Verizon 2016 State Of The Enterprise Cloud Market: Services Can Fuel The Channel

No Longer A Newcomer

Verizon has been surveying its enterprise customers on their cloud use and producing its "State of the Market: Enterprise Cloud Report" for three years. In just this short time frame, the novelty of the cloud has already worn off. The cloud has been established as a reliable platform that is helping enterprises get work done, and this year Verizon found that cloud use is getting more sophisticated. But just because cloud use is the new normal doesn't mean it won't challenge enterprises anymore.

Ryan Shuttleworth, chief technology officer for Verizon's cloud division, shared the findings of the report with CRN and said that while many enterprises have gotten the hang of cloud, companies are still looking for managed services. Services around the cloud represent a huge opportunity for channel partners, he said. Here is what Verizon reported this year about the state of the cloud market.

Enterprises Looking For The Next New Thing In Cloud

The cloud has evolved into another part of the IT strategy for enterprises within the short time that Verizon has been producing its cloud report. Eighty-four percent of respondents said their use of cloud increased in 2015, and about half of the companies surveyed said they will be using cloud for at least 75 percent of their workloads by 2018.

But because cloud use is becoming business as usual for many companies, it's not giving businesses the same competitive edge it once did. Enterprises are now thinking about how they can use the cloud to enable transformation and innovation, Shuttleworth said.

Cloud Use Is Becoming Sophisticated

Enterprises are starting to use the cloud to change how they do business, instead of simply adopting a "cloud-first" attitude with no strategy behind it. According to Verizon, more than one-third of organizations have already adapted their business model using cloud. These businesses, for example, are using cloud services to reduce their costs or improve end-customer experience. An additional one-fifth of enterprises surveyed indicated they are in the process of using the cloud to transform one or more of their business processes.

The cloud has also become less of a daunting undertaking. Fewer companies are seeing the cloud as a "project," which is helping to encourage deployment, Verizon said.

The Three Stages Of Cloud Acceptance: The Skeptic

According to Verizon's report, three cloud strategy personas have emerged as the cloud matures. The Skeptic, the first persona, still exists when it comes to the cloud. The company that this persona represents might recognize the potential benefits of the cloud, but still isn't fully convinced the cloud will work for it, according to Verizon. Six percent of survey respondents indicated that their organizations will have less than 25 percent of their workloads in the cloud by 2018.

While Skeptics’ reluctance was often the result of a corporate attitude toward risk management, governance or capital investment, security fears around the cloud -- rampant in past years -- have decreased, Shuttleworth said.

The Native

The second persona described in the report is the Native. Cloud Natives are companies that are very comfortable with the cloud, and that may even be considered "cloud-only" companies. Think Uber, a cloud-first business that doesn't own any of the assets that make the company a success -- the cars. But to be a considered a cloud Native, an organization doesn't have to be a startup or small company. More businesses are starting to buy services instead of servers, according to Verizon.

The Pragmatist

The majority of organizations fall in the middle of the spectrum, the Pragmatist persona, according to the report. Pragmatists are taking a measured, "hybrid" approach to the cloud, using standard components from one or more cloud providers tied together by APIs and orchestration services. This approach could include public or private cloud offerings. These companies have a plan and are working with specific service providers to ensure that they have the infrastructure they need to support cloud, according to the Verizon report.

Private Cloud Is Becoming Less Exclusive

As cloud models mature, the barriers to entry that once stood between businesses and private cloud offerings are diminishing. Private clouds' becoming less exclusive is one of the biggest changes in the cloud market today, Verizon said.

The report said that the price gap between public and private cloud offerings is closing, so private cloud is no longer reserved for enterprises with the largest budgets. And as the price falls, businesses can afford to move more workloads into private cloud environments.

According to the report, 27 percent of enterprises are using private cloud, compared with the 24 percent using public cloud.

Hybrid Cloud Has Gone Mainstream

The hybrid cloud approach is a mix of models, including on-premises and public and private cloud. Verizon said this model is now the norm, especially for large organizations.

The report noted that 53 percent of enterprises use two to four cloud providers as a part of their cloud strategy, and 50 percent of respondents use a blend of private, public and traditional IT resources. While 48 percent of enterprises said they have workload portability between private and public cloud resources, solution providers can be instrumental in helping to make this process more seamless for organizations, Shuttleworth said.

How Solution Providers Can Untangle Hybrid Deployments

Even though hybrid cloud is the sought-after deployment model, it can be the most complex to build and maintain, the report said.

Partners can help enterprise customers put together and manage these environments, which might consist of multiple cloud offerings from several providers. Organizations are seeking managed services providers who can integrate multiple platforms and make their hybrid approaches look like a seamless IT environment, Shuttleworth said.

Enterprises Don't Want To Be Alone In The Cloud

Because the cloud can be a nebulous concept, organizations are looking for managed services to make the most of their cloud deployments, Shuttleworth said.

Partners are better suited to stay ahead of changes in the cloud space that an enterprise IT team might miss. Enterprises also often lack the expertise they need to deploy the right applications or evoke business transformation on their own. Managed service providers can supply this expertise and free up enterprise IT teams to focus on how the cloud platform aligns to their business needs, the report said.