The world continues to move to the cloud as if there’s no alternative, which for nearly everyone, there isn’t.
Forrester Research just released a report – Predictions 2020: Cloud Computing – with the subtitle: New Hyperscale Alliances, Cloud-Native Innovations, And Security Demands Will Reshape The Cloud Battleground — Again. Massive trends continue, though with some twists that Forrester largely gets just right.
Here’s how Forrester sees it – with my comments offered along the way. Let me say at the outset that cloud computing opportunities and risks are some of the most important companies will address today and into the future. Arguably, companies cannot succeed without wide and deep cloud competencies, so the Forrester report is obviously timely. As the report notes, “the public cloud market – cloud apps (software-as-a-service [SaaS]); cloud development and data platforms (platform-as-a-service [PaaS]); and cloud infrastructure (infrastructure-as-a-service [IaaS]) – will reach $411 billion by 2022. In 2020, the combined platform and infrastructure markets will grow another 30%, from 2019 to $132.8 billion.” Big money; big market. Everyone needs to play.
Here’s the key – that Forrester gets absolutely right: “Enterprises are just now starting to use cloud to modernize core business apps and processes; to date, they’ve been using cloud primarily to build new apps and rehost infrastructure.” Cloud providers are responding to this new demand but in different ways, which is where it gets interesting, as Forrester suggests:
“IBM and Oracle will retreat to familiar territory, and Alibaba will threaten Google … in 2020, IBM and Oracle will no longer try to win on the general-purpose, hyperscale, global public cloud platform battleground now dominated by AWS, Azure, Google and Alibaba. IBM will focus on helping enterprises use the OpenShift development platform, on any cloud, to modernize core business apps. Oracle will focus on its SaaS and autonomous database products, recommending Azure for general-purpose cloud development services like AI/ML, Kubernetes/containers, internet of things (IoT), and other emerging innovations.”
If this prediction is accurate, it will represent a significant shift in the structure of the cloud market. Does it make sense? It sure does: IBM is losing ground and should re-double its efforts around Red Hat, and Oracle’s positioning makes good sense especially since their offerings beyond SaaS – like AI-as-a-Service – cannot compete with the other cloud vendors. Alibaba’s growth is no surprise; nor is its passing Google in global market share.
Forrester goes further: “SaaS vendors will exit proprietary platforms and move to the hyperscale leaders. Business applications SaaS vendors that are late to the infrastructure market are already opting for large-scale cloud partners for infrastructure … why? They need to focus on their core competency – application functionality – and can’t compete with the pace of innovation, security, or operational scale of the hyperscale giants. Regional partnerships have already begun, such as Workday partnering with AWS in Canada and Salesforce with Alibaba in China.”
This is another important insight. The cloud is consolidating around applications, data bases, platforms and even emerging technologies that have been “anointed” by the cloud vendors and offered as de facto industry standard commodities to their clients. The largest software vendors have no choice but to acquiesce to cloud vendors as their primary and secondary distributors. What a change from just a decade ago when there were still a healthy number of new on-premise implementations and vendor-provided clouds for their flagship apps. No more: the major cloud providers own distribution, support, upgrades and everything else that comes with the deployment of enterprise applications.
More: “HPC use in public cloud will grow to 40% … large investments by cloud providers have changed the game for 2020 … HPC in the cloud is rising rapidly … 26% of global infrastructure decision makers at enterprises ran HPC workloads in the cloud in 2016; 36% did so in 2018; and we expect more than 40% to do so in 2020 … but it’s not just the hyperscale public clouds targeting HPC workloads — colocation providers are also taking aim … we’ll see tremendous analytics and AI innovation on top of HPC solutions.”
And why not? The macro trend here is enterprise defaulting to the cloud for all things digital, of which HPC is an important emerging and enabling part. Layering analytics, AI, AR, VR, IOT – you name it – onto HPC Cloud is inevitable. Same thing for open source development where “hundreds of open source projects and vendors vying for developer attention in the cloud-native ecosystem will wage a pitched battle in 2020” for standardization. Some will win, most will lose. It’s also the same trends regarding cloud security, where the major cloud vendors will acquire, integrate and offer security tools and techniques – but not too aggressively – Forrester argues. I’m not so sure. As more and more services move to the cloud, pressure to keep them all secure will skyrocket. I’m looking for the cloud providers to make their bets on tools, techniques and technologies sooner rather than later. I’m also looking for the major cloud vendors to acquire cloud management vendors and short-circuit market demand for both services and security.
Additional Cloud Trends
There are very few questions left about the comprehensiveness of cloud services. Short-term and easily long-term, on-premise is dead. Cloud business cases have long since been validated and it won’t be long until just about all applications and data are hosted in someone’s cloud. The last frontier – emerging technologies – is now part of the cloud providers’ repertoire. Amazon, for example, offers tools in analytics, augmented reality, virtual reality, the Internet-of-Things, blockchain, robotics and machine learning. IBM offers capabilities in artificial intelligence, the Internet-of-Things, blockchain and analytics. Google offers capabilities in analytics, artificial intelligence and the Internet-of-Things. Microsoft offers tools in artificial intelligence, machine learning, blockchain, the Internet-of-Things and analytics.
But there’s another trend that may threaten competitiveness and, ultimately, cloud innovation: consolidation. Four vendors own close to 75% of the cloud infrastructure market (Amazon Web Services,33%, Microsoft 13%, IBM 8%, Google 6% and Alibaba 4%, as of Q1 2018). Three providers – Amazon Web Services, Microsoft and Google – own 55% of the overall cloud market. This kind of market concentration is – as always – good and bad – for all of the obvious reasons. But concentration also assumes the need to select a major cloud partner (among a shrinking set) as soon as possible in order to optimize their products and services. Since the largest cloud providers have the deepest product/service catalogs, companies have little choice but to select among a handful of providers. While companies benefit tremendously from soup-to-nuts provisioning, they’re at risk if the number of exquisite providers is tiny. The combination of full-provisioning and cloud oligarchy equals total dependency. While the trend toward richer cloud products and services is terrific, the availability of the products and services from a shrinking number of providers is not. When “83% Of Enterprise Workloads Will Be In The Cloud By 2020,” what will the corporate computing landscape look like?
Forrester’s predictions are well worth studying. Cloud strategies are well informed by studied insights. There are several research organizations that study cloud trends. The Gartner Group, Business Insider, IDG and MarketWatch, among others, study cloud trends. Forrester’s Predictions 2020: Cloud Computing: New Hyperscale Alliances, Cloud-Native Innovations, And Security Demands Will Reshape The Cloud Battleground and the companion report – Predictions 2020: Edge Computing: New Form Factors, Partnership Strategies, And The Promise Of 5G Will Converge To Catapult Edge Toward Mainstream – are both well worth reading.