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Economies of Cloud

A look at predictions for public, private and hybrid cloud spending, as well as cloud budget impact on the total IT budget.

Economies of Cloud

The debate about whether a business should embrace the cloud is over. Analyst Gartner says use of cloud computing continues to rise sharply, and by 2016, this growth will represent the bulk of new IT spending by businesses.

Enterprises are not just directing their fresh investments toward on-demand IT. Companies are also moving traditional systems and services to the cloud. Research firm IDC says there will be an 11 percent shift of IT budget away from traditional, in-house service delivery and toward various versions of the cloud by the end of next year.

The definitions of these versions of the cloud - public, private, and hybrid - are crucial, because they represent different forms of service provision for disparate business requirements. In the case of the public cloud, a service provider makes IT resources available over the Internet. These resources can be scaled up or down on a pay-per-use basis.

Such flexibility offers huge freedom to businesses, particularly in commodity areas of IT, such as email services. IDC expects spending on public cloud services to grow from $56.6bn in 2014 to more than $127bn through 2018. By 2018, IDC estimates public cloud services will account for more than half of worldwide software, server, and storage spending growth.

But the public cloud isn't right for every business requirement. While keen on the flexibility of on-demand computing, many C-suite executives retain serious misgivings about the governance of the public cloud, particularly in regard to information security.

Step forward, then, the private cloud, which offers the benefits of scalability behind a firewall. Resources in a private arrangement are accessible to a single organisation. By putting security first, IDC believes spending on the private cloud will be more than $24bn by next year.

But, once again, the private cloud will not suit every organisation. Private clouds rely on in-house IT management, which increases the cost of maintenance and provisioning and cuts down some on flexibility. This has pushed the evolution of hybrid cloud environments, which combine dedicated and shared resources, assigning capacity based on workload requirements.

In a hybrid cloud, an organisation provides and manages some resources in-house and has others hosted externally. Gartner estimates almost half of large businesses will have implemented a hybrid cloud by the end of 2017.

Across public, private and hybrid models, use of the cloud will continue to increase. The debate about embracing on-demand technology might have ended, but the consideration of which form of the cloud to use is only just beginning.