The cloud: It's not just about infrastructure

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07th December 2015

A new study has shown how the cloud is slowly moving up the value chain in Europe and elsewhere.

Historically, enterprises have used the cloud mainly as a source of opex infrastructure. As they would have done with more traditional colocation services, they've kept platform and software development inhouse, and used their outsourcing partners primarily as a way to keep the lights on.

However, this model is now evolving into something new, according to a report from Microsoft and 451 Research.

The study, called Beyond Infrastructure: Cloud 2.0 Signifies New Opportunities for Cloud Service Providers and published on March 18th, suggests that cloud solutions are gradually moving up the value chain in Europe and elsewhere. Comprising the results of a survey of more than 1,700 cloud users worldwide, including IT managers, application developers and marketers, it depicts a landscape in which infrastructure alone is no longer the only thing wouldbe cloud buyers are looking for.

Specifically, Microsoft and 451 Research found that almost 70 per cent of future opportunities for cloud service providers lie outside of the traditional infrastructure hosting market. Specifically, 27 per cent of respondents outlined plans to spend on application hosting, 21 per cent on managed services and 21 per cent on cloud-based security.

"For today's cloud service providers, infrastructure has become only a small part of their overall service offering," said Aziz Benmalek, general manager of Microsoft's Hosting Service Provider business. "This presents a significant opportunity for our service provider partners to provide value-added services to their customers." Michelle Bailey, senior vice president for Digital Infrastructure and Data Strategy at 451 Research, added: "Trust, uptime, security, performance and technical expertise are today’s differentiators for a businessready cloud.

"It's not just about having data centres everywhere at the lowest price. Providers need to build a business that aligns to who they are as a company and who they are supporting."

 

Why is cloud strategy changing? 

The results of the survey also provide some clues as to the reason for this shift. Microsoft and 451 Research found, for example, that the decisionmaking process around cloud procurement has moved higher up in most organisations: traditional IT managers are no longer exclusively responsible for buying cloud solutions, while the Csuite has widely stepped up its involvement.

More than half (52 per cent) of the chief information officers and chief technology officers in the survey reported having primary decisionmaking responsibility when it came to the cloud. A similar number (44 per cent) of chief executives said the same. However, just 38 per cent of IT infrastructure managers, and 29 per cent of IT architects, said they had the final say in the cloud procurement process.

This suggests that cloud is increasingly valued not only as a source of operational efficiency in terms of cost and resources, for example but also as a strategic asset, with relevance to a wide range of long-term business goals. As infrastructure-as-a-service has become commoditised, a more senior set of decision-makers are starting to look to cloud suppliers for the value-added services that will give them a competitive advantage in future.

"Cloud 2.0 is really about value, redefining cloud computing from a technical specification to a businessready environment," concluded Ms Bailey. "Enterprises are looking for a trusted endtoend solution, and ultimately this will involve multiple partners."

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