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Sunday, April 5, 2015

Cloud Based Analytics - Coming Clash of the Titans



From all indications, 2015 is well on its way to becoming the year of cloud computing. The feverish pitch of activities at key players on one hand and the data as well as observations of industry pundits affirm this. There are apparently a handful of reasons to keep the IT industry leaders awake at night.  

For starters, per NASDAQ, 2014 revenues for cloud services grew by 60 percent.  The global cloud computing market, per Forrester, is expected to grow to over $191 billion by 2020. IDC also foresees a robust market for cloud computing services.

The cloud computing stacks - Infrastructure as a service (Iaas), Platform as a service (Paas) and Software as a service (Saas) – are all driving the healthy cloud computing market growth. But Saas appears to be the winner with the highest projected growth in the medium term, with Goldman Sachs forecasting global SaaS software revenues to reach $106 billion by 2016.

Analysts believe the cloud analytics market will grow at a CAGR of 26.29% percent over the period 2014-2019. Cloud based analytics is at the center of this growth. This is obvious. As the layer that harvests insights, the analytics layer will always be preeminent and reside on top of the information value chain. It will continue to reap the benefit from the immense innovations in the underlying technology and data layers. It has also immensely powered this robust growth forecasts.

Cloud computing offers innovations – a new way of doing things for companies; it offers tremendous operational flexibility and the opportunity to cut down expenses. Further it provides users the ability to use software from any device, either via a native app or a browser. Hence, users will be able to carry over their files and settings to other devices in a completely seamless manner, which is a big bonus. Companies no longer need to maintain huge teams to manage their technology assets and their upkeep.   It can now be outsourced to the cloud and/or vendors.  The companies can now focus on what they do best – run their business with renewed focus.

It is no surprise that the market leaders – Amazon, Microsoft, Google, IBM, Salesforce, Oracle and other majors - are stepping on the gas. Amazon is the market leader with the biggest share of the market. Analysts have valued its web services business alone at $40-$50 billion.  IBM has announced that it will invest $4 billion on its cloud services, data analytics and mobile businesses to reach targeted revenue of $40 billion by 2018. It would not be a hyperbole to state that the outcome of this dogfight to win customers will decide the future contours of IT business.

How will this impact the Analytics business?  How will the banking and financial services sector be impacted? How about other industry verticals? Admittedly it is tough to predict the future; however, if past performance is any guide for the future, the impact would indeed be big. That is not to say the cloud analytics adoption and hence revenue accrual would be easy.

It is well known that banks and financial services institutions have taken a cautionary approach to cloud.They have been slow and deliberate in adopting the technology - for good reason. The main concerns have been around data security and discomfort in sharing private and often sensitive and confidential financial data. The periodic high profile hacking of customer data, including those on cloud, have not help boost confidence. However, innovations such as hybrid cloud and new data security tools are changing mindsets.  Banks and financial institutions are projected to adopt cloud and more specifically cloud based analytics in a big way.  Other industry verticals – particularly life sciences, heath care and insurance are already showing strong signs of resurgence in 2015.

Many IT industry analysts, particularly the analytics and insights industry watchers will be surprised at this optimism and robust projections. It is true that 2014 was not been a great revenue year for analytics for IT Majors. Many have already restructured or initiating this exercise. However, as pointed out in an earlier essay, it is more to do with leadership than business opportunity. It may not be surprising to find that these majors may not even have a spot in the boxing ring in 2015 for cloud based services; they have to be content to watch as bystanders as their future is being fought and snatched away right in front of them.

The coming clash of the titans in cloud computing will hog the spotlight for most of 2015 and beyond. The clash will have profound impact on the industry and the outcomes will seek to reshape it. This will be keenly watched by the pundits and all. Stay tuned folks.

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