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We’re noticing a growing trend, software M&A opportunities are all finding themselves within one niche: the cloud. The cloud certainly encompasses a very large can of worms. While I certainly adhere to the idea that much of the cloud is just growth from the “hosting” of yesteryear, it is so much more. In fact, we know that between infrastructure-as-a-service (IaaS) is set to have the largest growth trajectory in 2013 to the cloud, in general. With all the hype, there are a few questions we are regularly pestered with when it comes to cloud computing and cloud adoption. Among them:
- Is cloud computing experiencing a market bubble? If so, how can we hedge against it?
- What happened to traditional software? It certainly didn’t go anywhere and does offer a compelling value-add? Are you seeing expansion within the realm of cloud, storage and IaaS usage that justifies the setting aside of most desktop software applications?
- What does the coming 12 months hold for the cloud and how can we profit?
History tells us that high growth areas almost always experience a bubble. Luckily, this bubble may be a bit tempered by the general market conditions and overall reduction in venture capital funds and funding in general. In fact, a recent report I read by Foley and Lardner, LLP indicated that in the past decade the number of funds has decreased by about half, going from its height in 2001 of 1200 to a more recent level of 600. In addition, TechCrunch tells us that median (not to be mistaken with average) investment size on a per deal basis has also decreased by about half. In fact, it’s a case of the top 1% getting the biggest share of the proverbial VC fund pie. But with amount being pumped into the economy for quantitative easing, we can expect there will be bubbles just about everyone, including this industry. The key is picking the winners who will last through the storm–perhaps bruised–but more prepared for the next generation of IaaS apps.
Traditional software is dying. It’s an over-repeated and perhaps annoying thing to repeat, but traditional software mergers, acquisition and venture capital have moved to their hosted counterparts. The same shift from MSFT Office is to Google Drive is occurring in nearly every facet of the cloud. Even the lower levels where SIO.Co spends its time, the cloud is seeing a massive build-out that is absolutely dwarfing traditional software. I read a recent piece in GeekWire magazine–a Seattle publication which indicated, “every single day, AWS is adding enough new servers to have handled all of Amazon when it was a $3 billion revenue company around the year 2000.” If you truly want to know where the growth is, follow the investment money trail.
Finally, we’re all a bit tepid about the general market. With fiscal cliff, debt ceiling, yada, yada we’d rather not get into too many predictions about the future of cloud computing. But we’re confident that whatever the outcome, “the cloud” in general will make it through the fray. Individual companies may have a more difficult experience.
This was a guest post from Nate Nead of Deal Capital — Mergers & Acquisitions.
The past few years have been big for cloud computing. What skeptics have initially seen as mere ‘hype’ has, after all, gone into mainstream consciousness. Even enterprises that have been slow to cloud adoption are taking into consideration which aspects of the cloud they can benefit from.
That said, it remains to be seen just how cloud computing will make its mark in the IT industry in the next few months. But there are already more than a few predictions given out there. Here are the top potential trends that analysts say will define the development of cloud computing in 2013.
Hybrid clouds are on the rise. While SMBs have been reaping the benefits of cloud computing, larger corporations have had to evaluate a cloud strategy alongside very important issues such as security, compliance, possible outages, and retention of legacy applications, among others. At this point, it’s a given that enterprises will utilize more than just one cloud technology to be used over various deployment environments.
The answer that many of them have come up with? A hybrid cloud, i.e., the use of both public and private clouds. A hybrid approach to cloud lets enterprises leverage on the many advantages that public clouds offer (scalability, cost-effectiveness, business continuity, etc.), while allowing them to retain control over mission-critical systems and highly-confidential data.
Public cloud service providers will battle it out in pricing. While this year is shaping up to be a good one for cloud users, the same might not be exactly true for cloud service providers. With more providers getting into the fray, the goal of most of them would be achieving an operation that’s efficiently designed, low-cost, and more importantly, highly utilized. It’s essentially a market share land grabbing exercise for CSPs, which will likely drive down costs, and could make cloud consumers the ultimate winners.
Cloud will continue to boost mobility. With the ubiquity of smart, web-enabled devices and the rise of the BYOD (Bring Your Own Device) policy in many workplaces, the cloud will practically become synonymous with mobility. These days, we are hearing more and more of mobile applications that are connected to cloud-based solutions in the back end. And we’re not seeing the end of that anytime soon.
A lot has been said about the opportunities that Big Data can bring.
For instance, people’s interaction on social media can help retailers pinpoint exactly what consumers want at the time when they are most likely to take action. In the same manner, updated and real-time SKU data from various outlets and warehouses can assist manufacturers in determining optimal prices that maximize profit while managing inventory. Or, customer data can allow businesses to easily identify which clients bring in the most sales and/or the most profit.
