An oil and gas firm migrating to cloud computing provides a good example of how technology service providers (TSPs) can capitalize on the growth of cloud computing. Its IT environment typically has many remote sites but may need only a few cloud features, a handful of application services and a dozen or more infrastructure services.
In all, the firm might need 50, 60 or 70 cloud features. Yet the major public cloud providers such as Amazon Web Services and Microsoft Azure release 40 to 50 features in any given month, with total cloud feature sets totalling in the thousands. That pace of innovation is helpful for the market as a whole but leads to a level of complexity and confusion that makes cloud adoption and use difficult for already complex organizations with even more complex IT portfolios.
The number of cloud managed service providers will triple by 2020
“Who is going to help that oil and gas producer pick the right 62 cloud features?” says Gartner research director Sid Nag. “That’s where consulting and managed service providers can come in to help clients navigate these waters.”
Cloud computing is the foundation for digital business, and Gartner predicts cloud computing and services will be a $300 billion business by 2021. The IT services category is growing 2% to 3% per year while cloud growth is expected to grow six times that rate, at roughly 18%.
For product managers, product marketers and business leaders in companies that provide technology products and services, this means significant growth of wallet share in the coming years.
The cloud gold rush
Thirty-six percent of IT spending on implementation services is cloud-based, and 28% of IT spending on software is software as a service (SaaS). “When it comes to cloud computing, CEOs are speaking with their wallets,” says Nag. The number of cloud managed service providers will triple by 2020, says Nag. This represents the “cloud gold rush,” and this period of rapid expansion will be followed by a massive consolidation period after 2020 until 2023.
Key questions remain for TSPs: Where are the specific growth opportunities? How can technology vendors identify the areas of growth for their business, and how can they capitalize on cloud growth as a whole?