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The Evolution of Cloud Computing

  • Publish Date: Posted about 6 years ago
  • Author:by Steve Hallett

At a time when Digital Transformation is on everyone’s lips and the sheer volume of tech coverage around some of the usual suspects such as AI, VR and Big Data is huge – Cloud Transformation is still current and one of the most prioritised initiatives for both big and not so big businesses across EMEA going into H2.

It is no longer a question of whether or not companies will undergo a cloud transformation – but what services should be shifted into the Cloud exactly, how quickly can this happen, how much will it cost or indeed save the business and what are the priorities; from either a bottom up or a top down strategic approach. Cloud computing has an ability to kick-start other activities, for both external customers and internally as an organisation.

Short History of Cloud Computing

Cloud Computing has been around for years and started back in the 60’s when an intergalactic computer network was first conceptualised by JCR Licklider. Since then, Cloud Computing has evolved somewhat. By the late 90’s, Web 2.0 came around, thanks largely to the availability of much improved bandwidths for the masses.

SFDC arrived in 1999, leading the charge of delivering enterprise applications through a relatively basic website, laying the foundations for other software houses to begin delivering applications over the internet too. Google and others began offering browser-based enterprise applications including Google Apps (G Suite) as Web 2.0 really took off and another SaaS milestone passed. Microsoft contended with Office 365. Oracle, SAP and Microsoft encouraged their customers to upgrade to new cloud-based products over the next few years with great success. Monthly subscription services also appealed to IT buyers to avoid the CapEx peeks associated with hardware and software upgrades.

Amazon Web Services (AWS) emerged in 2002, before launching Elastic Compute Cloud (EC2) in 2006. Today, they dominate the global IaaS market and according to Gartner in 2017, many enterprises now spend more than $5m of their IT budgets on Amazon’s cloud services a year.

The next decade of Cloud Computing will be just as eventful. Security in the Cloud is perhaps now seen as a strength rather than a perceived weakness early on. Over the course of the past decade, cloud computing has evolved from being something service providers told companies they should be adopting to becoming the technological lifeblood that runs through most modern enterprises.

Legacy providers vs. cloud native suppliers

Legacy software providers, such as Microsoft, Oracle and SAP, have all made a concerted effort over the past decade to encourage users of their on-premise software offerings to upgrade to their cloud equivalents that they usually subscribe to on a pay-as-you-go basis. This, in turn, has seen IT departments gradually shift away from treating their software and hardware purchases as “big bang” capital expenditures that happen once every so often (or as the upgrade cycle dictates).

As enterprises have become increasingly accustomed to the pay-as-you-go cloud billing model, treating IT purchases as more of a day-to-day expense has become the norm, and – where SaaS is concerned – there is still a lot of room for market growth. Particularly, there are still plenty of enterprises yet to join the cloud software bandwagon, points out John Dinsdale, chief analyst at IT market watcher Synergy Research Group.

“Traditional enterprise software vendors like Microsoft, SAP, Oracle and IBM still have a huge base of on-premise software customers and they are all now pushing to aggressively convert those customers to a SaaS-based consumption model,” he says.

“At the same time, born-in-the-cloud software vendors like Workday, Zendesk and ServiceNow continue to light a fire under the market and help to propel enterprise spending on SaaS.”

IaaS and the public cloud

Another important milestone in the development of the cloud market as we know it today was the emergence of Amazon Web Services (AWS) in 2002. The company provided a suite of cloud-based infrastructure services including storage, computation and even human intelligence through the Amazon Mechanical Turk.

Then, in 2006, Amazon launched its Elastic Compute Cloud (EC2) as a commercial web service that allows small companies and individuals to rent computers on which to run their own computer applications. Today, the firm is the undisputed leader of the infrastructure as a service (IaaS) market, the company continues to add thousands of new services and features to its cloud services portfolio each year, and is a bone fide multibillion dollar enterprise.

According to figures published by IT analyst house Gartner in 2017, many enterprises now spend more than $5m of their IT budgets on Amazon’s cloud services a year. “With an accelerating pace of innovation on top of an already rich portfolio of services, and an expanding impact across a range of IT markets, [AWS] is the provider most commonly chosen for strategic adoption,” stated Gartner in its 2017 IaaS Magic Quadrant report, which ranks the runners and riders of the cloud infrastructure sector. While not the ideal for every need, it has become the ‘safe choice’ in this market, appealing to customers that desire the broadest range of capabilities and long-term market leadership.”

