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Cloud Computing: What nobody is talking about (yet)

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There’s no doubt that cloud computing is here to stay. In fact, the cloud is no longer a trend. It’s a firm fixture in the IT arena, shaping other trends. Forrester predicts the public cloud market will increase from USD $146 billion in 2017 to $178 billion in 2018. Going forward, the market will continue to grow at a 22 per cent compound annual growth rate (CAGR). Why are companies making the switch? A recent study showed the top three motivating factors are cost-savings, resource scalability and time to market/agility. It’s estimated that more than 70 per cent of Asia-Pacific companies will have a multi-cloud computing strategy by the end of this year. Where do we go from here? What trends will take shape in the coming years? Here are four we’ve identified.

IoT Will Drive Edge Computing

Researchers estimate the number of connected devices will grow to 30.7 billion by 2020 and 75.4 billion by 2025. The collecting, sending and processing of vast amounts of data will increase productivity and allow companies to make more informed decisions. However, with a traditional cloud network, precious time is lost with all that data transfer. Additionally, a loss of connectivity could be catastrophic if devices are depended upon for vital company or building management functions. Edge computing is evolving around the need to bring all that data closer to the IoT sensors. A study from IDC predicts that 45 per cent of data from IoT devices will be stored, processed, analysed and received at the edge of a network by 2020.

Edge computing provides a solution that analyses data locally and in real-time. It typically involves a mesh network of data centres that process and store data locally before it’s sent to the cloud. It’s a way to optimize cloud computing making the transfer and processing of IoT data more efficient. Instead of the data going directly to the cloud, computing is performed on the “edge,” or on the perimeter, of the network. As more companies connect their devices, they will drive the need for edge computing.

Hybrid Cloud Adoption Will Force Vendors to be More Interoperable

It’s estimated that 62.3 per cent of total cloud spending went to on-premises private clouds in 2017. The hybrid cloud market alone is expected to hit USD $91.74 billion by 2021. Many companies find the hybrid approach advantageous. A hybrid model brings cost savings because instead of building infrastructure to accommodate occasional increases in system usage, organisations can leverage public cloud offerings and only pay for it when it’s needed. Companies also benefit from increased security, accessibility and scalability with hybrid solutions. Additionally, a Forrester researcher explained to CIO magazine that companies “want to remain vendor-neutral to mitigate vendor lock-in.” They simply don’t want all their eggs (or apps) in one basket.

Another key benefit of a hybrid cloud model is disaster recovery. In fact, 56 per cent of respondents to one survey said a hybrid cloud model improves their disaster recovery capabilities. Cloud providers are responsible for setup, configuration, ongoing maintenance and monitoring. When disaster strikes, it’s often as simple as switching from your primary to your secondary disaster recovery site from one centralised interface.

However, managing multiple clouds can be challenging. Thus, the mass adoption of hybrid solutions will force vendors to be come up with ways to be more interoperable. A heterogeneous cloud is evolving with tools that will work across vendors to connect business operations across the hybrid model. While vendors may be reluctant to offer solutions that work with other vendor platforms, consumer demand for convenient options will force their hands.

Event-Driven Computing will Take Hold

Cloud computing has given rise to many SaaS platforms. First, it was Infrastructure as a Service (IaaS), which enabled Platform as a Service (PaaS), which gave birth to Software as a Service (SaaS), and most recently Functions as a Service (FaaS) and Backend as a Service (BaaS). FaaS and BaaS are both referred to as serverless computing, which is leading to event-driven computing. Here’s how.

Under FaaS models, companies essentially pay for how much computing power an application uses per millisecond. This commoditised function of cloud computing can have a big cost impact. To avoid the additional costs, companies are turning to event-driven computing. Instead of storing an application on a server, businesses can run it from the cloud, choosing when to use it. Under this structure, enterprises pay per task (or event). Gartner predicts that 80 per cent of digital business solutions and 80 per cent of new business ecosystems will require support for event processing by 2020.

Blockchain Will be a Top Security Strategy

Trends show that blockchain solutions are taking hold, mostly due to the need to find better security solutions for the cloud. It’s estimated that global companies will spend USD $1 trillion on cybersecurity between 2017 and 2021. Blockchain technology basically creates an append-only transaction ledger. You can add new information to the ledger, but previous information (stored in blocks) cannot be edited. Cryptography is used to link the contents of new blocks with existing blocks so that a change in the contents of a previous block would invalidate all the blocks after it.

How does this structure secure data? Blockchains store data in a decentralised manner, blocking mass data hacking. Blockchains accomplish this because the computers on the chain are consensus-driven. When adding to the blockchain, the computer must solve a mathematical proof. The results are shared with all computers on the network, and they must agree on the solution in order for the addition to take place. In effect, they come to a “consensus” that the addition is being made by a valid user, not a hacker. As cloud adoption increases, so does the need for greater security. Blockchain technology is an innovative approach that is filling that need. Read more about Blockchain in our recent blog.

Optimising Cloud Spend Takes Centre Stage

While companies are investing more in the Cloud, they are also realising some money is being wasted on the cloud. Optimising cloud costs is going to take priority for many companies. Twenty-six per cent of larger companies (those with 1,000 or more employees) says they spend more than $6 million annually on the public cloud. The same research found that another 26 per cent spend between $1.2 and $6 million, and 70 per cent say they plan to increase their cloud spend by at least 20 per cent next year. Another 20 per cent said their cloud spend will double. That’s a lot of cash riding on the cloud. Is it being used effectively? Research says no.

Data from RightScale found wasted cloud spend due to inefficient use is at about 35 per cent. Additionally, 58 per cent of respondents said “optimising cloud costs” is their top initiative this year. RightScale found that even though companies are focused on cloud management, a relative minority are implementing policies to optimise cloud costs. This will change as they realize how much money is being wasted. What steps will be taken?

  • Increase transparency. Companies will look for cloud optimization platforms that have built-in monitoring tools, including cost tracking.
  • Use data. Analytics must be used to single out areas of waste. Lingering temporary workloads and over-provisioning virtualized machines are just two examples of red flags that might be raised. Developers sometimes do not know exactly what kind of resources an application may need, so they may over-provision. The RightScale report noted, “Predictable, inelastic workloads will almost always be cheaper when running on internal infrastructure; volatile and seasonal workloads, or those targeted for growth, are best suited to yield benefits on cloud infrastructure.” Data will reveal if your workloads structures are allocated appropriately.
  • Implement controls. IT managers must find a balance between encouraging innovation and growth while implementing controls that flag unnecessary or redundant cloud instances. Are unnecessary cloud services running when they don’t need to be?
  • Real-time governance. Cloud environments are dynamic, and most companies do not have the resources to constantly monitor the ever-changing environment. Therefore, organisations will depend more on tools for monitoring that offer real-time data on usage.
  • Analyse needs. We already reported on the increase in hybrid cloud adoption. But, it’s important to note that using more than one vendor can make the environment more complex, leading to more cloud spend on management and administrative costs. Carefully analyse the organisation’s needs to access what cloud structure is best.
  • Assess storage use. It’s true. Storage on the cloud is cheap. However, it’s not free. Storing archive data longer than necessary or storing too many backups may be increasing cloud spend. Another common mistake is not tiering your storage correctly. You might be paying active storage fees for data that is rarely accessed.

The digital transformation, including cloud computing, is set for phenomenal growth. In the Asia-Pacific region alone, digital transformation is expected to add USD $1.16 trillion to the GDP, and a continued growth rate of 0.8 per cent is predicted annually.

Read more about how your company can ensure it’s keeping up with digital trends in our Guide to Digital Transformation e-book.

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