These are only a few of the many potential uses of Big Data. But being able to capture the its full value is easier said than done. Thanks to the cloud however, creating a successful big data strategy is no longer an insurmountable task even for smaller businesses.
With cloud-based applications, Big Data analytics is no longer just limited to the few large corporations who have the financial resources to deploy sophisticated technologies for storage, computing, and business intelligence (BI) tools. The challenge of effectively utilizing Big Data has been deemed as an ideal case for cloud computing because it requires having to draw on tons of unorganized data sets using vast computing power.
Now this is exactly what the cloud offers, but in a less complicated and more cost-effective process than if an enterprise were to mount these requirements by itself. Cloud computing services provide the hardware, software, storage, and networking resources needed for massive data analysis on a scalable, pay-as-you-go approach. When business intelligence is made available in this manner, high-performance analytics that’s suitable for handling Big Data is within reach for most enterprises.
In today’s extremely competitive business landscape, valuable data may well be the key factor to help you gain that edge over competition. Cloud-based analytic solutions can help organizations across all industries turn raw, complex data into relevant, insightful information.
Consumers and small businesses who are utilizing online storage and backup instead of, or in addition to, traditional on-premise storage solutions are experiencing for themselves the benefits of online storage: convenience, flexible and cost-effective pricing, easier sharing and collaboration, automatic backup option, and scalability of storage space.
But one nagging concern continues to remain foremost in mind: How secure really is data stored online?
While storing important data on to the cloud requires a huge amount of trust on the user’s part (individual or business entity), it’s also worth noting that online backup service providers — or at least the most trusted names in the industry — stake their reputation on their ability to provide secure storage services to their clients. Otherwise, why be in business at all?
Security technologies in use
To ensure that data is kept safe at all times, service providers employ encryption technology even before the files are transmitted and while these are in storage.
Even before the data leaves the user’s computer, these are already encrypted using 128-bit Blowfish encryption. Then the data is transmitted via SSL (Secure Socket Layer), a cryptographic protocol that establishes a secure web communication, and is therefore widely used in the transfer and exchange of confidential information over the Internet.
Now these are standard technologies which are also being utilized in online banking and e-commerce transactions, so basically, your data is being protected with bank-level security.
Security in data centers
While data remains encrypted (AES or Blowfish) while in storage, the security level doesn’t end there. Online storage providers also go to extra lengths to make sure that data centers are physically safe. Safety measures deployed in these centers may include:
- Restricted personnel access (need for electronic key cards, bioscans, and/or PIN codes);
- Use of Uninterruptable Power Supply (UPS);
- Back-up generators available on-site in case of power outage;
- Security personnel on duty 24/7;
- Temperature monitoring and control to prevent disk failure;
Even with all these measures in place, there is of course no foolproof guarantee that data stored online in the cloud is completely safe. After all, no one and no provider is invulnerable to attack.
But compared to simply storing your files in an external drive attached to your computer, which makes it vulnerable to attacks, disaster, and computer failure, online storage is still the better, safer way to keep your data.
The volume of data being amassed across the globe on a daily basis has reached a staggering level already. Using powerful networks, large enterprises collect and store tons of information from customers, employees, suppliers, and their own operations, while consumers in general contribute to the ever-growing torrent of data as they buy and use products, browse the Internet, and communicate through mobile devices and social media.
It therefore comes as no surprise that analytics and Big Data – the collective term used for these immensely large and complex datasets which have grown beyond the capability of conventional database management systems to store and analyze – are fast becoming important buzzwords in business.
A recent study commissioned by the McKinsey Global Institute (MGI) has brought to light just how extensive Big Data has grown, and how deeply it has permeated into almost every sector in the global economy.
Crunching the Big Numbers
According to MGI estimates, companies added about 7 exabytes of new data into storage for the year 2010, while consumers contributed another 6 exabytes of data stored in their PCs and laptops for the same year. Note that 1 exabyte is approximately 1 billion gigabytes, or about 4,000 times the data currently available in the US Library of Congress.
Now that’s a lot of data. What’s even more noteworthy is that data is bound to grow in leaps and bounds within the next few years. This is supported by IBM’s claim that 90% of today’s data has been accumulated only in the last two years, and that 2.5 quintillion (2.5 x 10 to the 18th) bytes of data are created everyday.
Finding Value in Big Data
These figures only go to show that data is now an integral part of most business operations, and has become just as important as other key production elements such as, say, human resources and equipment. So with the Big Data era now upon us, the challenge that remains for businesses across all industries is finding the opportunities that the available data can bring.
