Last Tuesday, February 14, I briefly attended CloudConnect 2012 at Santa Clara Convention Center.  One of the keynote speakers that morning was Geva Perry, author of Thinking Out Cloud. * What’s really noteworthy about the keynote is Mr. Perry’s assertion, based on research, is that generally speaking, cloud computing is happening from the bottom up.  That really makes sense to me.  The Cloud is answering the need of developers who may not have access to or don’t have the budgets for resources.  Mr. Perry states, “Amazon understood this, and built its service so it was optimized for developers.”  DataCenter Knowledge, which first published the keynote summary, goes on to hypothesize that the same was true with SalesForce.com.  The early adopters were those frustrated with their own company’s CRM offerings and sought to satisfy their need from a Cloud service.

Further, this reframes and reinforces the capital expense model and converts it to an operating expense model.  That is exactly the foundation on which the Cloud is based, especially the public cloud.  However, despite the fact that there is a measurably significant financial difference between the costs of public- versus private-cloud services (private-cloud being much more expensive), adoption is at a brisk pace and getting stronger. 

Taking an historical look for a moment at projections of a couple of years ago from Enterprise And SMB Software Survey, North America and Europe 4th Quarter 2009 and Forrsights Software Survey 4th Quarter 2010, between 2009 and 2010 SaaS adoption increased by 20%, IaaS adoption increased by 75% and PaaS adoption increased by 80%.  Momentum is growing with projections for the respective sectors (SaaS, IaaS and PaaS) between 2011 and 2012 increasing by 46%, 52% and 71%.  CDW recently published its cloud Computing Tracking Poll Report** showing 37% adoption in enterprises followed by higher education (34%), healthcare (30%), federal government (29%), state and local government (23%) and SMBs (21%).**

Jumping forward to the present, this morning there appeared an article on the CCIM Institute site** addressing the fact that corporations swamped with excess office space are starting to dispose of it.  One of the reasons for this is changes in the ways that employees are interacting with each other.  Rather than continue using office space in traditional ways, more companies are using an open layout to create more collaboration amongst workers.  Furthermore, Teknion, a furniture manufacturer, published its Workplace of the Future study showing that 46% of companies surveyed currently employ the Cloud and 90% plan to increase their investment in Cloud and other productivity-enhancing technologies by 2015. 

According to Johnson Controls’ recent Collaboration 2020, predicts that during the coming decade employees expect to spend less time at their desks and more time working in collaborative environments and communicating via video.  As long as they are connected, most employees can work anywhere.  However, being able to work anywhere also entails that in addition to bandwidth, employees must have access to their files and data, most likely via Cloud-computing.

So should CIOs feel threatened by this?  I guess that really depends on the specific goals of the enterprise and its CIO.  However, it seems to me that if positioned properly, utilizing the Cloud could provide an incredible advantage for the IT organization.  Rather than having to focus on budgets constrained by and at the effect of the continual refresh cycle, CIOs can focus on solving real business issues and driving the growth and expansion of the enterprise.  Conjecturing for a moment that there is probably no organization that hasn’t been touched by the recession of 2008, companies have been forced to do more with less.  This is especially true with regard relationship between labor and IT infrastructure.  

Anecdotally, in addition to using less office space, it is apparent that enterprises have chosen to automate, by increasing the footprint of the IT landscape rather than hire warm bodies to do the same work.  In most cases, that investment has been manifested in the purchase of more IT hardware (servers, storage, network, etc.) and infrastructure.  Not that this is a bad thing, since the slightest bit of consumerism is driving the economy forward even at its current sloth-like pace.

So is adoption still being retarded because of security concerns?  Over the past 2 years, the perception of security being an issue has been assuaged in the minds of most, which, I believe, is fueling the increased adoption rates.  Certain business verticals are turning to the Cloud to achieve business goals and objectives.  A year ago, while attending the Southern California Biomedical Conference, I listened to Steve Phillpot of Amylin Pharmaceuticals describe his company’s migration of its IT environment to the Cloud.  Shortly thereafter, I heard Ed Ryan of Allergan discuss the same kind of migration that his company undertook.  Both of these are success stories, but not the only ones.  Based on the project-oriented nature of its business model, entertainment production companies are starting to utilize the Cloud as well. 

Another contributing factor of Cloud proliferation is the increase in mobile applications and storage.  Smart phone apps and storage services are supplementing the growth of the Cloud.  Tangentially, just last week, Congress approved the auction of additional wireless frequencies.  The motivation was to create a new revenue stream to ease budgetary concerns, but regardless of the reason, the result is a positive step in creating more needed bandwidth to support Cloud adoption.

Some worry that the growth of Cloud will have a negative impact on the continued need for more data center space.  Fearing that as Cloud adoption grows, and servers become more efficient and virtualized, less data center space will be required.  The best analogy that I can offer to counter this position reminds me of the one of the most congested thoroughfares in the US, the 405/San Diego Freeway (located in Southern California).  Constructed in the late-1950s, and continually expanded since that time, demand for more lanes has always outpaced the supply. 

The more lanes that are added, the more cars seem to fill the road.  The adoption of mass transit (if you can call it that in L.A.) doesn’t seem to have any effect to reduce the flow.  So, applying this to the data center model, despite the fact that companies like SeaMicro (www.seamicro.com) and Calxeda (www.calxeda.com) are producing servers that use half or a quarter of the power and create much less heat than conventionally designed servers, that virtualization is becoming the standard and Cloud service offerings are gaining gigantic momentum, it will be a long time before demand subsides.  CIOs fearful of how Cloud-computing will impact their worlds should be mindful of the fact that today and in the future IT will continue to drive the success of the business that it serves.

 

Footnotes

* (A summary of Mr.  Perry’s keynote can be found at http://www.datacenterknowledge.com/archives/2012/02/16/the-bottom-up-nature-of-cloud-adoption/?utm-source=feedburner&utm-medium=feed&utm-campaign=Feed%3A+DataCenterKnowledge+%28Data+Center+Knowledge%29)

**(http://www.ccim.com/cire-magazine/articles/139111/2012/01/resizing-or-right-sizing)

***(http://www.cdw.com/shop/tools/surveys/survey.asp?SurveyKey=D808B2971F634B5A96E452FE7E6FA165)