Who are the cloud services buyers?

Already there are some stereotyping on who is buying, i.e. actually paying for, cloud IT services:

• Developers and upstarts buy Platform as a Service type of cloud services, i.e. development environments that can be tailored to meet developers needs or configurable platforms that upstarts can tailor to their needs
• CTOs and IT departments buy cloud infrastructure, Infrastructure as a Service, type of cloud IT services, i.e. compute, storage or networking as a service
• Everyone buys cloud app services and Software as a Service, but usually it's line of business units that buys a specific SaaS-service for their task or project deliverable at hand (and CTO or IT departement are out of the loop)

This is already seeing some change, for instance enterprise IT are increasingly looking at and buying PaaS kind of cloud IT services to cover business needs that can be met using "one size for all" SaaS applications and basic cloud IT infrastructure setups.  And for instance HR or finance departments that wanted that one, great, must-have SaaS application for their line of business, finds out that there are integration issues or data exchange issues once they have 2 or more SaaS apps up and running from 2 or more cloud providers.  Can the IT departement please help sort out this mess?

Bain and Company had a great break-down of cloud buyers in a 2011 report (The five faces of the cloud, by  Michael Heric, Ron Kermisch and Steve Bertrand), listing 5 CIO buyer categories according to cloud "adoption speed and willingness":

• Transformational: These early adopters already use cloud computing heavily to transform business IT and delivery to their business, with on average more than 40 percent of their IT environments relying on one or more cloud models.
• Heterogeneous: These companies are looking to evolve IT service delivery and capabilities and typically have an diverse mix of legacy systems and newer technologies like virtualization and cloud computing. Assumed to make up more than 40% of the buyers in 2013.
• Safety-conscious: Balancing security with growth, these buyers and companies are particularly concerned with the security and reliability of their IT environments. They understand the value that cloud computing offers, but are willing to compromise to ensure that their IT and business environment is safe and secure. Private cloud and hybrid public-private cloud models have the most appeal. Along with the transformational type of companies they are the biggest cloud IT spenders by 2013.
• Price-conscious: Have their TCO for IT services in place years ago, these bottom-line focused companies purchase cloud technologies and services primarily for cost savings and to deliver basic business functionality.
• Slow and Steady: This is by far the largest group of companies and IT buyers (some 44% of companies in 2011) and do not yet appear ready to adopt cloud computing in a progressive way, although they express interest in exploring offerings if a provider can slowly and steadily guide them.

The key thing in the report is the observation that "... early adopters generate ~50% of cloud spending today (i.e. in 2011), but ~90% of growth through 2013 will come from other companies".

Assuming, for many reasons, that Europe and the Nordics lags some 2-3 years behind the US in cloud adoption and uptake, a lot of the stories and hybris we are seeing in the Nordics for cloud take-up and usage today are coming from these transformational and heterogenous early adopters, but the real big money are on hold until the larger companies and enterprise IT starts adopting cloud IT in a forceful way. Which should be 2014 - 2016 in the Nordics approximately.  

A finishing note on the role of the CTO and IT departments, that in many cases are being bypassed by the CFO, CIO or CMO or developers buying cloud services directly themselves - what are they left with?  In many cases being very or too much focused on their on-prem IT platforms and services, they will be forced to take on on-prem and cloud based IT service delivery as well, evolving into an IT broker of physical or virtual application services for their organisation once the CFO or CMO realize that handling 2 or more cloud services and applications aren't that straightforward anyways when it comes to user support, login hazzles, performance variations, billing and security across different cloud providers.

Erik Jensen, 20.11.2013