Cloud infrastructure as a service (IaaS) represents a spectrum of services; there is no "one size fits all" service, and no single provider successfully addresses all segments of the market, according to Gartner, Inc. The market is poised for strong growth with worldwide IaaS forecast to grow from an estimated $3.7 billion in 2011 to $10.5 billion in 2014.
"We are still at the beginning of the adoption cycle for cloud compute IaaS," said Lydia Leong, research vice president at Gartner. "This is a rapidly evolving market that represents the transformation of IT infrastructure over 10 to 20 years; however, the next five years represent a significant revenue opportunity-as well as a critical period for vendors who need to lay their foundations for the future."
Cloud IaaS is the capability provided to the consumer to provision processing, storage, networks and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications. The consumer does not manage or control the underlying cloud infrastructure but has control over operating systems, storage and deployed applications, and possibly limited control of selected networking components (e.g., host firewalls).
IaaS can be delivered by an internal IT organization (insourced) or by an external service provider (outsourced). The underlying infrastructure can be hosted within an organization's data center or in an external data center. That underlying infrastructure can be dedicated to a single customer ("private cloud"), shared between a consortium of customers ("community cloud"), or shared with a provider's customer base in general ("public cloud").
Because the market and the associated technologies are immature, customers frequently settle for what they can get now, rather than what they actually want or need. They currently tend to make primarily tactical decisions rather than long-term strategic commitments. Ms. Leong warned that while capturing the customer at this stage has value, service providers need to work hard to ensure that they retain these customers as their needs evolve.
"Startup IaaS pure-plays, Web hosters, carriers and data center outsourcers are all competing in the cloud computing IaaS market. However, many providers have a market viewpoint that is restricted by the particular use cases that they see in their sales pipeline, and this can lead to tunnel vision," Ms. Leong said. "In reality, customer requirements and use cases for cloud compute IaaS are diverse and evolving quickly. Cloud IaaS represents a spectrum of services; there is no 'one size fits all,' and no single service provider successfully addresses all segments of the market."
Ms. Leong said that in order to understand the market evolution, providers must first understand what prospective customers intend to do with cloud IaaS - both now and in the future. They also need to be aware that customers are often not fully aware of either their needs or the options available in the market and as a result, significant education needs to take place.
The on-demand nature of the cloud means that customers will want to try it with a minimal amount of fuss and cost. Providers should not underestimate the value of a frictionless sale to someone outside the usual IT procurement process. Getting a foot in the door is not only extremely valuable for a provider; it also helps the prospective customer demonstrate immediate value to his or her organization.
Providers must also be prepared to pay attention to the different buyer constituencies in each segment: IT operations, other technical personnel (such as application developers, engineers and scientists) and business buyers, all of whom may have different needs. The needs of an organization (and the buyer) may also change over time; for instance, initial cloud IaaS adoption is often driven by application developers, but as the organization's use grows, consolidated sourcing becomes the province of IT operations.
"Cloud IaaS is an evolving, emerging market," said Ms. Leong. "Service providers must remain flexible, be prepared to respond quickly to changing market demands and be agile in their adoption of new technologies in order to make the most of its potential."