2012: The year cloud computing took a bite out of IT

As new public cloud plays leap in and the private cloud slowly evolves, we're on the brink of a shift to cloud computing for critical business workloads

When we started talking about cloud computing five years ago, it meant one thing: Services such as Amazon or Salesforce that customers could self-provision over the Internet and pay as they go.

That's what we call the "public cloud" today, as opposed to the "private cloud," which refers to the application of public cloud technologies and practices to one's own data center. And guess what? The public cloud was where the action was in 2012 -- and it's where much of the action is going to be in 2013. According to IDC, businesses will spend $40 billion on the public cloud this year, rising to nearly $100 billion in 2016.

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Despite that rapid growth, public cloud dollars still represent a small fraction of the trillions of dollars devoted to IT globally every year. The data center isn't going anywhere -- but it needs the greater efficiency and agility the private cloud offers. The question of the day is whether the private cloud will evolve quickly enough to stop an accelerated exodus to public cloud services.

The rush to infrastructure in the cloud
In 2012, the biggest thing to happen to the cloud was the arrival of three major new IaaS (infrastructure as a service) players: Google Compute Engine, HP Cloud, and Microsoft Windows Azure. All three entrants face an uphill battle competing against the incumbent leader Amazon Web Services -- and even against Rackspace, long the distant No. 2 IaaS provider.

Why the surge in providers? IaaS revenue continues to grow, of course, but I think the real driver is anticipation of a long-awaited tipping point: when enterprises start moving their production workloads -- as opposed to dev and test or batch processing jobs -- to IaaS platforms.

Up until now production IaaS workloads have tended to originate with other tech players, from consumer companies like Netflix to small PaaS (platform as a service) players such as Engine Yard. I think 2013 could be the year when that changes. I've had several off-the-record conversations over the past few months that convince me we'll see a number of large enterprises move core applications -- including ERP -- to IaaS providers in the coming year.

It's no surprise, then, that Google, HP, and Microsoft are positioning their offerings as much more tailored to enterprise needs than Amazon Web Services, which the insurgents like to dismiss as generic and ill-suited to run enterprise production workloads. That might have been true a few years ago. But today, Amazon has a tremendous lead -- in virtual machine configuration options, in the native services it offers, and in the huge partner ecosystem it has developed. Amazon continues to expand its enterprise sales and support, bulk up its SLAs, and now offers "virtual private cloud" services that provide greater isolation among customer workloads.

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