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Cloud infrastructure market showing steady growth

Eric Tabor  |  September 18, 2015

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The cloud Infrastructure-as-a-Service market is growing at an accelerated rate, with providers bringing in increased revenue, according to IT analyst firm Gartner.

A recent Gartner report found that global spending on cloud IaaS solutions will reach almost $16.5 billion in 2015, an increase of more than 32 percent from last year. As more businesses move an increasing number of workloads to the cloud, the market is expected to grow at a compound annual growth rate of 29 percent through 2019.

"10% of CIOs consider cloud IaaS their default infrastructure option."

Last year the absolute growth of public IaaS workloads surpassed on-premises workload growth of any type for the first time, the Gartner report revealed. According to a survey of CIOs conducted by Gartner, cloud IaaS is considered an infrastructure option by 83 percent of CIOs and 10 percent already deem it their default choice.

This growth in the IaaS market is also causing a consolidation of service providers, according to Gartner vice president and analyst Lydia Leong. The market is rapidly revolving around a small number of trusted service providers, so IT buyers will need to select their vendors carefully.

"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 Leong.

The cloud IaaS market is growing and providers are consolidating.The cloud IaaS market is growing and providers are consolidating.

IaaS proves a versatile tool
Cloud IaaS solutions can be put to work for practically any use case that can reasonably be hosted on virtual servers, but the most common are development and testing environments, high performance computers and batch processing, Web-based apps and non-critical internal business applications. Gartner suggested that businesses adopting a cloud IaaS solution operate in two essential modes, otherwise known as bimodal IT. This allows them to keep sight of what is needed to maintain IT operations while at the same time innovating with new, digital possibilities.

"Cloud IaaS can now be used to run most workloads, although not every provider can run every type of workload well," said Leong. "Cloud IaaS is not a commodity. Providers vary significantly in their features, performance, cost and business terms. 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."

When first starting, most organizations deploy cloud IaaS for mode 2, which are agile IT projects that may be on the periphery of the organization's IT needs but can still have a major impact for the business. As the company becomes more comfortable with its use of IaaS over time, some organizations may choose to use it in Mode 1, for traditional IT projects.

As time goes on, many enterprises, especially those in the mid-market, will likely migrate away from operating their own computing facilities and instead host their workloads in a data center run by a service provider and rely primarily on infrastructure in the cloud.

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Eric Tabor

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