Predicting Cloud Computing Adoption Rates

From conservative, single digit adoption rates to hockey-stick projections of exceptional growth, analyst firms, venture capitalists and government ministries are weighing in on how they see cloud adoption progressing.

While each of the adoption rate predictions vary significantly in terms of their methodologies and results, all rely on the assumption that SaaS applications including CRM will continue to gain momentum.  The user adoption rates vary on how fast the momentum is, yet all share this assumption.  Speed, increased user adoption rates, and the ability to more closely align software to business goals are cited most often as the biggest benefits.

Where the projections vary most is whether enterprises will eventually migrate the majority of their applications to the cloud or not.  Forrester, Gartner and others see a hybrid cloud architecture emerging in the enterprise and forcing the issue of legacy systems migration by 2015.  As would be expected, vendor-driven research sees an “all or nothing” world in the near future.

Sanity Check

Wanting to see how reliable the figures were showing rapid cloud adoption in the enterprise, I did a quick sanity check.  Taking the  distribution of sales by segment for Salesforce.com and their annual revenue growth rate, then normalizing it across all segments, enterprise emerges as their strongest segment by a wide margin in 2015.  It had a 15%+ compound annual growth rate (CAGR) from 2011 – 2015 just taking their current sales by segment distribution of sales and extrapolating forward.  Data points like this and the market factors behind them is why SaaS is often used in these studies as a leading indicator of broader cloud adoption.

Adoption Rate Round-Up

• CDW recently published their Cloud Computing Tracking Poll Report reporting 37% adoption in enterprises followed by higher education (34%), healthcare (30%), federal government (29%),  state & local government (23%) and SMBs (21%).Source and opt-in for research results: http://www.cdw.com/shop/tools/surveys/survey.asp?SurveyKey=D808B2971F634B5A96E452FE7E6FA165

• Japan’s Internal Affairs and Communications Ministry 2010, the cloud computing market in Japan is expected to grow to U.S.$29.2 billion in 2015. Gartner has projected cloud adoption in Japan will represent 12 percent of the global cloud services revenue. Source: http://www.biztechreport.com/story/1202-cloud-services-asia-pacific-region

• Forrester found that SaaS will outgrow all other cloud services, achieving 37% adoption in 2011 growing to 50% by 2012. In previous studies Forrester has shown that SaaS is a major growth catalyst of ongoing investment in IaaS and PaaS in enterprises. Source: Source:  Forrsights: The Software Market In Transformation, 2011 And Beyond Shifting Buying Preferences Lead To New Software Priorities by Holger Kisker, Ph.D. with Pascal Matzke, Stefan Ried, Ph.D., Miroslaw Lisserman  Link: http://bit.ly/ijJy70  The following table is from the report:

• Microsoft Global SMB Cloud Adoption Study released in March, 2011 is one of the most comprehensive done this year on this topic. Of the many findings, the study predicts  39 % of SMBs expect to be paying for one or more cloud services within three years).  One of the best studies on cloud adoptions done this year Source: Study Results Document (PDF (22 pages): http://bit.ly/gN8yTx

• North Bridge Venture Partners, GigaOM PRO and over a dozen research partners completed the study The Future of Cloud Computing 2011. The study found 13% expressed high level of confidence in cloud computing for enterprise applications, with 40% experimenting and 10% saying they will never use cloud-based platforms as they are too risky. A presentation of the results can be found here:

The Future of Cloud Computing 2011

View more presentations from Martin Walsh

Source: http://futureofcloudcomputing.drupalgardens.com/2011-future-cloud-computing-survey-results

Ovum predicts that multinational corporations (MNCs) will see cloud computing grow to 61% by the calendar end of 2011. Source:http://www.datacenterdynamics.com/focus/archive/2011/06/are-big-companies-actually-adopting-cloud-computing

• Springboard Research (Forrester) completed a study of cloud computing adoption in Asia finding 31% of companies with 50 or fewer PCs will adopt cloud-based applications in 18 months, 56% with up to 500 PCs.  The key findings are available for download from the source URL below the infographic.

                                     Microsoft Asia is making this available for download here: http://bit.ly/jWjOj1

• TechTarget published their analysis of virtualization and cloud computing adoption in the study, State of virtualization and cloud computing: 2011. Of the many findings, a few of the most significant is how pervasive VMware ESXi 4 and later (vSphere) is throughout enterprises today.  The study also shows that 7% of those interviewed had implemented cloud computing in 2010, growing to 9% in 2011 – quite conservative compared to many of the other adoption rate analyses completed.  You can find the results here:http://searchdatacenter.techtarget.com/feature/State-of-virtualization-and-cloud-computing-2011

• VMware and The Cloud Industry Forum (CIF) project UK cloud adoption being around 48% in 2011/12, growing significantly in the next three years due to anticipated SaaS adoption by SMBs.  Source: http://www.cloudindustryforum.org/uk-sme-cloud-adoption-set-to-increase-in-line-with-european-businesses opt in for the research:http://www.cloudindustryforum.org/register-your-details-to-download-our-white-papers

• Yankee Group has found that in 2011, 41 percent of very large enterprises (more than 10,000 employees) have already deployed or are considering deployment of platform as a service (PaaS) within the next 12 months, compared to just 32 percent in 2010. They have also found that mobility is most significant factor driving cloud adoption in the enterprise. Source:http://professional.wsj.com/article/TPCHWKNW0020110722e77q0004d.html\

Courtesy – Louis Columbus

Mobile VAS and security concerns

From playing games to reading news headlines, and from surfing the Internet to checking bank balance, value added services offered by service providers today have transformed the mere phone to a sophisticated device. With the advent of 3G, the usage of VAS is only going to increase. Apart from the benefits, this may also expose end users and mobile networks to greater security threats.

