How Big is Public Cloud Opportunity?

By Gary Kim October 20, 2011

About 77 percent of enterprise respondents surveyed by PwC have a plan to adopt some form of cloud computing, and 64 percent said some type of cloud, including private and public, would be the best way to manage IT infrastructure in three years.

Precisely what that means for would-be providers is not quite so clear, though.

PwC surveyed 489 business executives in an effort to understand the real state of data center management, and the results suggest both increases in traditional data center operations, "private" cloud operations and some increase in public cloud activities. But there will be a huge decline in use of traditional data center services managed by service providers.

Traditional IT outsourcing service providers are about to see their business models and customer value propositions disrupted.

But the essence of cloud computing is a move towards highly standardized racks of commodity servers and a software environment that together make for a highly efficient use of resources. Who needs to outsource to a third party when such capabilities are available? IaaS Will Count for a Third of IT Resources in 2014

"We have seen major technology shifts in the data center in the past," says David Stuckey, PwC's US leader of its data center infrastructure practice. "These shifts in reality have just added to the mix in the data center, increasing complexity and cost."

“Cloud computing, when done right, has the potential to actually replace, and not just augment, legacy environments while adding value by reducing costs and increasing agility," says Stuckey.

Private cloud is infrastructure operated solely for a single organization, whether managed internally or by a third-party and hosted internally or externally. Private cloud Some might argue that this approach is not too different from what enterprises already do, since organizations still have to buy, build, and manage the facilities.

In 2009, public IT cloud services spending was modest compared with spending on traditional IT products, according to IDC. Cloud spending was just four percent of the spending on comparable offerings delivered as traditional products.

Cloud services are expected to grow to about 12 percent of the size of traditional product spending by 2014, though. While spending on public IT cloud offerings in 2014 will reach only 12 percent (approximately one-eighth) of the size of traditional IT product spending, it will be almost a third of the net-new growth in IT spending, IDC has said.

Or maybe not. Many applications, especially those used by consumers and smaller businesses, are provided over a public cloud.

With some exceptions, the trend in large organizations is still “private” cloud operations. Public cloud opportunity not that big?

As CA's Andi Mann writes, even the cost benefits of public clouds aren't necessarily a given.

Gary Kim is a contributing editor for TechZone360. To read more of Gary’s articles, please visit his columnist page.

Edited by Rich Steeves

Contributing Editor

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