INDUSTRY’S LARGEST CLOUD SURVEY REVEALS CLOUD MOMENTUM DRIVING ENTERPRISE TO ‘RE-ORCHESTRATE’ STRATEGY

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Cloud environments will remain predominantly hybrid in the coming years, enhancing the importance of a clearly defined cloud governance and orchestration strategy to optimize for security, self-service and agility, while minimizing costs,” said Holly Maloney McConnell, Principal at North Bridge

North Bridge, a growth equity and venture capital firm, in partnership with research analyst firm Wikibon, announced the results of its sixth annual Future of Cloud Computing Survey, which analyzes trends in cloud computing, adoption, use and challenges on a yearly basis. The study provides the broadest and deepest exploration of cloud in the industry with 53 leading cloud companies participating as collaborators. This year’s survey received 1,351 responses, a record-breaking number, representing a 60/40 balance of user/vendor perspectives spanning senior executives to practitioners across all industry sectors such as Technology, F.I.R.E., Government, Healthcare, Manufacturing, Media, Professional Services and Transportation.

According to Wikibon’s July 2016 report based on market conditions and recent public cloud revenue results of Amazon, Microsoft, Oracle, SAP, and IBM; public cloud spending is expected to accelerate rapidly, growing from $75B in 2015 to $522B by 2026 at a compound annual growth rate of 19%. Within each public cloud segment continued rapid growth rates are also expected during this period: SaaS (19% CAGR), PaaS (33% CAGR), and IaaS (18% CAGR). Wikibon estimates that by 2026, cloud will account for nearly 50% of spending related to enterprise hardware, software, and outsourcing services.

Cloud Strategy
Based on our survey, while slightly less than 50% of all companies either have a cloud first or cloud only strategy; some form of cloud strategy is pervasive among all with 90% of companies surveyed reporting that they use it in some way.

A new finding this year is the fact that a surprisingly high number, 42%, of companies surveyed derive 50% or more of their business through cloud-based applications. In fact, a whopping 79.9% of the companies surveyed were getting some revenue from the cloud. This speaks to the digital transformation occurring across many industries and how many are looking to not only move more quickly with the cloud but profit from it as well.

Meanwhile, in terms of a cloud architecture the survey found that a hybrid model is still the predominant strategy at 47% followed by Public 30% and Private 23%. These figures have remained roughly constant from last year and are expected to remain roughly the same as hybrid blends the best of scalability (public cloud) with a way to keep costs under control (private cloud).

“Cloud environments will remain predominantly hybrid in the coming years, enhancing the importance of a clearly defined cloud governance and orchestration strategy to optimize for security, self-service and agility, while minimizing costs,” said Holly Maloney McConnell, Principal at North Bridge. "The continued growth in the cloud-first enterprise is forcing traditional IT vendors like Oracle to accelerate pace of acquisition to fortify their cloud platform strategies.”

When asked about specific cloud technologies, 7 in 10 companies indicated they are using software-as-a-service (SaaS) in some way. While, SaaS is the most popular cloud technology in use by companies, infrastructure-as-a-service (IaaS) isn’t far behind with 58% of respondents deploying IaaS for compute and 53% for storage. Both areas are expected to increase a modest 5% over the next two years. Platform-as-a-service (PaaS), for its part, is being deployed by 45%, but is expected to show the highest increase over the next two years growing by 19%.

Where Data Lives
28% of companies surveyed mentioned they store 50% or more of their data in a public cloud versus 59% of companies surveyed store 50% or more of their data in a private cloud. These numbers are expected to converge over the next two years, with public cloud data storage expected to increase 18% and private cloud data storage expected to decrease 16%. This reflects specific benefits the public cloud offers in storage, dev/test environments, security and the ability to more easily integrate with analytics. Still, challenges persist with data in the cloud as vendor lock-in and portability are growing areas of difficulty when changing cloud providers for applications and/or infrastructure.

"This year's survey showed a strong move towards a more strategic and nuanced view of hybrid cloud. Broad SaaS adoption, deep analytics, and emerging areas such as IoT and AI highlight that the value of data is a large consideration when building a cloud strategy. As the cloud ecosystem matures, users are turning to a broad spectrum of technology and integration companies to help unlock the potential of cloud," said Stuart Miniman, Sr. Analyst at Wikibon.

Cloud Usage In Business & IT
In 2015 IT came to the party in terms of moving IT operations to the cloud. In 2016 the numbers continue to bear that out with disaster recovery, IT services (helpdesk, virtual desktop), web content management and communications all running in the cloud at over 70%.

On the business side – not much has changed year-over-year with similar percentages: 75% of sales/marketing, business analytics, customer service all either in the cloud or moving there.

Cloud Drivers & Inhibitors
Among all survey respondents, the top inhibitors to cloud adoption changed quite a bit with surges in concern over lock-in, bandwidth and pricing. The top concerns were security (38.6%), lock-in (30.0%), privacy (28.7%), complexity (24.4%) and regulatory/compliance (24.3%). Even though it is still the top inhibitor, concerns regarding security have fallen off significantly since 2015 (45.2% 2015) and regulatory complexity fell off as well (36.0% 2015).

