$42 Billion reasons to get into the cloud computing business

Stan Beer
Friday, 06 March 2009 16:10

Opinion and Analysis

Cloud computing is definitely not just hype. In fact it is tipped to be a US$42 billion market within three years. With that sort of money in the pot, you can bet your bottom billion dollars that players from all over will be bidding for a piece of the pie.

According to IDC, worldwide IT spending on cloud services will grow almost threefold, reaching US$42 billion, by 2012. As the cloud computing model offers a much cheaper way for businesses to acquire and use IT, IDC expects its adoption to be amplified by the cost-cutting mantra of most organizations today.

In a recent IDC survey conducted with 696 IT executives and CIOs across Asia/Pacific excluding Japan (APEJ) to gather their views, understanding, current usage and planned usage of cloud computing, it was found that 11% of the respondents are already using cloud-based solutions.

A further 41% of the respondents indicated that they are either evaluating cloud solutions for use in their businesses, or already piloting cloud solutions. When asked about their opinion of the current state of cloud computing, 17% of the respondents stated that although cloud computing is very promising, there are currently not enough services available to make it compelling.

Chris Morris, Director for IDC's Asia/Pacific Services Research and Lead Analyst for Cloud Computing Research in Asia/Pacific says, "Future uptake of cloud computing looks strong.

"Over the next three years, as the use of cloud services expand from the domain of early adopters to that of the early majority, it becomes critical for IT vendors to develop strong cloud offerings, and play a leadership role in aligning their new cloud products and services with their organization, their traditional offerings, partner ecosystem, and customer and market requirements.

"IT vendors who fail to seriously contend for a leadership role will be left with a minority share of the lucrative pie."

According to IDC, for IT vendors to be successful in the cloud market, they will have to address users’ cost concerns. The survey also revealed that more than 50% of the respondents indicated cost cutting as the key driver behind the adoption of cloud computing.

Users are also indicating that any cloud solution they buy must offer competitive pricing, offer Service Level Agreement (SLAs) and offer complete solutions.

"Some IT vendors are well positioned to do this but others who are focused on a single solution will need to build strong partner ecosystems to bring broad solutions to their customers. The time to do that is now, as our survey respondents have indicated that in three years time, their use of cloud-based services will be very different as compared to what we see today" added Morris.