In depth: Cloud services - marking the margins

Nermin Bajric


The impact of the Cloud, while undoubtedly massive in the long term, remains nebulous and hard to pin down, according to ICT experts.

Yes, this 'Cloud thing' is making some serious noise. yet there are mixed messages wherever you look. Organisations which have overcome their fear of 'it' are looking to deploy, while Cloud services and solutions providers are scrambling to make ends meet in a growingly congested Australian market filled with confusion and, often, a lack of direction.

Add to that the fact that no one strategy has yet been determined as definitively successful (if there is such a thing), and it becomes a tough task.

What is certain for now is that the multi-faceted Cloud market, on both the compute and services fronts, is chugging along; some components are ballooning, while others crawl.

According to IDC figures, Cloud computing climbed to a global estimated value of $US47.4 billion in 2013, with the analyst firm expecting it to reach $US107bn by 2017. IDC datacentre and Cloud vice-president, Rick Villars, said its 23.5 per cent compound annual growth rate is five times faster than that of the broader technology market.

Meanwhile, the Cloud services market remains in the early stages of development, but is also growing. Ovum Asia-Pacific (APAC) IT research director, Steve Hodgkinson, sees growth at a quicker rate for more generic-style services such as compute and storage Infrastructure-as-a-Service (IaaS), and commodity-like Software-as-a-Service (SaaS) solutions.

But while blanket figures position Cloud services as a 'can't go wrong' play, figures around its utilisation remain a mirage.

"Many surveys look only at 'any use' of IaaS or SaaS solutions. Of course, most organisations are investing in Cloud computing and making some pilot or experimental use of Cloud services," Hodgkinson said.

"But this does not necessarily translate across the broad use of Cloud services for a wide range of ICT activities, applications and workloads."

Delivering on promise
Nonetheless, Cloud is delivering on its promise and offering margin to "organisations that have approached [it] with eyes open and in a professional manner."

The smarter resellers are cutting through the confusion and jargon and presenting customers with additional services on top of the base offering, and a price explanation, according to Channel Dynamics director, Cam Wayland. Cutting edge companies talk about brands, which platform services are hosted on, which vendor is solving customers' education and which is understanding the issues.

"It's about how the smarter players get in there, carve out a piece and maintain that recurring revenue," Wayland said. "We are still in that growth phase where prices and margins are being squeezed as the big players enter the market.

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