On the drivers of cloud adoption, the 2016 results are consistent with those from 2015: scalability (51%), business agility (46%) and cost (43%). One surprising finding was that mobile and open source are now twice as likely as last year to be cited as a driver for cloud computing.

New Directions For The Cloud
This year’s study revealed nearly half of respondents indicated they are using or will use (within the next 24 mos.) an industry cloud offering. Further, there are numerous emerging areas of cloud investment such as: 58% saying that analytics is a new top priority, 52% saying containers and not far behind, 48% investing in IoT. One area that was not as high as expected on the list of emerging priorities was virtual reality with only 16% saying they would make it a priority.

Among users taking the survey, expectations in terms of immediate ROI continue to rise across both SaaS and PaaS/IaaS deployments. In another development, users indicated that while direct is still the most common sales channel, as offerings have become more specialized and as the cloud drives deeper into industries across the board, there is a growing opportunity for VARs and resellers to lend expertise as evidenced by the fact that indirect sales channels are up 3X versus last year.

"As security continues to improve, cloud environments are extending deeper into verticals and applications, allowing categories like content management and communications to take advantage of both public and private cloud for the digital transformation of industries,” continued Maloney McConnell. “The channel will play an important role in bringing these specialized and industry cloud services to market."

Lastly, in one of the bigger jumps in the survey this year, 51% of all survey respondents have begun DevOps in small teams -- up 37.8% versus last year. Going a step further – 30% of companies indicated they have begun DevOps in large teams or company-wide, up 2X versus last year. These increases speak to the compelling need for rapid product cycles in today’s competitive world and the strategic role that IT can now play in business.

Don’t miss the live panel discussion of this year’s Future of Cloud Computing Survey results. You can watch today’s 1:00 pm ET webcast here:  http://siliconangle.tv/2016-north-bridge-future-of-cloud-computing-survey/

During the webcast, the following cloud industry experts will deliver real-world insights:
• Holly Maloney McConnell, Principal at North Bridge (@North_Bridge)
• Stuart Miniman, Sr. Analyst, Wikibon (@stu)
• Paul Gillin, Enterprise Editor, SiliconANGLE (@pgillin)

To engage in this topic follow @futureofcloud and participate in the #FutureofCloud conversations on Twitter. To access all surveys published since 2011please visit www.northbridge.com/cloud-computing or SlideShare http://bit.ly/FOCC2016.

About North Bridge
North Bridge Growth Equity and North Bridge Venture Partners are active partners with entrepreneurs providing seed-to-growth financing for innovative companies looking to disrupt big markets. With $3.5 billion in capital currently under management, North Bridge partners, many founders themselves, work with entrepreneurs to apply their expertise in the creation, operation and scaling of market-leaders. The firm has funded more than 170 companies creating many billions in market value. Among those firms are Acquia, Actifio, Couchbase, Demandware, Dyn, Ingenious Med, Mavenir Systems, OutSystems, Paydiant, Proto Labs, Reval Starent Networks and WP Engine. The firm is based in Waltham, MA. To learn more about North Bridge go to http://www.northbridge.com. Follow us at @North_Bridge.

About Wikibon
Wikibon is a community of business technology practitioners founded to deliver the most actionable and real-time information available in the marketplace. The Wikibon analyst team comprises expertise cutting across all facets of business technology, with a cross-functional focus on cloud, big data/analytics and infrastructure. Wikibon research methodologies heavily leverage traditional approaches and advanced social media and data analysis techniques. To learn more about Wikibon, go to http://wikibon.com. Follow us @Wikibon.

2016 Future of Cloud Computing Survey Collaborators (* indicates Platinum Level)
1. Acquia*
2. Actifio
3. Apperian
4. AppFormix
5. Aquto
6. Attunity
7. Cazena
8. Clarity Software Solutions
9. Cloudability
10. Cloud Elements
11. CloudHealth Technologies*
12. CloudOps
13. Confer
14. Coolan
15. Couchbase
16. Disqus
17. Dyn
18. eGenera
19. EnterpriseDB
20. erecruit
21. Exoscale*
22. Harmon.ie
23. Hornetsecurity
24. Ingenious Med
25. Iron.io
26. Jive Communications
27. Layer3 TV
28. Linux Foundation*
29. MarkForged
30. Microsoft*
31. Nasuni
32. Newforma
33. Onshape
34. Open Exchange
35. OutSystems
36. Plexxi
37. PolarSeven*
38. Quora
39. Red Hat*
40. Reval
41. RIFT.io
42. Rightscale
43. Salsify
44. Scribe
45. Sharethrough
46. Signiant
47. SpringCM
48. Tapjoy
49. Think Strategies
50. Unidesk
51. Unitrends
52. Wikibon*
53. WP Engine*

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