Cloud service providers: The runners and riders

Amazon, in particular, initially started out pitching its wares to startups, hailing the public cloud as way to get their businesses up and running without having to shell out tens of thousands of pounds to acquire on-premise servers, storage and networking equipment.

Unburdened by the capacity, cost and maintenance constraints that come from having to rely on traditional, legacy, on-premise hardware, this eased the path from startup to scale up for many of these early cloud-adopting companies. So much so, “cloud-native” organisations (as they came to be known) started to emerge that were able to out-innovate their longer-established (and oftentimes better-funded) peers because the business agility cloud afforded them.

The Google Cloud Platform, which is the coverall term used for its IaaS offerings, has also followed a similar path, by starting out focusing on winning over startups, before ramping up the enterprise-readiness of its services to boost their appeal to a wider range of users. Keen to prevent their hold on whatever market they’re operating in from weakening, enterprises soon followed the lead of their nimbler, cloud-native contemporaries and began looking for ways to reduce their reliance on on-premise technologies too. And it is here that Microsoft, with its Azure public cloud proposition and its sizeable enterprise install base, has found itself with something of an advantage over its startup-focused competitors.

While Amazon and Google have both sought to increase the enterprise-readiness of their offerings, as they have set their sights on conquering the world of corporate IT, Microsoft has years of experience in knowing what CIOs look for in a prospective IT provider. Originally pitched as Microsoft’s take on platform as a service (PaaS) at launch in 2012, the remit of Azure was extended to include IaaS in spring 2013 with the general release of Azure Virtual Machines around that time.

On the back of long-term users of the Redmond giant’s on-premise technologies upgrading and migrating workloads to Azure, Microsoft is now regularly cited by the analyst community as being the second biggest IaaS provider (after AWS) in the world.

“Microsoft is frequently chosen as a strategic cloud provider by customers that are committed to Microsoft technologies or that like Microsoft’s overall cloud strategy, which spans IaaS, PaaS, SaaS and on-premises solutions,” said Gartner, in its 2017 IaaS Magic Quadrant report. Microsoft is leveraging its tremendous sales reach and ability to bundle Azure with other Microsoft products and services to drive adoption. It is steadily growing the size of Azure customers; many are beginning to spend more than $500,000 a year, and a few exceed $5m in annual spending.

The evolution of cloud

Cloud has also prompted a number of other service providers to tweak their product offerings and wider business strategies to account for the change in enterprise IT buying behaviour this industry mega-trend has brought about. HPE, Dell and VMware, for example, initially set out to go head-to-head with Amazon, Google and Microsoft before calling time on their public cloud initiatives at various points over the past five or so years, citing competitive pressures.

While some have opted out of the game altogether, VMware and Rackspace have taken a slightly different route, with both positioning themselves as organisations that can help enterprises manage the applications and workloads running in their competitors’ public clouds.

In the case of Rackspace, it ended up ceding its initial early lead in the IaaS market to AWS, and since 2015 (or thereabouts) has moved to help enterprises manage their Amazon, Microsoft and Google cloud deployments. This pivot has paid off for the firm, with its AWS managed service offering regularly flagged by the firm as being one of the fastest-growing parts of its overall business.

VMware, meanwhile, sold off its public cloud business to French IaaS challenger, OVH, in April 2017, having spent a couple of years before that repositioning itself as a hybrid cloud provider that can help enterprises manage and applications in the AWS and Microsoft clouds.

Where next for Cloud Computing?

In light of all this, it is fair to say the next 10 years of cloud are likely to be just as eventful, as enterprise appetites for the technology (and their expectations about how it will benefit their organisations) continues to grow, adds Synergy Research’s Dinsdale.

“Major barriers to cloud adoption are now almost a thing of the past, with previously perceived weaknesses such as security now often seen as strengths,” he says. “Cloud technologies are now generating massive revenues for cloud service providers and technology vendors and we forecast that current market growth rates will decline only slowly over the next five years.”

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