How will IT Trends affect CSPs and consumers in 2014?

It seems like it is that time of year again… the annual rehash of the year that was and the jostling for pre-eminence in predictions for the year which approaches.

So let us heave ourselves onto that creaking bandwagon and take a look at which IT trends are likely to affect our marketplace over the next twelve months…

Trend #1: Continued growth of social and mobile

It seems almost too obvious to mention… up to now, it has driven the sector growth both in terms of cloud-based Apps and platforms, such as Facebook, and cloud-based service providers (since smaller SaaS providers and new entrants have looked to IaaS to enable initial growth without the need for big capital expenditure).

Threats: Most analysts report a huge surge in the number of businesses and marketers investing or planning to invest in mobile and social as a way of driving consumer engagement with their brand. It is possible, however, that instead of focusing on better-leveraging established cloud-based platforms and utilising emerging cloud-based bespoke App development and hosting services, this investment will be diverted to developing and hosting bespoke Apps in-house.

Opportunities: While business in some quarters has been slow to react, consumers have been busy embracing the cloud. This change has been powered by both software and hardware-driven changes. It is expected that this year, Smartphone and Tablet use will overtake that of the traditional desktop. Consumers are now using multiple devices, and no single device is the primary hub – instead, their primary hub is the personal cloud. In addition, the increasingly complex demands of mobile users will require a commensurate growth of server-side computing and storage capacity.

Trend #2: Increasing scope of the “Internet of Things”

Again, a driver for increasing amounts of server-side computing and storage capacity. For me, the opportunities are exemplified by the high-tech vending machines SAP Hana demoed earlier this year. These machines use a Smartphone to transmit transaction data to the cloud for analytics, including inventory management. If the customer has the associated App installed on his or her Smartphone, then a profile will be built up over time based on purchase history, feedback and promotional take-up.

…high-tech vending machines […] use a Smartphone to transmit transaction data to the cloud for analytics, including inventory management.

Threats: In this instance, SAP Hana is offering a full service solution so, while it leverages ‘Cloud’ technologies, this particular example serves more to illustrate how traditional software/ hardware/ service vendors are moving to take advantage of the new business model. While this might be great for consumers, it means an increasingly competitive marketplace for existing CSPs.

Opportunities: For me, this example highlights the new opportunities that exist for organisations who are able to think creatively about the kind of solutions consumers want or could benefit from. For those willing to re-imagine traditional solutions, opportunity abounds.

Trend #3: Big Data

Big Data has been a topic for many years now, but expanding consumer engagement initiatives and the internet of things will only add to the pressure on organisations of all kinds.

Threats: Compliance is a key driver to keep data onsite. Plus, the shrinking rack space/ performance ratio alleviates some of the pressure from organisations. It could also be argued that the big data issue is primarily an opportunity for providers of analysis solutions.

It could also be argued that the big data issue is primarily an opportunity for providers of analysis solutions…

Opportunities: The ever-increasing demands for the storage, backup, and archiving of data and the additional processing power required for analytics exerts a continued pressure on organisations. In testing economic conditions, where the tendency is to kick big Cap Ex spending into the long grass, Iaas and AaaS look like an attractive way to meet short-term demands.

Trend #4: Increasing awareness of Software Defined Networks

Software Defined Networking has been touted as the last step in the virtualisation process – enabling data centres to be truly abstracted from the physical.

Threats: The main threat here is one of skills shortage. For CSPs providing IaaS solutions, if SDN does live up to its promise of helping organisations to effect better management of their existing infrastructure, it may also pose problems, as it stalls organisations’ moves towards supplementary external capacity.

SDN should also facilitate improved granularity of data flow metrics, which brings the potential for improved monitoring and security, possibly making cloud solutions more attractive to some.

Opportunities: As infrastructure becomes dynamically configurable, flexible provision offered by cloud-based XaaS becomes more desirable. SDN should also facilitate improved granularity of data flow metrics, which brings the potential for improved monitoring and security, possibly making cloud solutions more attractive to some. It has led some analysts to suggest that enterprises should be designing private cloud services with a hybrid future in mind. This strategy will be viewed more positively as standards for infrastructure program-ability and data centre interoperability more fully emerge.

Trend #5: The big freeze?

In 2013, Facebook opened its first data centre outside the USA, in Lulea, Northern Sweden, making a lot of noise about its green credentials as it did so. As well as running on renewable energy from local hydro-electric schemes, the data centre’s sub-arctic location has meant it can operate with approximately 70% less mechanical cooling capacity than the average data centre. With Iceland now also promoting itself as a cooler, greener data centre location are we set to see a migration of provision to colder climes?

Threats: What may be good news for the environment may be bad news for less competitive data centres located in warmer climates and dealing with higher energy costs. Additional market disruption may also evolve from Facebook’s decision to share data centre efficiency knowledge through the Open Compute programme paving the way for low-cost imitators in economies like China and India to replicate these operating efficiencies, with green energy potentially coming from solar and wind sources; greater competition from lower operating costs will force all players to take increasingly efficiency-driven energy management initiatives.

What may be good news for the environment may be bad news for less competitive data centres located in warmer climates and dealing with higher energy costs.

Opportunities: The lack of warm days isn’t the only consideration when building data centre cooling systems; air moisture levels can also impact energy consumption dramatically, so there is something positive for UK sites! If increasing energy efficiency, reduced operational costs, and open standards for data centre operation and interoperability are the result then we can only all benefit in the long run.

Trend #6: Consolidation in the market place?

Back in July, the BVP Cloud Computing Index announced that the top 30 Cloud Technology companies in the US had a market capitalisation value of more than $100 Billion – claiming the figure demonstrated Cloud had ‘come of age’.

Threats: This spend on Cloud is still just a small drop in the IT ocean. Gartner figures suggest the global annual $30 Billion spend on SaaS, PaaS and IaaS is just 2% of an overall global annual IT spend of $1,370 Billion. AWS may now dominate IaaS and arguably PaaS provision, but Microsoft, Google, IBM, VMware and others are now vying for market share. It is yet to be seen whether this competition will lead to an expansion of the overall market or a redistribution of market share.

Data from the Synergy Research Group suggests the Cloud computing market grew by 47% year on year…

Opportunities: The BVP Index is still heavily dominated by SaaS and doesn’t take account of privately-owned Cloud businesses. Data from the Synergy Research Group suggests the Cloud computing market grew by 47% year on year (up to Q2 2013).

What factors are going to be decisive in 2014 for your business? How do you see the market developing? What predictions do you make for the next 12 months?

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