications could easily encompass 25 percent of cloud applications by the end of 2017.

More and more, people expect everything to be connected, and the cloud makes the cost of doing that realistic. Companies that make devices, from mobile phones to thermostats, understood early on that it doesn’t make sense to keep all the smarts and storage in the device itself. Most smart IoT devices pair with their own cloud.

Nest, for example, stores data from their thermostats in their own cloud, and they even sell cloud storage services for their DropCam IoT device. Most mobile applications have a back-end cloud service, typically running in another public cloud. Without cloud services, the devices would likely cease to have value, or cost much more than the sub-$100 US price tags we see today.

Developers are also creating applications that are purpose-built for cloud platforms. They’re called “cloud native,” which means they leverage the native features of the platform, such as auto-scaling, auto-provisioning, and other features that are accessible by leveraging the native APIs. Cloud native applications written for the cloud platforms they run on perform better than applications which are not. Moreover, they burn less money during operations, and provide better monitoring and management capabilities.

The second wave of cloud computing is really more of an evolution than another inflection point. Cloud services, either public or private, are becoming systemic to everything, including enterprise infrastructure and applications–IoT, mobile computing, etc. The success is based on how cloud computing provides the path of least resistance to what is typically the most cost effective solution. Unless major issues are uncovered—and that doesn’t seem to be happening–cloud computing will continue its rapid growth.

This article originally appeared on Cloud Technology Partners under the title "The Second Wave of Cloud Computing."