Will Cloud Computing disrupt the traditional hosting industry?

Cloud Computing rushes towards the goals of high growth it. The term is being absorbed even more based on the economic pressure, and as we all see the great business opportunities beneath Cloud Computing, I believe it is time to look at the “leftovers in the industry”. Based on my view, I could try to answer the question

Will Cloud Computing disrupt the traditional hosting industry?

Let’s make a quick SWOT analytic of Cloud Computing:

 Strength

  • Low up-front capital investment
  • Easy economy model
  • Low cost
  • Quick deployment
Weakness 

  • No clear usage calculation
  • Unclear profile/ terminology
  • Monitoring & maintenance
  • Outsourcing vs. Consume
  • Interoperability
 Opportunity

  • Metered cost
  • Pay-as-you-grow
  • New business model
  • New generation hosting
Threat 

  • Security and governmental/
    public audit requirements
  • Vendor dependency
  • Immature model
  • Privacy

Looking at the traditional it hosting industry, often the customer will hand over the components, maybe staff and knowledge as part of the outsourcing deal. This makes economy of scale and economy of skill drive the IT hosting industry, as costs and outcome simply are predictable and also know between the partners – the customer and the outsourcing partner. With Cloud Computing the customer will have to trust the vendor and it’s “platform, knowledge and skill. Not only will the customer need to use a “one-solution-to-fit-all” rather than “our-requirement-will-be-the-deal”.

But doing interviews with customers and buyers of IT outsourcing deals, and looking at the buyers that are considering Cloud Computing – I strongly believe that customers and vendors will bridge that gap. Through many years, I cost-models and return of investment have been calculated over 3 or 5 year, based on write-off profiles and accounting standards. Today, Cloud Computing offer an instant-ROI and test-implement model, where the years (probably weeks or months) often used on cost model, now totally rely on the implementation and organizational implementation, many mid- and enterprise market companies struggle to reach.

Consumption and IT is simple more flexible and “fast” in Cloud Computing in contrast to traditional it hosting. The cost model is more attractive, and based on these facts; I do believe the Cloud Computing will the next generation and standard of it hosting/outsourcing within the next 2-5 year. Consolidation in the hosting industry will make 25-50 global international traditional outsources, who runs the major components of traditional it hosting. Vendors and service providers will build their adoptive and structured platform above them, offering true compelling and attractive business propositions, which simply disrupt the old it model.

And based on that vision, it would be beneficial to look at the economy stream of the vendor it market, to determine those 25-50 global vendors, but that is to another article 😉