Cloud computing: What's coming next

The development of cloud computing is still at a relatively early stage. Here's how it's likely to evolve over the next few years.
Written by Mark Samuels on
Doctor nurse laptop

The NHS benefits from bringing information together, "so it can do things once rather than many times. The trend in all industries is that more information will be pushed to the cloud", says NHS' Nick Hopkinson.


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It is ten years since the official launch of Amazon Web Services -- and, during that decade, the cloud has moved from an over-hyped concept to a business reality.

Today, on-demand IT is used in a variety of ways by organisations of all shapes and sizes. But what will the future bring? We analyse the current market for on-demand services and predict how businesses will use the cloud by 2020.

How big is the cloud market, really?

William Fellows, co-founder and vice president at 451 Research, says the total value of the cloud -- in terms of infrastructure (IaaS) and platform-as-a-service (PaaS) -- is about $13bn annually.

Although significant, the amount of cash dedicated by businesses to the cloud is small compared to the total amount spent on technology around the world: to put that big number in context, there are some (very) big individual organisations that will have an annual IT budget not too far from that figure.

Such comparisons make for sober reading for those who believe the tipping point for on-demand IT has been reached. Yet Fellows says that, whatever way experts chose to interpret the figures, there can be no denying that something crucial is happening in regards to the way CxOs buy technology.

Fellows argues, the golden days of buying cloud ever-more cheaply -- which we are currently experiencing -- will not continue forever.

"The amount of companies involved and the low spending figures involved lead many to conclude that cloud providers are involved in a race to the bottom," he says. "That's a misconception. Providers are actually involved in a race to the top. The key suppliers are trying to get users onto their higher rate services as quickly as possible."

And there are some big changes ahead for the market, too: "As hyper-scalers -- like Google, Amazon, and Microsoft -- pull away from the rest of the market, the other firms will be left swirling around in a morass and will struggle to respond," he says.

Still, the opportunity exists for system integrators to pivot and to start providing niche offerings, particularly in regards to managed service provision. By 2020, successful specialists will offer services that help CIOs manage the broad range of applications being used on-demand and the security around those tools, the analysts predict.

"Moving to the cloud right now is still not for the faint-hearted," says Fellows. "CIOs, particularly those in heavily regulated industries, will want a cloud that's de-risked and packaged conveniently by the end of the decade."

Changing the way businesses operate now and in the future

One IT leader who is operating in a heavily governed environment is Nick Hopkinson, CIO at Devon Partnership NHS Trust. He agrees that most senior executives still see the cloud as part of a mixed approach, with various elements that you should always keep in house.

Hopkinson says the perceived value of information often governs how much data a CIO is prepared to push outside. He is piloting use of the cloud for secure video consultation between nurses and the people who rely on the Trust's services.

"For the NHS, there are clear advantages in bringing information together, so that we can do things once rather than many times," he says. "The trend in all industries is that more information will be pushed to the cloud -- we'll see a continuation of services moving online during the next few years."

It is sentiment that chimes with Dan Probert, head of IT innovation at charity Camfed. The organisation helps marginalised girls in sub-Saharan Africa to learn and succeed. More than 3.5 million children in Zimbabwe, Zambia, Ghana, Tanzania, and Malawi have benefitted from their work.

The organisation has created detailed records for 220,000 pupils and is adding more every day. These records are completed on mobile devices and stored in the cloud. "We're an early adopter and everything we do as an organisation is though the cloud," says Probert.

"All our records now sit in Salesforce, so when our team looks at information online, they can see all the correlations and share key data with schools and activists. Our use of the cloud won't change in the future but on-demand IT itself will continue to evolve."

Different clouds for different organisations

It is worth noting, says Tom Reuner, managing director at HfS Research, that use of the cloud is very different for organisations born using it and those that struggle to leave legacy environments behind. "But what all these organisations have in common is that cloud can be a technology, a delivery concept and a business model," he says.

Perhaps the most important point, suggests Reuner, is that debates about best-use cases for the cloud are moving beyond narrow notions of cost savings and into a new stage of maturity, characterised by conversations about agility and workload. As use of on-demand IT develops, he says it is crucial to recognise the cloud is simply one of many building blocks for digital transformation.

Smart CIOs will call on a series of related technologies, such as analytics and automation, to change how their organisations operate. The key, says Reuner, will be the ability of providers to create integrated approaches, allowing CIOs to 'plug and play' with transformative tools as new business needs arise.

One executive who continues to search for new ways to make the most of digital IT is Alex Hamilton, co-founder and chief executive of Radiant Law, a commercial contracts firm that uses on-demand IT to communicate with staff and clients. "We use the cloud for all different layers of the traditional IT stack. It allows us to move much faster," he says.

"It's all about ubiquity. I think the cloud has become the accepted way of delivering technology for many businesses now. We work with some very big companies and what we're seeing is that the cloud is a true enabler for agility and productivity."

Such developments lead Hamilton to conclude, like Reuner, that on-demand IT will become a basic building block for transformational technology services. "There are understandable concerns but many have been addressed by the big providers and companies, like us, really are much more confident about going on-demand," he says.

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