Public Cloud Service Revenue Forecasted to Reach $113 Billion by 2018

Posted by Mike Vizard on Feb 13, 2015 12:00:00 PM

While everyone concedes that public cloud services have become a force to be reckoned with, no one is certain what portion of the trillions of dollars spent on IT is going to migrate into the public cloud.

One recent estimate made by the market research firm Technology Business Research (TBR) forecasts that public cloud spending will reach $113 billion in 2018. That's up from $67 billion in 2014.

7932571974_aebaea40d8_zRegardless of where IT winds up getting deployed, there are two immutable facts. The first is that somebody still has to be charge of managing it. The second is that no application workload is an island unto itself. Applications always need to be integrated with each other, and because a larger percentage of those applications will not be running in a public cloud, the integration opportunities for IT services providers are still significant.

A slow transition to hybrid

Right now, however, cloud computing is not very hybrid. In fact, it bears a lot more resemblance to traditional IT than most folks would care to admit. Instead of viewing the cloud as a new way to manage IT, most organizations continue to manage IT pretty much as they always have. The only difference is that instead of having isolated stacks on infrastructure based on Windows or Linux, there is now a third stack of infrastructure running in the cloud. They might not know exactly what’s running underneath those cloud applications, but much like before, the tendency is to manage each of those application environments in isolation.

That doesn’t mean applications aren't moving between those stacks of computing, but it does mean that the management of IT across the environments is not particularly holistic. IT services organizations should take note of what that means at least in the short term, Cloud computing might actually be increasing the total cost of IT. Granted, the cost of provisioning a virtual machine in the cloud is a lot less than it is on premise. But existing systems don’t simply go away, so the end result is increased IT management overhead created by the need to support applications that now run both in the cloud and on premise.

Long-term opportunities for MSPs

Therein, of course, lies the long-term opportunity for IT services firms that have the expertise and tools needed to provide managed services across hybrid cloud computing environments to actually reduce the total cost of enterprise IT when all costs are fully loaded.

No matter how anyone looks at IT management today, it has never been a more complex undertaking. The ability of most internal IT organizations to keep pace with that complexity is limited at best. It’s only a matter of time before more of them begin to rely on managed service providers that as a rule should make much better use of advances in IT automation to reduce those costs even further.

When it comes to cloud computing infrastructure, entities such as Amazon Web Services (AWS) have already proven that scale is everything. In the very near future, IT service providers should expect those same kind of economics to be applicable to the management of the hybrid cloud as well.


 Photo Credit: Chris Potter on Used under CC 2.0 License

Topics: Cloud Industry and Technology, Cloud Trends

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