Likelihood of Over-spending while Choosing One of the Major Cloud Providers

Jul 26,2021 by Manoj Yadav

The extensive spread of cloud adoption across all organizations should be attributed to the significant part of IT budgets being earmarked for procurement of cloud hosting services in 2017. It is projected that a whopping 34 percent of total IT budgets will be consumed by cloud computing and hosting. This is a 6 percent growth over last year.

Rise in cloud adoption

The rise in cloud spend can be understood by looking at growing number of enterprises appreciating value of cloud for streamlining their business processes. In addition to this, more and more enterprises are relying on third party resources for security solutions, application management, and infrastructure.

Contrary to the belief that cloud providers are essentially supporting enterprise IT with infrastructure solutions, it is reported that just about 30 percent of cloud services account for infrastructure and the remaining 70 percent is associated with cloud enablement, managed services, security solutions, and application services.

Cloud application services with 42 percent share are the highest contributory services in the entire gamut of cloud providers’ offerings. It should be noted that a significant portion of application, or managed and unmanaged infrastructure. As far as infrastructure and applications services are concerned, almost half of them are related to solutions that are integrated with additional security of managed services.

Changing trends of cloud requirements

Changing trends in cloud spending are indicative of the growing need for bundled services by enterprises. This can challenge the dominance of major providers in the domain of unmanaged SaaS and IaaS solutions while opening up new business avenues, Service providers can look forward to growing demand for a diverse set of cloud as well as hosting services including application and infrastructure hosting.

Cloud solutions are procured from wide spectrum of providers of hosting and cloud services and according to a recent survey, public cloud infrastructure services account for a major part of these services. Public cloud is adopted by almost 69 percent of all enterprises.

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In terms of global spending in infrastructure and public cloud solutions, these are expected o register a healthy growth as mentioned earlier and as also confirmed by IDC report that confirms over 24 percent growth for these set of cloud services.

State of public cloud growth

The growth of public cloud between 2015 and 2020 is expected to reach more than 21 percent in terms of Compound Annual Growth Rate (CAGR) to touch revenue of $203.4 as a total expenditure on cloud adoption. This is almost seven times more than the growth of overall expenditure in enterprise IT.

Among all types of cloud service models, SaaS (Software as a Service) will emerge as the most sought after cloud variant with an estimated share of almost 60 percent by 2020. Current year 2017 will be marked by major cloud adoption trends in banking and professional services across the globe. These sectors are in need of highly scalable and efficient solutions that are backed by cutting edge technologies.

Cloud expenditure will be dominated by large firms that employ more than thousand personnel as well as medium sized employers with employee strength of 100 to 500 approx. These firms will contribute to more than half of public cloud expenditure. Public cloud adoption will be driven by US, which will emerge as the largest place boasting of greater than 60 percent revenues. This will be followed by Western Europe as well as Asia Pacific except Japan.

Analysis of ten cloud service providers that include the four major players in the domain such as Azure, AWS, IBM SoftLayer and Google was carried out. The major providers have gained capability of persistent block storage, self-signup, and hourly billing modules. Ranking of different vendors was based on average performance of vCPU storage and memory. As against the benchmarked provider 1&1, all major player could not even cross halfway mark.

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Performance of major players in terms of virtual machines was found to be dependable with RACKSPACE, OVH, and 1&1 scoring well on this parameter in case of block storage Rackspace did well along with most of the other providers.

If one studies all important IaaS providers, then the 2017 cloud landscape is a heady mix of stability, performance and price. It implies that there is a significant hazard of overspending by enterprise customers while selecting the appropriate cloud service provider.

Hurdles in selection of right service provider

In spite of the fact that the selection of a right web service provider is facilitated due to presence of only four major cloud providers that are highly dependable. However one needs to exercise extreme diligence while following this approach. This is because there is a plethora of small cloud providers that offer economical yet high performing infrastructure.

This is despite the fact that four major cloud players are commanding more than 50 percent market share. On must take into account that these major cloud providers throttle resources for maintaining a uniform user experience across the whole infrastructure resulting into performance mitigation on cloud hosting.

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