It’s a good time to be a cloud service provider (CSP). According to the newly released Cisco® Global Cloud Index, global cloud traffic will more than quadruple over the next four years. And for many, if not most enterprise cloud customers, conversations are no longer about whether to adopt the cloud. They’re about how well-tuned cloud services are to their specific business needs—and how fast CSPs can deliver them.

This is all good news, but it reflects some major underlying changes in the cloud services marketplace. In fact, it’s such a big shift, that analysts at 451 Research are calling it Cloud 2.0. And if you’re a CSP trying to tap into the growing market for cloud services, you’d better be ready for it.

What Is Cloud 2.0?
The first wave of cloud services focused primarily on increasing revenue and reducing enterprise IT costs. Those are still important goals, but today, enterprises view them as table stakes for any cloud solution. Increasingly, customers are focused on using cloud to fuel continuous innovation. They know that maintaining the status quo is the fastest way to become irrelevant. At the same time, they face constant pressure to reduce risk. If those sound like contradictory goals, then you understand why enterprises are asking CSPs for help.

Katie Broderick, research director of 451 Research, describes it this way:
“The dynamics of the business environment have thrown down the gauntlet for CSPs. Simply stated, in the Cloud 1.0 era the customers went along for the ride, opting for lowest costs in a drive to shed both CapEx and OpEx. Today, however, the customer is very much in the driver’s seat. Customers seek CSPs that can help them clear a secure path to sustained innovation.”

Looking at the Numbers
451 Research conducted a survey of more than 1,700 individuals in IT worldwide, and the results were clear: buyers expect cloud to save them money and make their operations more efficient. But increasingly, they’re looking to the cloud to improve product or service quality, lower risk, and speed time to market.

“Several factors are driving, if not accelerating, the push to the Cloud 2.0 era,” says Broderick. “The most significant driver is the intention of the majority of the market – those with about 15 percent of their applications in the cloud today – to place some 45 percent of applications in the cloud within two years. These are organizations with a medium risk tolerance that are in need of increasing numbers of services, not the more cutting-edge experience cloud users with which CSPs often deal. This factor demands a different, more sophisticated and services-rich approach to the market for most CSPs.”

These cloud customers need prepackaged cloud services that can be deployed in days or hours, not weeks. They need enterprise-class security and geo-compliant governance. And they need all of this delivered by providers they trust, under service-level agreements (SLAs).

A Growing Opportunity
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The good news is that the cloud opportunity for CSPs now goes well beyond Cloud 1.0 services, which largely focused on infrastructure (IaaS). According to the 451 Research survey, customers want application hosting, security services, and managed services like cloud backup, disaster recovery (DR), and database as-a-service. And they’re clamoring for more industry-specific cloud solutions that are tuned to their specific business needs and workloads.

If CSPs can respond—if they can figure out how to deliver diverse cloud services from an automated, self-service platform that aligns with customer workloads—they can position themselves to thrive in the Cloud 2.0 world. Cisco can help.

In fact, the Cisco Cloud Architecture for Microsoft Cloud Platform was designed to do just that. Built through a strategic partnership with Microsoft, it provides a versatile platform for delivering diverse cloud services—Iaas, PaaS, and SaaS; public, private, and hybrid—faster and more easily. It combines Cisco Unified Data Center and Application Centric Infrastructure (Cisco ACI) with Microsoft Windows Azure Pack (WAP) as part of a complete, pre-tested and validated cloud platform. So CSPs can offer a full range of new cloud services—network services, disaster recovery, Big Data, enterprise applications, and more—as fast as customers want to innovate.


Find Out More
Check out more findings from 451 Research at this Cisco Knowledge Network webinar, or download the white paper. And learn more about how Cisco Cloud Architecture for Microsoft Cloud Platform is meeting the demands of Cloud 2.0 here.



John Malzahn

Senior Marketing Manager

Service Provider Cloud Solutions