Among the fastest growing mobile market in the world, India has become the 5th country to have crossed the 100 million mark in subscriber base. Mobile phones are no more the mere communication tool of yesteryears. With a wide range of value added services offered by service providers today, they have actually become an extension of the persona of the user.

Although, both end users and service providers stand to gain from the increase in the usage of VAS but there are many security concerns that threaten this fastest growing telecom segments. There is still less awareness and commitment on the part of service providers to come up with concrete steps to tackle these concerns. This can be attributed to the fact that it is still an upcoming segment of the telecom industry.

Mobile virus is a security threat that most mobile users, operators, and handset producers are not aware of. This could be because the problem has been limited in scale so far. Mobile viruses can be disastrous for both network operators as well as end users. The first such mobile virus attack was recorded way back in 2005.

The probability of an attack has increased manifolds as users now increasing store sensitive information on their mobile devices. With mobile transactions gaining popularity in India, attacks such as phishing, pharming, and Trojan have also increased. Attack on data networks has also been witnessed over the past few years. 3G services will only make the scenario worst by opening up a wide range of opportunities for all those who will be the part of telecom network. Customers will have access to services such as data search, GPRS based services, including m-newspaper, mobile locater, picture downloads, Java enabled content and games, m-commerce etc. Along with the increased penetration of m-commerce it will also make it possible for unsocial elements to perform malicious activities in numerous ways. They may try and extort money from mobile operators by rendering the network unusable or acquire subscriber information with the aim to lay hands on their billing and credit card information. Today, subscribers are also confronted with the danger of someone taking control of their device using Bluetooth, which will give complete access to all their information.

It is important for all in the telecom system to wake up to these threats that are looming large over the horizon and take appropriate steps well in time. This will call for proper architecture and cooperation from the security ecosystem. It should be the priority for every enterprise to develop a core strategy to tackle this challenge while retaining the customer's trust.

How do Indians Respond to Mobile Marketing Campaigns?

Mobile marketing, as defined by Mobile Marketing Association, is a set of practices that enables organizations to communicate and engage with their audience in an interactive and relevant manner through any mobile device or network. In early 2000s, marketing on a mobile phone through SMS gained momentum and during the years that followed MMS and marketing through games, popularly known as mobile advergaming or Ad-funded mobile game, also joined the bandwagon. This popular mean of advertising stood ground even during the recession and in some cases even gave better profits.

Despite mobile marketing being an efficient and effective marketing tool, what is of more consequence is how customers respond to mobile marketing campaigns in India. There is good news on this front! Recent studies have shown a positive scenario by observing an impressive response rate for text message marketing in India. It has been observed that one in every three urban Indians has responded to such marketing campaigns. This is either done by forwarding the messages to friends or by calling the sender for more details.

Companies can continue to invest or even raise the budget allotted for mobile marketing as this medium not only has the potential to reach a wider client base at cost effective rates, but is also capable of generating the expected response from them. Indian customers have shown a liking for SMS-based value added services. Among the popular services that customers opt for are business/finance news, stock market tips, astrological advice, spiritual quotes, news alerts, job alerts, and sports updates.

A good number of urban Indians who have received promotional offers via SMS used the information given by the message to make a purchase. This shows customers have faith in these SMS services. It is surely an encouraging sign! It has also been observed that urban Indians enjoy participating in SMS-based contests too. All these facts go on to show that with a strong 300 million mobile subscriber base and almost over 100 million new additions every year in India, mobile advertising is here to stay.

There are various reasons for this promising trend among Indian mobile subscribers. For one, customers in India have the advantage of cheap data plans offered to them by mobile operators. This makes the customers more receptive to promotional offers via SMS. The rise in the number of mobile users is due to the fact that mobile operators are also becoming active in the rural areas of the country. This has boosted the number of mobile users in India and is increasingly going to add to the numbers for sure. A rise in the middle class section, who boost of better purchasing power, is another important factor. This is a result of the growing Indian economy, which has generated a section that has greater disposable income with them.

Many success stories with mobile marketing in India go on to show the scope of this medium of advertisement. Private banks, for instance, have changed the way we perceived banking. Their mobile banking services have made banking an anytime and anyplace thing. With targeted mobile marketing and responsive Indian customers, mobile marketing companies have a bright and enviable future in store.