Gartner Says Public Clouds Puffing Faster Than Expected

September 24, 2012 Timothy Prickett Morgan

The public cloud is huffing and puffing itself up and is trying to blow the IT distribution business down. According to a new projection from Gartner, the myriad kinds of public cloudy services available on the market today will account for $109 billion worldwide. That is up 19.6 percent from 2011’s global public cloud revenues, and higher than the 12 percent growth Gartner was forecasting in prior prognostications.

“The cloud services market is clearly a high-growth sector within the overall IT marketplace,” explained Ed Anderson, research director at Gartner. “The key to taking advantage of this growth will be understanding the nuances of the opportunity within service segments and geographic regions, and then prioritizing investments in line with the opportunities.”

That’s obviously a vendor perspective. The issue for end user organizations will be the ones they have always faced with any new technology: quantifying performance and price and dealing with interoperability issues.

At the moment, Gartner reckons that business process as a service is 77 percent of the total public cloud services market, at $72 billion in 2011 and projected to rise to $84.2 billion in 2012. That number includes Internet-based advertising, in case you were wondering, and that represented 47 percent of the total BPaaS segment, and therefore a little more than 37 percent of the whole public cloud pie for the 2012 projection. Cloud ad spending is expected to remain at about the same level within the BPaaS segment through the projection Gartner is making from 2011 through 2016.

Software as a service, or SaaS, or infrastructure as a service, or IaaS, are what most people think of when they hear the words “public cloud” if they are not thinking of Amazon EC2. IaaS is growing like a rocket, and is expected to see a 45.4 percent boost in 2012, rising from $4.3 billion last year to $6.4 billion this year. SaaS services collectively will rake in $14.4 billion this year, and Gartner expects that SaaS and IaaS services will generate about the same revenues in 2016. Platform as a Service (PaaS) clouds, where you don’t give people raw virtual servers and storage, but rather database, Web, and other functions as a service that the cloud provider operates, will hit $1.2 billion this year, while cloud management and related securities services running in the heavens will account for $3.3 billion in revenues.

Over the span of the projection, Gartner expects for public cloud services revenues to grow from $91.4 billion to $206.6 billion by 2016. Personally, I think putting advertising in there is a pretty generous thing. Most people don’t think of advertising as part of the IT budget.

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Do the Math When Looking at IBM i Hosting for Cost Savings

COVID-19 has accelerated certain business trends that were already gaining strength prior to the start of the pandemic. E-commerce, telehealth, and video conferencing are some of the most obvious examples. One example that may not be as obvious to the general public but has a profound impact on business is the shift in strategy of IBM i infrastructure from traditional, on-premises environments to some form of remote configuration. These remote configurations and all of their variations are broadly referred to in the community as IBM i hosting.

“Hosting” in this context can mean different things to different people, and in general, hosting refers to one of two scenarios. In the first scenario, hosting can refer to a client owned machine that is housed in a co-location facility (commonly called a co-lo for short) where the data center provides traditional system administrator services, relieving the client of administrative and operational responsibilities. In the second scenario, hosting can refer to an MSP owned machine in which partition resources are provided to the client in an on-demand capacity. This scenario allows the client to completely outsource all aspects of Power Systems hardware and the IBM i operating system and database.

The scenario that is best for each business depends on a number of factors and is largely up for debate. In most cases, pursuing hosting purely as a cost saving strategy is a dead end. Furthermore, when you consider all of the costs associated with maintaining and IBM i environment, it is typically not a cost-effective option for the small to midsize market. The most cost-effective approach for these organizations is often a combination of a client owned and maintained system (either on-prem or in a co-lo) with cloud backup and disaster-recovery-as-a-service. Only in some cases of larger enterprise companies can a hosting strategy start to become a potentially cost-effective option.

However, cost savings is just one part of the story. As IBM i expertise becomes scarce and IT resources run tight, the only option for some firms may be to pursue hosting in some capacity. Whatever the driving force for pursing hosting may be, the key point is that it is not just simply an option for running your workload in a different location. There are many details to consider and it is to the best interest of the client to work with an experienced MSP in weighing the benefits and drawbacks of each option. As COVID-19 rolls on, time will tell if IBM i hosting strategies will follow the other strong business trends of the pandemic.

When we say do the math in the title above, it literally means that you need to do the math for your particular scenario. It is not about us doing the math for you, making a case for either staying on premises or for moving to the cloud. There is not one answer, but just different levels of cost to be reckoned which yield different answers. Most IBM i shops have fairly static workloads, at least measured against the larger mix of stuff on the public clouds of the world. How do you measure the value of controlling your own IT fate? That will only be fully recognized at the moment when it is sorely missed the most.

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