Reliance on IT services firms to build private clouds starts to fall

Posted by Mike Vizard on Jan 21, 2015 1:21:03 PM

In 2014, building private clouds created a major revenue stream opportunity for IT services firms because the expertise required to set one up was in short supply. But a survey of 1,865 IT organizations conducted by Technology Business Research (TBR) may give IT services firms some reason for pause going into 2015.

11406980684_940cf681c1_zThe survey found that that while private clouds represent a $41 billion market opportunity growing at a rate of 15 percent– 65 percent of those clouds were built by a third-party. Taking into account all the self-built clouds, the survey found that 83 percent of the private clouds built involved a professional IT services organization. But year over year, that represents a 3 percent decline.

What's to come: Public, private, or hybrid cloud?

IT services firms should take note of these trends because in 2015 private clouds will be much more turnkey in 2015 than they were in 2014. On the one hand, public cloud service providers are now making private clouds that don’t require any IT infrastructure investments and are more widely accessible. On the other hand, server vendors are working with VMware and Microsoft to create private cloud appliances that are significantly easier to deploy and configure. Chances are that internal IT organizations will be a lot more comfortable with private clouds both inside and out of the enterprise in 2015 than they were in 2014, which means they might not be relying as much on IT services firms to build them.

In fact, going into 2015 the bigger opportunity might not be building private clouds as much as it is integrating them. The TBR survey notes that the hybrid cloud market was valued at only $7 billion in 2014. But with only 22 percent of respondents having a hybrid cloud in place, the survey still found that on average customers spent $4.4 million on cloud integration in 2014. That would suggest that much of that integration work didn’t necessarily involve multiple types of clouds but rather legacy systems that for the most part run on premise. Over time most of those legacy applications will eventually be replaced by an application running in some type of cloud. But the majority of those legacy applications will probably continue to run on premise through most of the decade if for no other reason than simple inertia.

Keeping up with the cloud

What all this means for IT services firms is that the cloud market is evolving rapidly. The days when most customers weren't sure what a cloud was are pretty much over. In fact, most customers have come to terms with the fact that they will be relying on some mix of private and public cloud computing services for the foreseeable future. Longer term, they might not even be able to distinguish what part of an application workload is running where at any given moment as the line between private and public cloud computing services gets cloudier.

There’s an old saying among IT services providers that says where there is mystery, there is profit. In 2015, it looks like cloud computing in general, and private clouds in particular, are about to become a whole lot less mysterious.

Photo Credit: Perspecsys Photos on Flikr. Used under CC 2.0 license. 

 

Topics: Cloud Trends

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