Here is a curious observation of the world of information technology: there are some numbers that don’t add up. No doubt you have heard or read many of the consultant’s reports on the exciting growth and adoption of the cloud, especially Infrastructure as a Service (IaaS). This is where firms build their digital assets to make them more competitive. Search any pundit and you will see growth rates of 30%+ or more. And, where cloud providers break out (or can be teased out) their specific IaaS sales we see double and triple digit growth.
Here is the rub. Look at the annual spending on IT budgets. It is huge. Gartner projects worldwide IT budgets for 2016 to equal $2.69 Trillion. Now, if you add up all the leading IaaS only providers, and extrapolate to 2016, we get about $21+ Billion or so in revenue. We can debate the numbers but for now accept that we are close – give or take a $billion or so.
Now consider the implication. Cloud is certainly big and growing but in the big picture it is just a little over three-quarters of one percent (0.78%) of the total IT budget. What gives?
An IT budget is dominated maintaining/improving legacy infrastructure and applications (70% to 80%). So, let’s cut that out. Also, some industries (high tech and media) and some regions (North America) have been much more aggressive in adopting the cloud than others. Boil down those factors and we see that serious cloud spending is small and concentrated. All the excitement around it is due to it taking a growing part of the new IT spending.
But flip your perspective for the “Aha! Moment”. If only a limited set of enterprises are aggressively adopting cloud, this means most organizations do not do cloud. Lots of firms may be experimenting with cloud, or perhaps confusing themselves with cloud washing what they are doing, but cloud adoption is definitely not mainstream. What is going on here? What could be holding them back? How about a shortage of cloud expertise?
In its recent annual survey, RightScale, the providers of a multi-cloud management tool, indicate that the biggest hindrance to cloud adoption is a lack of expertise. This was cited by almost a third of the respondents and surpassed concerns about security, which was the top issue in previous surveys.
The requirements of cloud expertise are becoming formidable. The functions, features and pricing of cloud services have really blossomed as the offerings from the big three – Amazon Web Services (AWS), Microsoft (Azure) and Google Compute Platform (GCP) – have matured. AWS, the market leader, alone has nine different kinds (families) of compute power on offer. These further break down into fifty-three different instance types (combinations of computing horsepower and memory). Why so many?
AWS with ten years under its belt is the oldest provider. In that time it has regularly been responding to customers needs to optimize performance and cost effectiveness for different kinds of tasks. This is great for customer choice. Running a simple website requires a different machine than processing your mobile banking transactions. Why over pay or suffer poor performance? However, you can see how and why the expertise gap has grown. That’s quite a bit of knowledge required to select the right machines for the task you are trying to address.
And these are just the basic computing horsepower and memory offerings. There are also many kinds of storage and network services available, as well. A little dizzying isn’t it? Now, compound this by including the multiple offerings of Microsoft (six families with twenty-five instance types) and Google (four families with eighteen instance types).
The expertise need, and the opportunity to fulfill it, is rapidly emerging. Google “AWS training” and you get 13.5 million hits. Still, it is going to take a while to close the gap.
It’s hard to believe with the buzz around how mobile, big data, natural learning (artificial intelligence), robotics, and on, and on are changing our business and our world that the underlying engine critical to enabling all these – cloud computing – is still actually used very little. Sure, there is an investment in legacy systems that is hard to just abandon, but perhaps the real challenge is that there is just not enough individuals with cloud smarts to go around.
Where do you think your company stands in this race for talent? Where do you think you competitors stand?