Enterprise spend on public cloud IaaS to reach $650m by 2018

Research by Telsyte shows the uptake of cloud computing within Australian enterprises is expected to continue to grow, with the current total market value for public cloud infrastructure services is worth AU$305 million.

There were twice as many enterprises adopting infrastructure-as-a-service (Iaas) in 2013 over the previous year, according to a new study by Telsyte.

The Telsyte Australian Infrastructure and Cloud Computing Market Study 2014 showed that more than half of all organisations greater than 20 employees are now using public cloud IaaS for at least some part of their IT infrastructure, indicating that cloud computing within Australian enterprises is "skyrocketing".

The study has forecasted the total market value for public cloud infrastructure services to reach AU$650 million by 2018, up from AU$305 million in 2014.

Telsyte senior analyst Rodney Gedda said with cloud services presenting a low barrier to entry for IT infrastructure, the organisation penetration is growing strongly.

"There are a few key things driving this. One is the plain volume of organisations that will subscribe to cloud services that aren't already. The second thing is cloud penetration within the organisation will increase, so organisations that are already using cloud services will spend more," he said.

"The third thing is the value of enterprise services in the cloud will expand. For example, if a company is running database workloads and billing systems on-premise, to move them into the cloud might be more of an exercise than just spinning up a VPS (virtual private server) with a credit card, so it's higher value sell."

The study also sets out to dispel ongoing discussions that Australian organisations are being prevented by corporate and legal policies from using offshore cloud services. The Telsyte research indicates two-thirds of businesses that use the cloud are already using an offshore provider. Furthermore, 46 percent of CIOs said they are not subject to any restrictions on the use of offshore cloud services.

"The multinationals have made inroads into the local cloud market and local providers will need to compete on features and service levels, and not simply the fact that data is hosted in Australia," said Gedda.

The research identified there's a growing trend in the adoption of a hybrid cloud model, which is expected to be in use by some 30 percent of enterprises by 2018. But on-premise IT is still considered a favoured choice. In fact, the study showed more organisations are implementing and considering private clouds, and are using virtualisation technology to implement a cloud architecture under their control.

"We can't forget most of IT still runs on-premise, so enterprise IT is already an existing investment in service, storage, and infrastructure," Gedda said.

"For an organisation that has quite important workloads, they can't just toss everything out and start again in the cloud, so the hybrid approach is a midpoint between organisations who want to keep key applications within the company's boundaries, and between looking at moving some workload that may deem to be not as business critical, but they need to take advantage of the cloud benefits which are flexibility and agility."

Gedda concluded that there is now a "healthy range" of private cloud management options available to organisations that are looking to replicate the "scalability and manageability of public clouds with their own servers".