25 Percent of U.S. and U.K.Legal Firms Use Cloud Computing

Of those using cloud computing, 31 percent of U.S. respondents and 50 percent of U.K. respondents had to preserve or collect data from the cloud in connection with actual or threatened litigation. Meanwhile, more than a quarter of respondents who use cloud computing report they have encountered security breaches.

Market Intel (News – Alert) Group forecasts that the U.S. cloud computing market will grow at a 15.3 percent compound annual growth rate over the 2010 to 2016 period. But note that public cloud computing, which is what most people are thinking of when they hear the phrase "cloud computing," is estimated to reach only about $10 billion or so by 2016.

"Private cloud computing," which many would say is simply a re-branding of today’s data center business, will reach $43.5 billion by 2016. That latter figure includes "premises" data center services, apparently. Cloud computing forecast

What also is not clear is what revenue categories get included in "cloud computing." Some analysts seem to include retail revenues of products enabled by data centers, while others seem to count only revenues earned by cloud services infrastructure providers.

The Yankee Group (News – Alert) global forecast for cloud computing revenue includes some key definitions that illustrate the issue, for example.

Yankee Group defines mid-size to large enterprises as 250 or more employees. The forecast also includes SMBs, which the firm defines as organizations with 2 to 249 employees. The forecast excludes consumer cloud services but does allow that small businesses will often adopt consumer cloud services for business use. Yankee Group excludes sole proprietors from infrastructure as a service and platform as a service because analysts do not believe the typical small business has a need for those services.

The forecast likely understates demand in the small business segment to the extent that many small software firms will have high incentives to buy platform and infrastructure services "as a service."

To forecast revenue, the analysts start with the concept of average revenue per employee per month. Yankee Group calculates ARPE for SaaS (News – Alert), IaaS and PaaS as $4, $2 and $1, respectively.

For example, a typical enterprise will spend $4 per employee per month on SaaS. This is equivalent to $48 per year per employee, or what a small business or sole proprietor might pay for an online backup service such as Mozy or Carbonite and simple collaboration software like Evernote (News – Alert) or Dropbox.  Yankee Group cloud computing forecast

The point is that cloud computing sometimes, perhaps often, includes both the value of the cloud services infrastructure services (data center services) as well as the retail value of software as a service sold to end users using such infrastructure. There is some logic to that, but it vastly obscures and overstates the revenue available to cloud computing infrastructure providers.

Perhaps the safest way to figure out what a realistic forecast is would be to assume that cloud computing essentially displaces some other existing form of spending. You can make your own assumptions about the percentage of such spending that cloud infrastructure will displace in any country, over any period of time.

For cloud infrastructure providers (the "data centers" providing the cloud-based computing cycles and storage) that means starting with current enterprise spending on "owned" facilities, software and hardware and then assuming a shift to public cloud alternatives.

"Private cloud" might, or might not, have much impact on third-party cloud infrastructure providers.

 U.S. Cloud Computing Forecast