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  • Clouds Grow, But Can IBM i Follow?

    August 29, 2016 Timothy Prickett Morgan

    Until cloud computing–meaning virtualized compute, storage, and networking that is sold under utility pricing–is absolutely the norm in the data center, we will be talking about what is and is not cloud and how fast it is or is not. The prognosis is that investments in public cloud computing are going to continue to grow fast, much faster than the overall IT sector, which has been coasting along more or less level for years.

    That placid surface on overall IT spending masks the churn underneath the surface, so don’t be fooled.

    According to researchers at IDC public cloud spending is expected to hit $96.5 billion in 2016, and moreover is expected to increase at a compound annual growth rate of 20.4 percent between 2015 and 2020, rising through $195 billion by the end of the forecast period. IDC breaks the cloud market into the same infrastructure, platform, and software layers as the rest of us do, but further refines the software part of this as applications as a service, system infrastructure as a service, and application deployment and development as a service (what we call platform clouds) separately. This cloudy software component of the public cloud stack accounted for 83.7 percent of revenues in 2015, with the remaining 16.3 percent being for foundational infrastructure services for raw compute, storage, and networking. This may come as a surprise to many, and so might be the fact that the IaaS and PaaS layers of the public cloud are forecast to grow faster than SaaS.

    “Cloud software will significantly outpace traditional software product delivery over the next five years, growing nearly three times faster than the software market as a whole and becoming the significant growth driver to all functional software markets,” explained Benjamin McGrath, senior research analyst for SaaS and business models at IDC. “By 2020, about half of all new business software purchases will be of service-enabled software, and cloud software will constitute more than a quarter of all software sold.”

    Spending on public cloud services seems to be mirroring IT spending in the overall global economy, and IDC says that the discrete manufacturing, banking, and professional services sectors are the big cloud spenders. The media, telecommunications, and retail sectors will see the fastest growth between 2015 and 2020, and 20 different sectors that IDC tracks will see cloud spending double over those five years, just as the market at large.

    This is just another way to say that cloud is becoming normal for a lot of workloads at companies. Just as companies have been willing to pay a premium for the AS/400 and its follow-ons because of the integration, security, ease of programming, and ease of administration of the platform, companies are willing to pay a premium for cloud services that allow companies to deploy fast and flexible infrastructure. One only need look the latest financial results for Amazon Web Services to see that.

    In the second quarter, AWS saw revenues increase by 58.2 percent to $2.89 billion and operating income rose by 135.9 percent to $718 million. The revenue growth rates are cooling for AWS a little bit, but the company is learning how to extract more profits from its investments in hardware, software, and system management expertise. This is the game, and it is no wonder that so many companies want to start IBM i clouds and offer similar services to RPG and COBOL shops that currently run atop on-premises equipment.

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Volume 26, Number 37 -- August 29, 2016
THIS ISSUE SPONSORED BY:

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Table of Contents

  • Power9 Gets Ready To Roll In Systems In 2017
  • We’re All IBM i Storytellers
  • Tape: It Ain’t Dead Yet
  • Time For Tapeless? LaserVault Tempts The SMB
  • Clouds Grow, But Can IBM i Follow?

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