Contributed by David Dzienciol, Regional Vice President and General Manager, Parallels Asia Pacific
We are nearing the end of 2013 and the cycles of prediction for the coming have started pouring in. The latest Cisco Global Cloud Index predicts that cloud traffic will account for two-thirds of global data center traffic by 2017 growing at 4.5-fold – 35 percent a year (see Figure 1).
Figure 1: Percentage of Data Center Traffic in the Cloud, 2012-2013 Source: 2012-2017 Cisco Global Cloud Index
Management consultant Bain & Company says software continues to benefit from the cloud as it transitions to mirror what customers, enterprises and SMBs, are demanding of their software – everything delivered as a service. Figure 2: SaaS is likely to penetrate almost all categories of software Source: The cloud reshapes the business of software, Bain & Company, 2013
According to Gartner, the year 2012 saw many enterprises adopt new technologies to improve business operations that address the convergence of social, mobile, cloud and information. Moving forward the need to digitalize the business and be customer-centric will be crucial in 2014 which will require new approaches to information delivery, communication and transactions. Digital business models will create new business opportunities and enterprises must respond immediately in order to build the right business and IT road map for future market demands.
Analyst firm IDC predicts that whilst large midsize companies may look to preferring part-ownership of their infrastructure (a.k.a. a continuing seesaw between private cloud and hybrid cloud solutions), smaller businesses will opt for the economies of scale and ease-of-adoption that public cloud offers.
For our part, Parallels sees the rising realization among SMBs that the Internet offers a rich and rewarding environment for them to capture a larger ecosystem of customers – from the both the businesses or consumers.
These observations and predictions mean that cloud computing will continue to gain importance and relevance notably among SMBs as they discover the opportunities that social media and mobility offer in the expanding universe of ecommerce.
The latest Parallels SMB Cloud Insights for APAC points to healthy growth across the major cloud services, including infrastructure as a service (IaaS), web presence and web application, hosted communication and collaboration, and business applications, contributing to a health US$10.8B for 2013.
As Figure 3 shows, IaaS contributes US$3.7B to this market; web presence services contribute US$2.3B; hosted communication and collaboration, including hosted email and hosted PBX, adds US$937M, and the online business applications category makes up the remaining US$3.8B. Figure 3: Market opportunity across major cloud service offerings (2013 vs. 2016) Source: Parallels SMB Cloud Insights for APAC, 2013
Two related phenomenon will drive opportunities for SMBs in 2014. We believe that while the proliferation of mobile apps will drive the growth around Personal Cloud, the real opportunity lies with businesses discovering new avenues of growth serving other businesses. The other pair in this duopoly is social media which is attracting SMBs as the new channel for business expansion.
SMBs recognize that social media adoption is making customer engagements even more daunting as personalization becomes the primary avenue of engagement. Having said that, social media also opens up new opportunities to SMBs to market beyond the geographic limitations that conventional channels facilitate.
Central for SMBs to realize new market opportunities will be an ecosystem of business enablers, led by hosted service providers, integrators and developers, who through their unique focus and capabilities create a marketplace of ready-to-go solutions and services that SMBs can quickly latch on to roll out new products and services.
Already there is a ready-market of available cloud-services across the gamut of SMB wants and needs. There is an equally healthy ecosystem of service providers able to willing to support what SMB customers are looking for.
Figure 4: Cloud Service Offerings Source: Parallels SMB Cloud Insights for APAC, 2012
Critical to the success of these service providers is having a cloud management platform (CMP) that provides for the management of public, private and hybrid cloud environments. CMPs incorporate self-service interfaces, provision system images, enable metering and billing, and provide workload optimization through established policies. Advanced CMPs also have the ability to integrate with external enterprise management systems, including service catalogs, support the configuration of storage and network resources, allow for enhanced resource management via service governors and provide advanced monitoring for improved “guest” performance and availability.
Coming into 2014, a challenge for the service provider market is determining the route to take when it comes to management tools – proprietary systems or open source. VMware’s early market entry has given it a sizeable market share and following. On the other end of the spectrum is the open source model which is gaining traction among those concerned about vendor lock-in and integration with tools and apps yet to be developed.
Leading open source CMPs like Citrix Cloud Platform and Eucalyptus are both mature platforms but lack a large base of supporting contributors. OpenStack, supported by tech heavyweights like HP, Rackspace and RedHat, is fast gaining mindshare despite being essentially just a framework for components and not a fully mature product that would be easy for service providers to deploy.
While the open source CMPs are making progress, it is unlikely that they will displace VMware’s vCloud suite or competing products such as BMC Cloud Lifecycle Management, over the next five years. Microsoft is also rapidly growing its market share, thanks to its stronghold in IT organizations and frequent role as a strategic vendor.
At Parallels, we see the market continuing to evolve rapidly and possibly taking several years before clear leaders emerge. Our strategy is to ensure the service providers who choose Parallels Automation can deploy a wide variety of IaaS services including storage solutions that enable high availability services. Parallels Automation leverages the APS standard to enable a variety of proprietary and open source CMPs, as well as syndicated IaaS services.
By 2016, we believe Asia Pacific will be a major hosted services marketplace with an estimated value of US$23.3B, representing a health year-over-year growth of 29 percent. IaaS will make up US$7.6B of that total, web presence and web applications will reach US$3.8B, hosted communication and collaboration – with the fastest growth – will contribute US$3.6B, and business applications will triple to add US$10B.
2014 certainly holds a very promising future for all players in the cloud service game. Are you ready to play?