Forrester Researcher Projects Cloud Hyper-Growth Through 2020

The public cloud market is exploding into a stage of hyper-growth, an analyst with Forrester Research told NexGen Cloud attendees Tuesday, but partners need to understand their role in helping customers migrate to the right platforms to maximize that opportunity over the next few years.

Dave Bartoletti, principal analyst at Forrester, told attendees of the conference in Anaheim, Calif. that we've entered the "age of the customer," and in that new epoch it's not about the big beating the small, but the fast beating the slow.

"Fast businesses are creating cloud-based ecosystems that are centered around the customer," Bartoletti said at NexGen, produced by CRN parent The Channel Company.

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The "value ecosystem" being created focuses on touching the customer at every stage in the business process, and is fueling the growth in cloud technology adoption, he said.

It's important for the channel to remember that cloud isn't a place for their customers to get cheap servers and storage. It's "a place to turn ideas into software faster," Bartoletti said.

IT adoption follows an S-curve, with a slow ramp, an acceleration phase and then a plateau.

The cloud market essentially started only four years ago, when performance and security greatly improved, at which point just 10 percent of global companies had adopted Infrastructure-as-a-Service and Platform-as-a-Service, Bartoletti said.

It's now in the acceleration phase, with 33 percent adoption this year—a number likely to rise to 49 percent in 2017, he said.

Even Forrester has underestimated the cloud's market potential. The research firm had to upwardly revise its predictions for 2017, but now estimates a $32 billion spend. That number is expected to double by 2020 as hyper-growth continues, Bartoletti said.

Cloud spending is ramping twice as fast as the virtualization wave that preceded it, he added.

For the channel, that means opportunity for companies that appreciate their roles in aiding customers. But it's important for partners to understand their customers need help in making their migration decisions—not just in implementing migration plans—because they typically don't know what they need.

Apps should dictate that process, Bartoletti told NexGen Cloud attendees.

Partners should start customer engagements by evaluating app portfolios for behavior and suitability, focused on selecting the right paths to modernizing enterprise apps — whether its replacing them with Software-as-a-Service, rebuilding them from scratch, extending all or part of their functions into the cloud, or just "lifting-and-shifting."

Partners also need to make sure they have clearly figured out their provider model to understand the factors that will drive their success.

Some are squarely systems integrators, in which their differentiating capability will be the number of experts they can bring into their fold. For hosting providers, automation capabilities will drive success. And if they're cloud-first resellers, the differentiation will come from the customer experience they provide.

"It's hard to do all three of these at once," Bartoletti said, recommending that hosting and resale partners think about adding integration services to their model, because that's where the demand is in the market.

A significant challenge for channel integrators, especially in the midmarket, is finding skilled staff, he said.

In some hot markets, like the San Francisco Bay Area or New York, it's nearly impossible for solution providers to be competitive for experts in cutting-edge cloud technologies.

Many companies "can't go to the cloud because they can't hire anyone who can spell cloud because they're all working for Google," he said.

For Shonta Williams, CEO of Centricity, a solution provider based in Washington, D.C. that focuses on working with the federal government, Bartoletti's points on evaluating the application portfolio were particularly relevant to her practice.

"I'm interested in helping clients understand how to manage cloud best, because a lot of the challenges with the CIOs in the federal government is they don’t know which apps to move to the cloud, and they have trust issues from the security standpoint," Williams told CRN.

The federal government is still near the bottom of the adoption curve because of the highly regulated environment in which it functions, which adds to the challenges of migrating those customers, Williams said.

Bartoletti's discussion on the value of the channel in providing cost-monitoring services, as other IT services become less relevant in a cloud environment, also was insightful, she said.

Many federal clients get their budget numbers at the beginning of the year and need a cost-analysis from their consultants to help them predict spending, she said.