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Accenture: Tough times ahead for cloud services

Posted: 15 Apr 2011     Print Version  Bookmark and Share

Keywords:cloud computing services  cloud business models  high-tech companies' cloud investments 

A new report from Accenture warns high-tech companies eyeing cloud service opportunities that finding success at cloud computing services will not be easy or inexpensive.

"The pressure is on and the opportunity is there with all the traditional high-tech companies looking at cloud services, but it's a big strategic leap," said Tim Jellison, a senior executive at Accenture.

Jellison said cloud services will force companies to support multiple business and operating models, including new kinds of customer relationships.

"The days of a single or even two business models is rapidly coming to a close," Jellison said. "In our opinion it will take four to five business models to provide what customers want these days," he said.

In the first in a series of reports on the topic, Accenture said Microsoft now supports seven business models, Cisco Systems five and Google four—in part due to the rise of cloud services. One software company spent $ Rs.45.66 crore (10 million) to get into a single cloud service business and others who want to support multiple business models may need to spend Rs.228.31 crore ($50 million) to Rs.456.62 crore ($100 million), it estimated.

Dell said earlier this month it will spend as much as a billion dollars this year for plans to launch ten data centres in the next 24 months to host cloud services. The news came weeks after rival Hewlett-Packard said it will launch cloud services this year as part of a new strategic plan under CEO Leo Apotheker.

Selling cloud services is radically different than selling servers and switches, Jellison said. "It's almost like being a telco or cable company," he added.

New players will need to balance allocating funds for existing businesses and new cloud service offerings. "Traditional business models will dominate for some time, but these new business models will drive growth," said Jellison.

According to research firm Gartner, by 2014 businesses will spend close to Rs.1.60 lakh crore ($35 billion) annually on cloud services. The majority of the spending will be for hosting applications remotely or general computer services. International Data Corp. forecasts only about 11 per cent of the total software industry revenue in 2014 will come from remotely hosted applications.

- Rick Merritt
  EE Times

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