![\"A](\"https://mercurylabsmarketing.com/wp-content/uploads/2018/02/A_View_Above_the_Cloud_Tops.jpg\")
Gartner\u2019s latest Hype Cycle for cloud computing shows the technology has now reached the Slope of Enlightenment stage. That means the Cloud has already drifted past the first three hype levels\u2014Innovation Trigger, Peak of Inflated Expectations, and Trough of Disillusionment\u2014and is steadily climbing toward the Plateau of Productivity phase. It\u2019s about time, too. Today, the Cloud ranks among the most disruptive and groundbreaking IT innovations ever.
\n\n\n\nA little over 10 years ago, cloud computing started life as a buzzword for server virtualization. Back then, slapping the word \u201ccloud\u201d onto anything that resembled shared hosting, colocation, or other service-based IT solutions allowed vendors to tout decades-old products as newfangled innovations. This raised a lot of confusion around the technology, and it wasn\u2019t until 2010 when Gartner published the IaaS Magic Quadrant that the skies finally started to clear (so to speak) for cloud computing.
\n\n\n\nFast forward to 2018, and the Cloud has evolved into a must-have business technology. Almost all companies (regardless of size, industry, or location) now rely on the Cloud for a broad spectrum of business needs\u2014from SaaS-based versions of legacy apps to IaaS-deployed strategic enterprise-level systems.
\n\n\n\nMuch of this change stems from the continued expansion of use cases for cloud computing beyond cost-savings and productivity gains. Practically all the major IT innovations in the recent two years (such as the blockchain, AI, quantum computing, etc.,) owe much of their existence to the Cloud.
\n\n\n\nThat\u2019s why keeping up with the Cloud\u2019s rapid evolution can be daunting. In today\u2019s post, we\u2019ll check in on the current state of cloud computing and look at the changes at different angles, from overall trends all the way to industry-specific usage and adoption.
\n\n\n\nRelated: 5 Steps to Future-Proof Your Go-to Market Strategy for Cloud Services
\n\n\n\nLet\u2019s first take a 30,000-foot view of what\u2019s going on right now in cloud computing. There\u2019s a lot happening, but we\u2019ll just focus on what\u2019s really driving the changes.
\n\n\n\nAlthough figures for the size and growth rate of the global cloud computing market vary from one research firm to another, the numbers all point to one thing: the Cloud continues to get bigger at a faster rate.
\n\n\n\nGartner predicts that by the end of 2017, total worldwide revenues from public cloud computing will grow by 18% from the previous year\u2019s figure to $247 billion. Meanwhile, IDC puts the current size of the public cloud market at $122 billion with a growth rate of 24% year-on-year.
\n\n\n\nTaking a longer-term view, Forrester forecasts that the public Cloud will reach $236 billion in 2020, while Bane and Co. places this figure at $390 billion. Gartner sees cloud computing\u2019s market size growing to over $411 billion by 2020.
\n\n\n\nA handful of large companies control a huge chunk of the different public cloud segments. These powerhouses have dominated the Cloud for several years now and are still expanding at phenomenal rates\u2014at the expense of non-cloud IT companies and other smaller cloud providers.
\n\n\n\nForrester reports that in 2018, Amazon Web Services (AWS), Google, and Microsoft will capture 76% of the platform cloud market, a number which will grow to 80% in 2020.
\n\n\n\nIn a recent article, Forbes points out that IBM is also firmly engaged in the Cloud Wars as the company recorded revenue numbers that firmly put it in third place behind Microsoft and Amazon. In addition, Goldman Sachs analyst Heather Bellini believes that Alibaba (alongside Amazon, Microsoft, and Google) will also become a cloud market leader.
\n\n\n\nFor the overall cloud market, a few underlying trends drive much of the evolution we\u2019re seeing. Most industry sources, such as Forrester\u2019s 2018 Cloud Predictions report, say that the main developments reshaping the Cloud include:
\n\n\n\nWe\u2019ll go into some of these points in greater detail later.
\n\n\n\n![\"Peeling](\"https://mercurylabsmarketing.com/wp-content/uploads/2018/02/Peeling_Back_the.jpg\")
For this section, we\u2019ll zoom in a little bit and find out what\u2019s brewing in each of the Cloud\u2019s three main segments. While the overall Cloud market size shows a healthy pace of expansion, growth doesn\u2019t appear to be evenly distributed between IaaS, PaaS, and SaaS.
\n\n\n\nLatest research from IDC shows that the IaaS segment now accounts for 17.8% of the public cloud market (the second biggest among the three categories) with a year-on-year growth rate of 38.1% (the second-fastest among the three). These figures point to the IaaS segment\u2019s accelerating growth, especially when taking into account the 31% expansion rate reported by Gartner for the prior year.
