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Cisco IBSG Study – By 2013, Public Cloud Computing Services Revenue Will Reach Nearly US$44 Billion

Cloud computing has raised a lot of questions with service providers (SPs) and enterprises alike. Because the Cisco Internet Business Solutions Group (IBSG) is in the business of answering questions, we talked to IT decision makers across several verticals in the United States, the European Union, and India to see what companies are thinking.

We found that cloud is happening faster than most people imagine. Almost everyone we interviewed is in the process of evaluating cloud computing. We estimate that by 2013, public cloud computing services revenue will reach nearly US$44 billion, and more than 12 percent of enterprise workloads will be running in the public cloud. A trend toward convergence of the IT and networking departments will ease this transition.

Companies are not jumping wholesale into a cloudy future -- decisions are being made on an application-by-application basis. The factors driving enterprises to the cloud include variable workloads (tax season for financial firms comes to mind), and the ability to quickly set up and get running. Also, some apps just run better in the cloud, such as data entry or process interfaces to partners or suppliers.

Inhibiting cloud are the usual suspects: security, legacy architectures, and sunk costs.

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Cisco and BMC Alliance Announcement – Service Orchestration and Network Containers

Today Cisco announced a new strategic alliance with BMC and introduced the Integrated Cloud Delivery Platform (ICDP) solution to give customers an option to easily deploy end-to-end Cloud services on a large-scale multi-tenant Cloud computing infrastructure that spans networks, computing systems, storage, and applications. ICDP increases the scalability of Cloud computing environments for our Service Provider and other large-scale multi-tenant clouds by automating and simplifying the service orchestration and management of their service portfolios.

This alliance extends Cisco’s ecosystem of partners in the Cloud space. This move builds on the relationship between our two companies: Cisco and BMC have worked together on 140+ customer engagements, combining BMC’s BladeLogic and our Unified Computing System (UCS). ICDP integrates BMC’s Cloud Lifecycle Management (CLM) solution with Cisco’s Unified Service Delivery (USD) solution to simplify the management of delivering high-scale, secure, and multi-tenant Cloud services. Combining CLM with Unified Service Delivery infrastructure allows the support for end-to-end lifecycle management of Cloud computing-related initiatives with seamless integration of the planning, provisioning, assurance, compliance, and governance while increasing the quality of ongoing Cloud service delivery.

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Upcoming Cloud Computing Survey Results Webinar

Heads up, I’ll be moderating a webinar session this Tuesday, Dec. 7, at 8:00 a.m. PST where we will go over findings that Cisco’s IBSG consulting group completed recently on cloud computing. The results of the survey are useful for both Service Provider and Enterprise organizations. In the webinar, we’ll have distinguished speakers from Savvis (Brian Klingbeil, General Manager, Hosting), Valogix (Mark Yablonski, CTO), and Cisco (Scott Puopolo, VP, Cisco Internet Business Solutions Group). Based on feedback from IT decision makers, we will have an honest discussion on growing trends, concerns and implications of cloud computing, and the next steps towards success.

The main points on our agenda include:

  • Why cloud computing is a compelling economic proposition for enterprises
  • How quickly enterprises plan to migrate to the cloud
  • Which applications will be first in line for cloud migration -- and why
  • Who will be the most trusted providers of cloud services
  • What opportunities cloud computing opens for service providers

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The Cut Stops Here: New Platforms for Growth

The service provider (SP) industry is at an inflection point. During the past couple of years, SPs have dealt with the economic downturn by focusing the majority of their attention on cutting costs -- to the point where there’s very little left to cut. Despite continued economic uncertainty, there is a shift underway to revitalize revenue growth. SPs are eager to identify and execute on new sources of revenue growth -- however, there is also clear recognition that revenue growth cannot come at the expense of profitability. Growth under such conditions means taking advantage of market transitions as they are happening, creating new platforms for growth.

One key opportunity for SPs lies in providing a more expansive set of services to small and medium sized businesses (SMBs)—particularly leveraging cloud-based capabilities. Based on our estimates, the SMB communications and IT infrastructure market collectively represents more than $120 billion in spend for 2010. SPs currently address 60 percent of this spend. By extending into cloud services, much of the remaining 40 percent becomes addressable.

Cisco IBSG Service Provider Director, Tine Christensen, addresses this opportunity in this video:

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