The CIO at a typical large enterprise has a difficult task today. They're expected to perform procurement due diligence, in a professional and comprehensive manner, before selecting a cloud computing service(s) for their organization's many workload requirements.
More often than not, they look to one of the leading IT industry analysts for guidance. From a CIOs perspective, the industry analysts that they subscribe to (i.e. pay them an annual fee for their analysis) are expected to provide market clarity and a candid assessment of the various players.
Honest and informed analyst guidance is particularly important when most of the primary vendors and service providers tend to deliver the same basic offerings, or make very similar claims about their company's cloud-related capabilities.
Moreover, viewed through the lens of the collective IT technology trade media, a CIO can be excused for thinking that the current cloud infrastructure marketplace appears to be an undifferentiated blur. It looks like a commodity, that's likely to be a foundation for their CEO's strategic digital business transformation goals.
Assessing the Cloud IaaS Landscape
The market for cloud infrastructure as a service (IaaS) is in a state of upheaval, as many service providers are shifting their strategies after failing to gain enough market traction, according to the latest worldwide market study by Gartner.
Global spending on IaaS is expected to reach almost $16.5 billion in 2015 -- that's an increase of 32.8 percent from 2014, with a CAGR from 2014 to 2019 forecast at 29.1 percent, according to the current Gartner forecast.
"The IaaS solution ecosystem is rapidly consolidating around a small number of market leaders," said Lydia Leong, vice president and distinguished analyst at Gartner. "The sky is not falling, customers are getting great value out of cloud IaaS, but the competitive landscape is shifting."
According to the Gartner assessment, 2014 was a year of reckoning for cloud IaaS providers. Why? Many believe that their current strategy is failing them. But what does failure look like, from an industry analyst's perspective? Apparently, it's when a disenchanted cloud provider decides to change directions or abruptly exit the market.
"We urge buyers to be extremely cautious when selecting providers -- ask specific and detailed questions about the provider's roadmap for the service, and seek contractual commitments that do not permit the provider to modify substantially or to discontinue the offering without at least 12 months' notice," said Ms. Leong.
Should a CIO Believe in Magic (Quadrants)?
Gartner says that cloud IaaS market share has continued to become more heavily concentrated, even while the global marketplace for these services has grown dramatically.
Although 15 providers are featured in the Gartner "Magic Quadrant for Cloud Infrastructure as a Service" the market is dominated by only a few -- Amazon Web Services, Microsoft Azure and Google Compute Engine. Between them, these three providers comprise the majority of workloads running in public cloud IaaS in 2015.
In 2014, the absolute growth of public cloud IaaS workloads surpassed the growth of on-premises workloads (of any type) for the first time. Gartner's 2015 CIO survey indicates that 83 percent of CIOs consider cloud IaaS as an infrastructure option, and 10 percent are already cloud-first with cloud IaaS as their default infrastructure choice.
"Cloud IaaS can now be used to run most workloads, although not every provider can run every type of workload well," said Ms. Leong. "Cloud IaaS is not a commodity. Providers vary significantly in their features, performance, cost and business terms."
Ms. Leong concludes, "Although in theory, cloud IaaS has very little lock-in, in truth, cloud IaaS is not merely a matter of hardware rental, but an entire data center ecosystem as a service. The more you use its management capabilities, the more value you will receive from the offering, but the more you will be tied to that particular service offering."