\n\n\n\nAccording to IDC, a huge portion of this segment\u2019s continued growth comes from strong enterprise demand and sustained investments by providers in this space. This, in turn, drives the increase in the \u201crange and granularity\u201d of IaaS offerings, resulting in wider adoption. For example, new releases like Azure Stack and VMware Cloud on AWS have lowered the barrier to implementation for a lot of enterprise customers in need of hybrid cloud setups. Network World outlines these growth drivers as follows:
\n\n\n\nAmazon continues to dominate the public IaaS sector with a 44.2% market share, followed by Microsoft (7.1%), Alibaba (3%), and Google (2.3%).
\n\n\n\nRelated: Data Center Lead Generation Secrets
\n\n\n\nThe PaaS segment holds the smallest market size among the three cloud computing categories but outpaces the other service areas in terms of growth. IDC estimates that PaaS makes up 13.6% of the worldwide public cloud market with a growth rate of 50.2% year-on-year.
\n\n\n\nThanks to its reputation as a secure and scalable enterprise application development platform, the PaaS segment will continue to see strong double-digit growth in the near future, according to Gartner. Meanwhile, IDC points to the rapid adoption of container technology as the main driver of the segment\u2019s current expansion, along with the following trends (identified by GIA Research):
\n\n\n\nSynergy Research cites Amazon as the clear leader in the PaaS segment with a market share of 40%, which is larger than the next three players (Microsoft, Google, and IBM) combined.
\n\n\n\nAccording to IDC, Nearly 69% of the global public cloud market belongs to the SaaS segment. But with the ready availability of thousands of SaaS applications from thousands of SaaS vendors (both tech giants and startups) and the segment\u2019s relative maturity, there\u2019s now some level of commoditization sweeping across the SaaS sector. While this service area still sees some strong two-digit growth (about 23% by IDC\u2019s recent count), it actually has the slowest rate of expansion in the Cloud space.
\n\n\n\nStill, SaaS remains a prime area for growth and disruption as businesses continue moving apps off-premises in droves, and as more organizations consider migrating larger, business-critical tools (like ERP, SCM, and other strategic systems) to the Cloud. Most innovations we\u2019re seeing in SaaS today revolve around the following key trends:
\n\n\n\nRecent data from Synergy Research indicates that Microsoft leads the enterprise SaaS market, followed by Salesforce, Adobe, Oracle, and SAP.
\n\n\n\nRelated: Answering Quora: Who are the best SaaS Marketing Agencies in the US, and UK?
\n\n\n\n![\"Keeping](\"https://mercurylabsmarketing.com/wp-content/uploads/2018/02/Keeping_the_Cloud_Aloft.jpg\")
Most businesses now follow a cloud-first approach in their IT strategy. That\u2019s why spending on hosted/cloud services currently takes up a bigger share of the IT budget and has become the fastest-growing IT expenditure item for most organizations.
\n\n\n\nThe Cloud is seeing increased usage and adoption rates among businesses across the board. But the numbers vary according to business size, cloud architecture (public vs. private. Vs. hybrid), and cloud segment. RightScale\u2019s State of the Cloud Report shows some very telling cloud adoption/usage trends:
\n\n\n\nAnother survey, Building Trust in a Cloudy Sky: The State of Cloud Adoption and Security from Intel Security offers up the following highlights:
\n\n\n\nA survey by North Bridge Venture Partners and Gigaom Research records the following adoption rates per cloud segment: 74% for SaaS, 56% for IaaS, and 41% for PaaS.
\n\n\n\nWith their usage and adoption of cloud services growing, companies are setting and spending a bigger chunk of the IT budget on cloud computing. In their recent report 2018 State of IT: Trends, Budgets, and Purchase Drivers, Spiceworks notes the following budget trends for cloud services:
\n\n\n\nIDC\u2019s research on worldwide public cloud spending notes the following key findings:
\n\n\n\n![\"A](\"https://mercurylabsmarketing.com/wp-content/uploads/2018/02/A_Tour_of_Cloud-swept_Industries.jpg\")
Let\u2019s now take a look at developments in cloud computing for specific industries. While the Cloud transforms every single sector in the global economy, we\u2019ll simply focus on the financial services, healthcare, and manufacturing verticals for this post. That\u2019s because these three sectors are among the industries which will be massively impacted by the Cloud, according to a 2016 Economist Intelligence Unit (EIU) study.
\n\n\n\nIn a heavily regulated industry like the financial services sector, compliance is a huge factor that determines how quickly firms in the sector adopt new technologies like the Cloud. With highly sensitive data involved, security and privacy also rank high on the list of barriers to implementation.
