By Peter Bjorkman
Spring is almost here and we find ourselves working towards new goals—designing new methods for improving productivity, reducing spend, and staying happy. This time of year brings a good opportunity to look forward, both from a business and a personal perspective, to preempt the shifts and transformations on the horizon and manage change effectively.
We have been talking about cloud adoption for over a decade, waiting with baited breath for this transformational technology to reach critical mass. In recent years, the buzz has died down a bit, as organizations turned to shiny new objects like analytics, Internet of Things, and digital transformation. In the year ahead, we will likely witness a switch back to focus on cloud services adoption, a trend that will undoubtedly continue for the next few years.
Cloud adoption is proving to be a profoundly disruptive force, affecting both business and IT operations. According to Gartner’s Current State of Cloud Office and What to Do About It report, published in November of 2016, by 2021, more than 70 percent of business users will be substantially provisioned with cloud office capabilities. This year, IT will see its control over technology spending continue to dwindle, as business units like marketing take over. Gartner projects that 50 percent of IT spending will occur outside the IT department by 2020, rising from 17 percent today.
We can expect the cloud will reach what the firm calls the plateau of productivity. The innovators and early adopters have proven the underlying technologies work, vendors have undergone sufficient iterations to appeal to the mainstream. The market is ripe for the early majority to finally make the shift.
Vendors like Adobe, Amazon, Microsoft, and Salesforce.com have proven the value of anything-as-a-service—Infrastructure as a Service (IaaS), Software as a Service (SaaS)—some with record financial results. They have built market uptake and have paved the way for other vendors to create value add solutions. For instance, Adobe achieved record annual revenue of $5.85 billion in fiscal year 2016, representing 22 percent year-over-year growth. Not to mention that in its third quarter release, Salesforce announced unprecedented growth, with year-over-year revenue increasing 25 percent in dollars and 27 percent in constant currency.
Certainly, the benefits of IaaS are clear, but there is still a price to pay. The cost of IaaS can quickly spiral out of control. It is easy to forget about virtualized services, servers can be left running, feedback loops can cause repetitive downloading, and expensive software can be left idling on forgotten machines.
In 2017, smart organizations will adopt a cloud-first strategy for primary enterprise infrastructure, with only niche industries choosing an on-premise solution as the preferred route. With this shift on the horizon, it will be critical for organizations to deploy solutions like software asset management to gain visibility, gather insight, and control spend.
The SaaS market is now at a tipping point and uptake will continue to accelerate throughout the coming year. The early majority will start to make their move this year, bringing adoption over 50 percent within two to three years. Many organizations have yet to adopt, so there is time to take advantage of the incentives vendors will continue to offer to migrate customers to their SaaS platforms. From a compliance perspective, Microsoft, for example, has so far been lenient with customers that are licensed for Office 365 but who continue to use older versions. We can expect that to change with mainstream adoption. Microsoft will shut down unlicensed use of legacy Office products and impose steep fines on violators. It is a safe bet that other vendors are equally likely to ignore legacy usage during a transition period.
All in for the Cloud
Whatever cloud model an organization chooses to adopt, return on investment hinges on two things, rapid deployment and control. To manage these obstacles, businesses must have a holistic view of all installations, rather than relying on the individual administrative consoles provided by each vendor. Only with intelligent and consolidated data from installations can spend be optimized.
The trend lines are clear. Spend is shifting from IT to the business—and cloud is a major driver. Embracing this shift through astute distribution of control to maintain visibility is a sure-fire way to maximize the benefit of cloud technologies and help enterprises avoid uncontrolled device usage and costly software audits. The most forward-thinking IT leaders will embrace the drive to the cloud and use it to transform their role from one of control to one of enablement. SW
Peter Bjorkman is the CTO at Snow Software.
Apr2017, Software Magazine