Removing the limits on cloud-based IaaS

Removing the limits on cloud-based IaaS

12 December 2019 | Maria Sirbu

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Maria Sirbu

Blog Author | VP of business development, Voxility

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There is a misconception in the Infrastructure-as-a-Service (IaaS) market that it is simply a battle between giants.

Amazon Web Services, Google Cloud, Microsoft Azure and many other cloud service providers (CSPs) have shown rapid growth, but as their services have gone mainstream, they have also revealed their limitations.

The worldwide public cloud services market is forecast to grow 17% in 2020 to total $266.4 billion, up from $227.8 billion in 2019, according to Gartner. The second-largest market segment after Software-as-a-Service (SaaS) is IaaS, which will reach $50 billion in 2020. IaaS is expected to grow 24% year over year, which is the highest growth rate across all segments. 

It is an absolutely massive market that has been dominated by some of the largest businesses on the planet, but that doesn’t mean it doesn’t require change. Trends across the carrier and enterprise markets show that there is growing demand for new models and alternatives to global tech giants.

The 2019 Edelman Trust Barometer notes that there are “significant cracks in the foundation when it comes to trust in tech.” The loss of trust in Silicon Valley is widely recognised, but in the cloud-based IaaS market there’s a feeling that there’s no other way forward. That isn’t true. Carriers and enterprises want greater control over their infrastructure and are under growing pressure to show who is managing their data, as well as where and how it is being hosted.

When data is hosted with a public cloud provider, carriers and enterprises lose control over it and have to simply trust their providers. They sacrifice their control for an easy OPEX-based model. A report by IHS Markit and Fortinet even noted that 74% of companies have moved apps to the cloud then back on-premise.

Furthermore, a report by Risk Based Security found 2019 to be a record year for data breaches, with the number of reported breaches up 54% from 2018 and three 2019 breaches making the list for the ten largest breaches of all time. According to an IBM report, the average cost of a data breach has risen 12% to $3.92 million over the past five years. It is because of such data breaches that carriers and enterprises are questioning the security of cloud-based IaaS, and are increasingly looking for solutions that give them more control over their infrastructure.

At this point, the cloud conversation shouldn’t be as black and white as “on-prem” or “in the cloud”. There needs to be shades in between that offer the same flexibility and scalability as well as data integrity and control. Too often, having control over your data means increased cost and complexity. It doesn’t need to be that way.

Physical hardware in physical locations can also be rented with an easy OPEX-based model, just like how other tools or a flexible office space is rented in other industries. This IaaS model can be bundled with networking, security and global hubs to provide a comprehensive solution that competes with the cloud-based IaaS offered by cloud giants.

The carrier or enterprise benefits from a complete service wrap that supports multiple IaaS hubs without needing to contract multiple CSPs. In 2019 multi-cloud strategies grew tremendously, with a recent Gartner survey finding that 81% of respondents were working with two or more cloud providers simultaneously. Multi-cloud is adding a lot of complexity to enterprises’ operations in terms of both connecting and managing CSPs. Multi-cloud environments have really brought the limitations of cloud-based IaaS models to the forefront.        

These challenges will only grow as edge computing is used to lower latency, optimise performance for new technologies and deliver a high quality of experience for users. The edge computing market is expected to grow from $2.8 billion in 2019 to $9 billion by 2024, at a compound annual growth rate (CAGR) of 26.5% during the forecast period, according to MarketsandMarkets. This is partly because by 2022, $2.5 million will be spent every minute in the Internet of Things (IoT), and 1 million new IoT devices will be sold every hour, according to Gartner.

It is an exciting market, but one that will be challenging for both carriers and enterprises to serve efficiently with existing models. They need to go beyond what is offered today and rethink how they approach IaaS and OPEX-driven infrastructure models.

As the giants of cloud-based IaaS continue to increase prices like Google did in early 2019, there’s even more reason to explore different approaches to IaaS. This will require a mindset shift from carriers and enterprises, but there’s an opportunity to find IaaS solutions that better match their business needs.      

If as an industry, we only accept what is offered by the biggest players, there’s a chance that we will lose out on new competitive advantages and greater profitability. Organisations of all kinds can remove the limitations on their hosted infrastructure and find a new path forward with IaaS.