Time to gamble on emerging technology?

Storage services provide a way to store data and documents without having to continually grow farms of storage networks and servers.

Gartner predicts that by 2012, 80 percent of Fortune 1000 enterprises will be paying for some Cloud Computing services, and 30 percent will be paying for Cloud Computing infrastructure services.

Driven by falling prices and new vendors, the percentage of commercial mailboxes using a cloud-provisioned model will grow from one percent of business seats in 2007 to 20 percent in 2012, according to Gartner.

The push into the cloud email market by large suppliers will cause fundamental restructuring of the email market, predicts the analyst.

“Events during the past year have created the conditions for the rapid growth of the cloud delivery model for enterprise email, with companies such as Google, Yahoo, Dell and Microsoft all making major investments in Cloud Computing,” said Matthew Cain, research vice president at Gartner.

New web technologies are expected to yield new services, platforms, utilities, and business models for businesses and service providers.

Bruce McCabe, managing director of Australian research house S2 Intelligence, said Cloud Computing for channels is a challenging technology.

“In terms of what it means for a channel it is a move away from packaging and delivering software and hardware to a model of delivering software storage as a service,” McCabe explained.

McCabe said that over the next five years Cloud Computing will challenge the reseller’s role, which will be more about customisation and business outsourcing and getting into a realm for hosting services themselves.

“Channels need to perform universal services and as with insurance while there is no need for brokers, they can manage risk,” he said. “And so too with resellers they have the opportunity to sell more software while they may lose some sales in devices as we move to services.”

He added that software is particularly challenging in mid-term.

“Cloud Computing is in transition and for business customers and consumers to use it instead of a hard drive looks set to take off,” McCabe explained.

Software such as that offered by Microsoft Office is more than ever being delivered as a service and McCabe said this is worthy of a story in its own right.

“Office productivity is highly representative of what is happening more broadly with the delivery of software such as Microsoft and Zoho.com,” he said.

Until recently, the Cloud Computing market has largely been the domain of small suppliers, but it has been rapidly transformed into a market where the largest IT companies are aggressively competing.

He said that vendors such as Google, Microsoft and Yahoo have consumer mail platforms that serve millions of users and that the opportunity and the challenge is to transfer the economies of consumer mail to enterprises.

Gartner predicts that the impact of Cloud Computing on IT vendors will be huge. Established vendors have a great presence in traditional software markets, and as new Web 2.0 and cloud business models evolve and expand outside of consumer markets, a great deal could change.

Gartner believes the biggest expenses for the providers of cloud-provisioned consumer mail are currently electricity and storage and that the biggest cost for enterprise email operations during the next 10 years will be level-one help desk support as reduced licensing and operational costs improve enterprise cloud-based email economics.

Gartner said the uptake of cloud email will start with small companies (the only area where it is successful now) and move to midsize companies, and by 2012, the cloud model will serve the largest firms, with more than 50,000 seats.

“As large suppliers push into the cloud email market we’ll see a fundamental restructuring of the email market,” said Cain. “Traditional email software-as-a-service (SaaS) vendors will come under tremendous price pressure from mega-scale vendors.

“Established traditional dedicated server model hosting vendors will fare better based on their ability to offer larger scale and more customised email.”

From an end-user point of view, Cain explained that companies with fewer than 1000 seats typically have had the highest costs associated with email and would stand to gain significantly from the cloud approach.

Daryl Plummer, managing vice president and Gartner Fellow, said over the past 15 years, a continuing trend toward IT industrialisation has grown in popularity as IT services delivered via hardware, software and people are becoming repeatable and usable by a wide range of customers and service providers.

“This is due, in part to the commoditisation and standardisation of technologies, in part to virtualisation and the rise of service-oriented software architectures, and most importantly, to the dramatic growth in popularity of the Internet,” he said.

Plummer added that taken together, these three major trends constitute the basis of a discontinuity that will create a new opportunity to shape the relationship between those who use IT services and those who sell them.

Essentially it will mean that users of IT-related services will be able to focus on what the service provides them rather than how the services are implemented or hosted.

Gartner maintains that although names for this type of operation have come into vogue at different times – utility computing, software as a service (SaaS) and application service providers – none has garnered widespread acceptance as the central theme for how IT-related services can be delivered globally.

Gartner reported that while cloud-based services probably don’t meet the needs of enterprise computing today, it predicts over the next five years, they will creep into mainstream use, right at the same time that current enterprise computing models run their course.