\n\n\n\nNow, as more and more cloud providers tailor their offerings to meet the industry\u2019s needs, many financial services firms are moving their applications to the public cloud. Deloitte Insights points to a number of developments that helped increase cloud adoption and usage in the financial services industry:
\n\n\n\nAs a result, two key trends now shape how the Cloud impacts this sector. The first is the adoption of cloud-based applications for back-office and customer-facing internal systems. The second is the emergence of FinTech solutions that provide cloud-enabled apps and software for the delivery of financial services.
\n\n\n\nRelated: Lead Generation Guide for Cloud Hosting Services
\n\n\n\nSimilar to financial services, the healthcare sector has notoriously been slow to adopt cloud technology because of serious compliance concerns and data security issues. For some time after other industries started moving to the public cloud in earnest, healthcare\u2019s cloud adoption rates remained among the lowest.
\n\n\n\nBut now, healthcare organizations\u2019 attitude toward the public cloud has dramatically changed\u2014as cloud providers start widely using tools like end-to-end data encryption, access management services, HIPAA-compliant protocols, and personal health information protection agreements.
\n\n\n\nAccording to the Healthcare Information Management Society (HIMS), more than 80% of healthcare IT organizations use some form of cloud computing. The sector is projected to see double-digit growth in cloud spending, which is expected to reach more than $20 billion this year. The EIU outlines a few cloud computing use cases in the healthcare industry as follows:
\n\n\n\nCloud computing had also been slow to take off in the manufacturing space. According to the EIU, this largely stemmed from the intrinsic complexity of manufacturing processes (i.e., the need to embed cloud computing into a physical system). This kept switching costs and barriers to adoption very high for most manufacturers that moving away from legacy IT systems wasn\u2019t a viable option.
\n\n\n\nToday, however, manufacturers are heavily investing in cloud-based IT platforms like IoT integration, greatly expanding the industry\u2019s cloud adoption and usage. Figures from the American Enterprise Institute (AEI) show that the doubling in manufacturers\u2019 IT expenditures reflects increased spending on cloud-based software, storage, and design, as well as customer-facing and back-office systems.
\n\n\n\nAn IDC survey of manufacturing firms supports this finding and reveals a clear uptrend in the industry\u2019s reliance on cloud computing:
\n\n\n\nThe EIU also reveals several key areas where the Cloud plays a big role in manufacturing: production processes, supply chain management, design and prototyping, and inventory/order/distribution management.
\n\n\n\nRelated: Sales and Marketing Basics for the Cloud Crowd
\n\n\n\n![\"The](\"https://mercurylabsmarketing.com/wp-content/uploads/2018/02/The_Cloudy_Skies_Ahead.jpg\")
To wrap up this post, let\u2019s check out recent cloud innovations that experts predict will reshape the technology in the very near future.
\n\n\n\nAs the number of enterprise IoT projects double and IoT standardization/interoperability initiatives start taking root, the technology is finally ready for primetime. That\u2019s according to Real-Time Business Insights, who also points out that enterprises now leverage IoT capabilities to generate measurable business value rather than simply using IoT as a means for connecting devices.
\n\n\n\nAI enables much of this transformation. By embedding AI and machine learning into IoT systems, AI becomes the brain while IoT provides ways to both gather data and to act on AI\u2019s decisions. This synergy is already being used in manufacturing (predictive analytics), healthcare (remote patient monitoring), and other industries.
\n\n\n\nServerless computing started generating buzz in the developer community in 2014 when Amazon launched AWS Lambda as a cloud service to help developers focus on the application at the task level, without worrying about managing server-level resources or processes.
\n\n\n\nIt\u2019s now one of the biggest trends in cloud computing. Going serverless means that developers simply have to run their code via hosting providers (like Amazon, Microsoft, Google, and IBM). These vendors, in turn, manage application runtimes (load balancing, server provisioning, OS infrastructure, etc.) and deliver resources (compute times) needed by the application on a pay-as-you-go basis.
\n\n\n\nEdge and fog computing are ways to efficiently manage the massive amounts of data generated by IoT devices. These two related architectures minimize latency in the Cloud by carrying out much of the critical data processing close to where the data comes from (e.g., sensors, relays, and other connected devices), rather than doing all the needed computing at traditional cloud data centers.
\n\n\n\nWhile these two terms are often used interchangeably, there\u2019s actually a crucial difference between the two architectures. In edge computing, data processing takes place directly inside connected devices (e.g. programmable automation controllers). Fog architectures, on the other hand, move computing to the local area network level (e.g., fog node or IoT gateway).
\n\n\n\nIDC predicts that by 2020, 45% of the data created by IoT devices will be stored and analyzed at or near the network\u2019s periphery. Industries like manufacturing, financial services, healthcare, and telecom are already seeing the benefits of faster, near-real-time, and continuous data processing from connected devices.
\n\n\n\nRelated: Selling Tips to Make Prospects Buy your Software
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