Beware the low-cost cloud
By 2015, low-cost cloud services will cannibalize up to 15% of top outsourcing players’ revenue, according to research group Gartner.
“Industrialised low-cost IT services (ILCS) is an emerging market force that will alter the common perceptions of pricing and value of IT services. In the next three to five years, this new model will reset the value proposition of IT,” it says.
Steve Prentice, Group VP at Gartner, notes that with such cloud services, “what you do get is a very good price, without extra service and support – it’s merely basic services. Make certain you know that you are buying what you think you are buying.”
The projected $1 trillion IT services market is at the beginning of a phase of further disruption, Gartner says, similar, according to Prentice, to the one the low-cost airlines have brought in the transportation industry.
The Gartner lead cautioned against long-term contracts. “Avoid long-term contracts, in order to extend your flexibility. Use industrial services where you just want the basics,” he said.
Prentice pointed to “a paradox” within the current rate of cloud adoption. He says that while there is a great interest in migrating to the cloud, that enthusiasm hasn’t quite matched the actual activity in this space just yet.
According to Gartner, by year-end 2016, more than 50% of Global 1000 companies will have stored sensitive customer data in the public cloud. Prentice cited the current Megaupload debacle by way of caution.
Gartner has called on governing bodies to collaborate on cloud standards, and advised that companies start public cloud projects with less sensitive data; balance risks against agility; and investigate jurisdiction issues, Prentice said.
Additional predictions in this space by Gartner include:
- By 2016, 40% of enterprises will make proof of independent security testing a precondition for using any type of cloud service.
- By 2015, the prices for 80% of cloud services will include a global energy surcharge.
- Through 2016, the financial impact of cybercrime will grow 10% per year, due to the continuing discovery of new vulnerabilities.
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