freefallA huge surge in Cloud growth as the year has rolled on coupled with a fanatical and zealous backlash by luddites that has had little impact on the juggernaut that is transition to global Cloud services. The privacy war is well underway with massive investment in new and interesting technologies that last year were the domain of the end user and this year have been targeted at enterprises, all with the same goal, “NSA proof my services”. Meanwhile, the cost of Cloud services continues it’s race to the bottom, killing some key players, while the focus moves from IaaS to SaaS at an increasing rate.

Globally, the move to Cloud accelerated this year with more and more enterprises, agencies, and SMB’s picking up Cloud services. This seems to be primarily in the Software as a Service (SaaS) space, with appetite for Infrastructure as a Service (IaaS), dropping, as time passes and they grow more comfortable with the idea of buying services online. Shadow ICT, in my opinion, has grown exponentially.

The reason for that is that technology companies can now reach out to anyone and advertise their services, the CIO faces increasing redundancy as a result, stuck in a race to now catch up with an organisation’s Cloud service use, and fighting to make themselves relevant in a new world. Those CIO’s that altered their course two years ago to one of a pragmatic, broker of “anything as a service” find themselves seated at the big table leading organisations into a competitive advantage. Those CIO’s that haven’t managed to deal with Cloud and make that cultural move, find themselves increasingly redundant and fighting to turn ICT organisations into service providers and brokers, before someone else does. It’s a total nightmare for IT Groups to manage, and shows the direct disruption that Cloud is making on everyone.

Microsoft has been the darling of the year, moving up the ranks of Cloud challenger rapidly. The slick, marketing, end user focussed SaaS is finding a home in the heart of many individuals and organisations. That company that has been on our home desk for the last twenty years is generally trusted and has managed to leap the divide from IaaS to SaaS in a single bound. People can access and purchase services that are real to the end user, rather than battle with a large machine, such as Amazon, that can be confusing and difficult to access.

The NSA, after another year of revelations, and as the master of luddites, has angered the global tech community and ICT giants. Their continued moves to stifle Cloud services through the introduction of onerous government security “frameworks” is an anathema to unlocking the progress and benefits that Cloud gives. A one sided view of security, forced into legislation by U.S. security agencies, is a major threat to progress in those countries. Worse, the Luddite view is counter-intuitive, by locking out companies and government agencies from using Cloud, it is likely the security risk remains very high. It is more secure to use Cloud.

This battle has started an absolute revolution in privacy tools. Most large public Cloud companies have implemented encryption by standard in an effort to reassure consumers that the NSA, and others, can’t access it. The “NSA Proof” brand is now a real thing. Cloud tool sets that apply controls at an organisation’s border allow for companies to store data in the Cloud that is strongly encrypted or highly tokenised. The net affect being that security in the Cloud has been bolstered significantly. The cost to deploy those tools has meant an increase in cost, however, Cloud services are now almost un-defeatable by the Five Eyes, hackers, and other spy agencies. And if you want more examples of that privacy war then you need look no further than the following.

Brazil has signaled intentions to build their own connections to the rest of the world, thereby (theoretically) avoiding their Internet traffic traversing the continental U.S. In addition, they have demanded global ICT providers put premises inside their borders. Brazil are also working on public services to allow citizens to communicate with each other in a protected way.

China is investing heavily in Government Cloud, having spent some hundreds of millions on creating their own services. They are also reportedly deploying Quantum Computing to manage encryption on some of their internal telecommunications network. Quantum Computing is so experimental as to be virtually indistinguishable from magic, and this seems to be a response to what China say, which is the NSA doing the same. There is no more powerful encryption in play at this stage.

ICT global giants have lobbied and met with the U.S. President on more than one occasion outlining to him the damage that the Privacy war is doing to their business, with a heavy movement this year to European and local Clouds in response to continued spying perceptions.

The cost of Cloud services is now in free fall, particularly in relation to storage. Personal Cloud storage costs are now pretty much zero, and smaller providers are going to suffer as time goes on. IaaS pricing pressure continues to build as Amazon holds it’s prices firmly down, however even they are under pressure with some other providers (For e.g. Dimension Data) being, in some circumstances, even cheaper.

One of the largest Cloud providers on the planet, Rackspace, has exited the IaaS market this year. Understandably, in the face of the price death spiral, and a host of smaller Cloud providers have been gobbled up or pushed out of the market. Bizarrely, the Cloud gold rush is still perceived to be real with companies still creating Cloud services that are simply going to be blown out of the water before they even start.

In Part II I’ll look at what has been happening in New Zealand in the Cloud space.

 

 

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