Virtualization and Cloud executives share their predictions for 2017.  Read them in this 9th annual VMblog.com series exclusive.

Contributed by Mark Prahl, Virtustream

A Year of Great Cloud Expectations

The cloud has come a long way since its entrance into the enterprise IT scene. Years of cloud washing and overhyped expectations led many to initially struggle with adoption. In this first phase, cloud deployments were project-based and infrastructure-centric with an emphasis on self-serve access to cloud-hosted resources. Projects were largely confined to testing and development environments as early adopters such as DevOps and small-to-medium size businesses (SMBs) leveraged the readily available resources. IT departments in general feared the security and compliance challenges associated with the cloud. This fear combined with the cloud's potential high cost meant that some businesses never truly gleaned the value of the cloud.  

Today, it's clear that the cloud is not only here to stay, but holds a critical role in business success. Enterprises are now leveraging the efficiency and on-demand access of the cloud more than ever to speed innovation, cut costs, and improve productivity. In fact, a recent survey from 451 Research suggests that 60 percent of enterprise workloads will run in the cloud by mid-2018, up from around 41 percent today. Already, we are seeing mission-critical applications such as SAP and Oracle that were traditionally managed on-premises running efficiently in cloud environments at scale. The fear, uncertainty, and doubt that once dominated IT's cloud mindset has completely reversed. Gartner reports that more than $1 trillion of IT spending will shift to the cloud by 2020, as concerns around security and performance are resolved.

Enterprises will look beyond the mega clouds

There is impressive momentum outside of the top cloud players today; the market has evolved to encompass cloud service providers that address very specific segments with unique demands. Often they specialize in certain sectors with regulatory concerns or boast knowledge of particular enterprise apps. In contrast, the cloud behemoths are hyper-focused on reducing infrastructure costs; while that is crucial to many businesses, it may not fully meet organizations' needs for security, compliance, and managed services to augment enterprise IT capabilities. In the coming year, organizations will increasingly adopt a multi-cloud strategy that meets their individual needs, often leading them to evaluate options in addition to or outside of existing mega clouds.

Analytics will inspire organizational change in IT

The importance of data analytics within a business is well understood; however, most organizations have struggled to ingrain analytics into their organizational structure and culture. IT departments are accountable for intensive tasks of migrating and managing a large number of systems. As a result, organizations as a whole lack the time and talent to build and oversee data science teams in-house or take action on data insights. Now, organizations are realizing they can free up IT resources by automating and moving other tasks such as data analytics to the cloud.

Cloud service providers will face heightened customer expectations

As cloud technologies become more powerful and pervasive, companies will rely on cloud service provider (CSP)'s ability to meet their most demanding enterprise requirements for complex, mission-critical applications, including data requiring enterprise-class object storage. As a result, businesses will be asking the hard-but necessary questions-when evaluating current and new cloud service providers (CSPs), such as "can they provide service-level agreements (SLAs) around not just infrastructure availability but application availability as well?" Taking it one step further, businesses will expect CSPs to offer SLAs and managed services expertise across the cloud stack, including infrastructure, platform and applications. Those CSPs that are able to rise to the occasion will cement their position as critical for their customers' success.

Hyperscale cloud environments will rise in popularity

The hyperscale approach to data center and cloud infrastructure involves shifting from the traditional, server-based software execution to a software-centric approach. By making this transition, enterprises are able to develop software services without the typical cost and speed restrictions placed on them by physical infrastructure. This approach will give rise to more cloud-native development environments and enhance the efforts of DevOps teams. Through this lens, it's no surprise that hyperscale cloud environments will become mainstream as customers demand greater resource flexibility and control, as well as economies of scale.

Consumption-based billing models across cloud and managed services will become the new norm

Flexibility in billing is one of the areas where cloud deployments are advantageous, and yet many CSPs are still using the old managed hosting model, especially when it comes to managed services. True consumption-based billing offers an efficient alternative to cloud resource management wherein businesses only pay for actual usage of cloud and managed services resources. This is akin to how consumers pay for electricity and other basic utilities. Businesses can run much more efficiently and at scale, paying for only actual usage. An additional benefit is that businesses are able to transform cloud deployments into ongoing operating costs instead of capital expenditures, which tend to be an obstacle to moving projects forward.

In this next phase of cloud and through 2017, the expectations and demands placed on CSPs will be at an all-time high. It will also be the year that the enterprises will find the greatest growth, innovation, and reliability by driving forward cloud-based enterprise applications. Now that the cloud has grown up, it can finally take its proper place within both enterprises and public sector.

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About the Author

Mark Prahl has over 20 years' experience in product marketing leadership roles spanning Internet, mobility, storage, and cloud technologies with companies such as Lucent Technologies (now Nokia), EMC (now Dell EMC), and Virtustream, a Dell Technologies business. During this time, his experience has been primarily focused on bringing new and emerging technologies to market. In his current role as head of product marketing at Virtustream, Mark is responsible for promoting Virtustream cloud and managed services offerings in existing and new markets, as well as introducing new Virtustream products and services.