Storage is no longer an issue what with the many available options and decreasing costs for storage. What is more important is how raw data is mined, managed, and analyzed as a source of insightful information.
Any enterprise, regardless of size, that is able to harness the potential of Big Data is well on its way to boosting productivity, promoting innovation, gaining competitive advantage and creating value for their customers.
The tape backup naysayers will always try to crash the party, but we know better. Tape is not only not going anywhere anytime soon, but we like many other members of the storage community expect tape backup to continue to expand. To cite a specific source, Simon Watkins of HP Storage intimated the site of tape media, including drives and automation was over $1 billion in the first half of 2012. In fact, the LTO tape media industry had a growth trajectory of 12% YOY in 2012 reaching a record-breaking 10,000 petabytes for the first six months of 2012. Tape still dwarfs external disks in total demand. Since 2001–the year LTO-1 was first introduced, over 4,300,000 drives have been sold and well over 200,000,000 LTO tape drives have hit the market. That’s a huge number, especially given the margins for some tape suppliers.
Tape Growth and Expansion
The short story is that tape is going nowhere. It’s here to stay and is expected to grow up to 15% YOY over the next half-decade. Here are some areas where tape will see a resurgence:
- The desire for cost-cutting within organizations will create a vacuum for inexpensive backup and storage solutions, which is great for things like refurbished tapes.
- There is a tail on the growth curve. Many companies are not looking for the latest and greatest. In fact, most are on the end tail, not the early adopter tail of the petabyte tapes, let alone the petabyte disk arena. In fact, the majority of the market is simply seeking for the cost-effective solution that fits within the technology they already have–which at this point is only tape.
- Big data means big purchases of tape-based media. I recently read an article that indicated that Amazon is currently adding the same amount of capacity every day that it was using the power the entire company in 2002. The same type of growth is going on in all areas where digital media needs stored. It’s growing and tapes will be a very big part of that curve
Tape-based media backup and storage has a bright future–at least in the near term. The coming year will be an interesting one to watch to see the volume of purchases and how everything shakes out.
While large companies have long relied on offsite data storage as part of their disaster recover plan, this backup strategy was not as commonly used among small businesses because of the complexity and the expense involved. But thanks to the availability of cloud storage services, being able to store multiple copies of data in servers across various geographical locations can now be done by both big and small organizations.
Key benefits of cloud storage
So what advantages does the cloud offer that you can’t find with physical storage? I’ve listed three key benefits to storing data in the cloud.
Ensures business continuity. If your business can stand to lose critical data for a day or two while you scramble to retrieve backup data from tapes stored off site, then you’re one of the few lucky ones. Even a couple of hours data inaccessibility is plenty for most companies. But with a cloud backup, you can recover lost data quickly and from any access point in the event of a site disaster.
Adapts a pay-as-you-go model. File servers and storage networks may guarantee high capacity and performance, but these devices also cost a lot and therefore not a viable option for SMEs. This is why the cloud’s pay-as-you-go model for storage services is a perfect fit for businesses looking to maximize their resources. And these days, which company isn’t? For some, building their own cloud is also a viable option.
Allows scalability and fast deployment. Storage needs can escalate quickly and companies often resort to over-provisioning to ensure immediate availability of storage space when it is required. Because you can deploy additional storage quickly, cloud-based data backup significantly reduces or even eliminates the need for over-provisioning.
The question of security
For all its benefits however, cloud backup is far from being a perfect solution and one major concern is that of security. After all, in light of the various government regulations that companies have to comply to, this is one issue that business owners and CEOs would be hard-pressed to ignore.
So is the cloud really that insecure? Or is this perception perhaps merely an offshoot of the apprehension over losing close control over data? Of course, this isn’t to say that organizations shouldn’t look very closely at the security capabilities of their chosen cloud service provider. Go over those SLAs with a fine tooth comb if you must, and make sure that your cloud partner’s security standards match those of your own.
But then again, let’s not forget that data protection is as much the responsibility of the company as it is the service provider’s. It’s worth noting that lapses in data security are all too often caused by people from within the organization itself, whether intentionally or inadvertently. Therefore whatever security measures implemented for data handled on site should be applied to data stored in the cloud as well.
When faced with the decision to adopt a cloud storage, the choice of whether to go public, private or hybrid cloud is only one of several factors that business owners and IT administrators need to take into account. Another key consideration is the type of cloud service that would allow them to leverage the business benefits of cloud computing, and on this end, it appears that more people are looking at cloud storage.