Huge Market for Enterprise Public Cloud Services Available to Network Service Providers

New Cisco study details $44 billion opportunity for service providers as enterprises move workloads to the public cloud.

December 27, 2010

D.H. Kass

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Service providers have at their fingertips a new $44 billion sales opportunity available from selling and supporting public-cloud services to business customers, according to a recent study conducted by Cisco System Inc.’s Internet Business Solutions Group (IBSG).

The Cisco study, focused on the enterprise’s use of external, on-demand infrastructure and applications, consisted of interviews with some 100 IT decision makers and subject matter experts from 43 businesses and public sector organizations in the U.S., Europe and India. The vendor produced a white paper on the study’s results entitled Network Service Providers as Cloud Providers: Survey Shows Cloud Provision Is a Bright Option.

According to survey findings, by the end of 2013 about 12 percent of enterprise workloads will run in the public cloud, including desktop applications, email, collaboration and enterprise resources planning.

Service providers are well positioned to deliver features enterprises value such as on-demand provisioning of IT and network resources and end-to-end service level agreements, said Scott Puopolo, Cisco IBSG vice president, service provider.

"Service providers are at an inflection point, said Scott Puopolo, “Enterprises are making decisions about cloud migration on an application basis,” he said. “This means that service providers should develop and market cloud propositions relevant for specific applications.”

Enterprises in manufacturing, financial services, retail, health care and public sector organizations are poised to migrate applications to cloud-computing services, according to the study’s findings.

The data showed that readiness to migrate to the cloud is not simply a matter of confidence--some 80 percent of the enterprises surveyed are prepping for the move by merging their IT and networking departments into a single organization.

Most enterprise IT decision makers likely will phase in a move to cloud-computing services, beginning with non-critical applications, although many believe that no application should automatically be excluded from consideration, according to the study’s participants.

Application targets include IaaS and Saas

Infrastructure-as-a-Service application candidates to move to the cloud include development and testing, disaster recovery, simulations, data warehousing, according to the respondents. Software-as-a-service targets include customer relationship management (CRM), email, unified communications, web applications and desktop environments, the participants said.

"Software-as-a-service is an ideal application for cloud computing, said Mark Yablonski, Valogix LLC chief technology officer. “We have found running those applications in the cloud to be extremely beneficial, especially for providing agility in a global marketplace,” he said.

Valogix, based in Saratoga Springs, NY, is a provider of web-based inventory management solutions. In October, the company participated in a Cisco-sponsored panel discussion on Cloud Applications and Service Providers.

Ultimately, decisions to migrate applications to the cloud will revolve around key issues such as security, data center capacity and access to skilled IT personnel, according to the study’s participants. Many of the participants said that they will deploy both public and private cloud environments to manage their IT resources.

"The study conducted by Cisco Internet Business Solutions Group confirms that enterprises are weighing their options as they look to find the right cloud for their applications,” said Brian Klingbeil, Savvis Inc. general manager.

Savvis, a St. Louis, MO-based cloud infrastructure provider, last July released the results of a study of 658 C-level executives and other IT decision makers for large and mid-sized businesses based in the U.S., U.K. and Singapore, in which the respondents said that cloud computing will help the recovery from the global economic downturn.

TAGS: cloud computing,networking,Cisco,Enterprise,service provider

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