Cloud

The cloud age is finally upon us, report says

Enterprises are moving to the cloud at an increasingly fast pace. Here's what it means for IT vendors and companies looking for cloud infrastructure services.

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Image: iStockphoto/phototechno

Let the cloud revolution begin: In the next three years, businesses will rapidly move operations to a hybrid cloud environment. A new report from global management consulting firm McKinsey & Company surveyed 800 CIOs and IT executives worldwide, and found that many plan to soon make a core shift from "building IT to consuming IT" by migrating to the cloud.

"The cloud debate is over—businesses are now moving a material portion of IT workloads to cloud environments," the report stated. "The impact will be considerable, for consumers and vendors of technology alike."

Businesses reported plans to reduce workloads located in on-premises environments, moving many instead to dedicated private cloud, virtual private cloud, and public infrastructure-as-a-service (IaaS) providers—all of which are expected to see much greater adoption rates in the coming years. On-premises private cloud environments are expected to stay flat, the report found.

SEE: Industry cloud research report 2016: Adoption Plans, Decision Factors, Strategic Results (Tech Pro Research)

Surprisingly, cost is not the driving factor of the move—rather, IT leaders reported that benefits in time to market and quality were the top reasons to consider cloud services. Meanwhile, security and compliance were the top reported barriers to increased public cloud adoption, and were the top considerations on the table when customers needed to select a service provider. Cost and interoperability with on-site private cloud solutions were also important elements.

Large organizations lead the cloud transition, and were more likely to move operations away from traditional and virtualized platforms to the cloud at an increasingly fast rate. Midsize companies, many of which have been ahead of larger ones in terms of cloud adoption, saw a similar pattern, though to a lesser degree.

The large companies surveyed, representing industries including banking, insurance, and healthcare, reported facing significant pressure to make the digital transition, which the cloud facilitates. IT leaders from large enterprises reported plans to migrate up to 20% of all x86 workloads to public IaaS or platform-as-a-service (PaaS) environments within two to three years. They also reported planning to nearly double their operations in the private cloud in the next three years.

Respondents preferred hyperscale cloud services providers such as Amazon Web Services, Google Cloud Platform, and Microsoft Azure, due to the large capacity these tech giants offer. Of those surveyed, 48% of large companies had moved at least one workload to a hyperscale provider, the report found. But, by 2018, McKinsey expects that number to jump up to 80%.

Still, nearly half of IT leaders surveyed said they also plan to use tier-two and tier-three cloud providers and traditional vendors for at least one remote operation. A lack of workers with the technical skills needed to manage the cloud, as well as the need for hybrid cloud models, could further lead companies to adopt managed cloud services, the report said.

What does this mean for IT vendors? Those focused on on-premises environments will likely see a drop in revenue, as companies look more toward off-premises solutions, the report stated. On the other hand, growth is expected for those selling to cloud service providers.

IT vendors can expect cloud-related services to grow significantly, and traditional IT services to slow. To stay competitive, traditional IT distributors will need to potentially consolidate with other businesses, or pursue cloud opportunities, such as providing managed services.

Meanwhile, the hyperscale cloud service providers will likely keep increasing their work with semiconductor, memory, and storage component vendors to develop workload-specific architectures for clients.

The 3 big takeaways for TechRepublic readers

  1. Enterprises are planning to move a number of operations to a hybrid cloud setting by 2018, according to a new report from McKinsey & Company that surveyed 800 CIOs and IT executives worldwide.
  2. Benefits in time to market and quality were the top reasons IT leaders reported considering cloud services. Security and compliance were the top barriers to increased public cloud adoption.
  3. IT vendors selling to cloud service providers will likely see growth in sales, while traditional IT distributors will likely need to adapt to the new cloud environment.

Also see

About Alison DeNisco Rayome

Alison DeNisco Rayome is a Staff Writer for TechRepublic. She covers CXO, cybersecurity, and the convergence of tech and the workplace.

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