Cloud Computing: Software Services Instead of Servers

Grazed from Midsize Insider.  Author: Jason Hannula.

As cloud computing has been making its way up the IT food chain from infrastructure-as-a-service through platform to software services, it has been disrupting standard practices in IT shops. Just as infrastructure decisions are no longer focused entirely on the internal physical server life cycle, provisioning of enterprise software options is competing with external software service vendors. Patrick Thibodeau reported on ComputerWorld that 25 to 30 percent of server shipments in 2014 are destined for cloud services providers, with projections that that figure will rise to 45 percent by 2017. Meanwhile, IT managers report that they are actively reducing the number of in-house servers they manage or, at a minimum, are reducing their rate of acquisition.

Two trends are responsible for these changes: The continual consolidation of server infrastructure and the virtualization of software services. These trends are expected to negatively affect revenue for physical server vendors by 3.5 percent next year. With advancing big data initiatives and increasing macroeconomic activity, it is unlikely that reductions in server vendor revenue is the result of a drop in total computing requirements. Instead, the increased efficiencies in utilization of existing server infrastructure is slowing the need to acquire new servers…

Cloud Efficiency

Leveraging the economy of scale from a focused business model, cloud service providers gain a lead in the commodification of infrastructure, platform and software services. It makes little economic sense for internal IT groups to compete with external providers when the service is outside of their core business value chain…

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