Gartner: Low-cost cloud to disrupt $1 trillion IT services market

By Asia Cloud Forum staff 01-Dec-2011

Gartner revealed its top predictions for IT organizations and users for 2012 and beyond.

These predictions indicate changes in control for IT organizations as budgets, technologies and costs become more fluid and distributed. "The continued trends toward consumerization and cloud computing highlight the movement of certain former IT responsibilities into the hands of others," said Daryl Plummer, managing vice president and Gartner fellow.

Cloud computing is expected to take the center stage of IT in the next few years. According to Gartner's top predictions for 2012, organizations will see a rise in low-cost cloud services, and large enterprises will increasingly put their customer-sensitive data in the public cloud to reduce opex. Notably, more cloud services providers will include a "global energy surcharge" on their customers in light of costly renewable-energy sources. Here are Gartner's top predictions for 2012:

By 2015, low-cost cloud services will cannibalize up to 15% of top outsourcing players' revenue. 

Industrialized low-cost IT services (ILCS) is an emerging market force that will alter the common perceptions of pricing and value of IT services. In the next three to five years, this new model will reset the value proposition of IT. Low-cost cloud services will cause the cannibalization of current and potential outsourcing revenue. Similar to what happened with the adoption of offshore delivery, it will be incumbent upon vendors to invest in and adopt a new cloud-based, industrialized services strategy either directly or indirectly, internally or externally. The projected $1 trillion IT services market is at the beginning of a phase of further disruption, similar to the one the low-cost airlines have brought in the transportation industry.

Through 2015, more than 85% of Fortune 500 organizations will fail to effectively exploit big data for competitive advantage. 

Current trends in smart devices and growing Internet connectivity are creating significant increases in the volume of data available, but the complexity, variety and velocity with which it is delivered combine to amplify the problem substantially beyond the simple issues of volume implied by the popular term "big data." Collecting and analyzing the data is not enough -- it must be presented in a timely fashion so that decisions are made as a direct consequence that have a material impact on the productivity, profitability or efficiency of the organization. Most organizations are ill prepared to address both the technical and management challenges posed by big data; as a direct result, few will be able to effectively exploit this trend for competitive advantage.

At year-end 2016, more than 50% of Global 1000 companies will have stored customer-sensitive data in the public cloud. 

With the current global economy facing financial pressure, organizations are compelled to reduce operational costs and streamline their efficiency. Responding to this imperative, it is estimated that more than 20% of organizations have already begun to selectively store their customer-sensitive data in a hybrid architecture that is a combined deployment of their on-premises solution with a private and/or public cloud provider in 2011.

By 2015, the prices for 80% of cloud services will include a global energy surcharge. 

While cloud operators can make strategic decisions about locations, tax subsidies are no long-term answer to managing costs, and investments in renewable-energy sources remain costly. Some cloud data center operators already include an energy surcharge in their pricing package, and Gartner analysts believe this trend will rapidly escalate to include the majority of operators -- driven by competitive pressures and a "me too" approach. Business and IT leaders and procurement specialists must expect to see energy costs isolated and included as a variable element in future cloud service contracts.

Through 2016, the financial impact of cybercrime will grow 10% per year, due to the continuing discovery of new vulnerabilities.

As IT delivery methods meet the demand for the use of cloud services and employee-owned devices, new software vulnerabilities will be introduced, and innovative attack paths will be developed by financially motivated attackers. The combination of new vulnerabilities and more targeted attacks will lead to continued growth in bottom-line financial impact because of successful cyber attacks.

By 2016, 40% of enterprises will make proof of independent security testing a precondition for using any type of cloud service.

While enterprises are evaluating the potential cloud benefits in terms of management simplicity, economies of scale and workforce optimization, it is equally critical that they carefully evaluate cloud services for their ability to resist security threats and attacks. Inspectors' certifications will eventually become a viable alternative or complement to third-party testing. This means that instead of requesting that a third-party security vendor conduct testing on the enterprise's behalf, the enterprise will be satisfied by a cloud provider's certificate stating that a reputable third-party security vendor has already tested its applications.







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