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Heads in the cloud

We could have stuck to the knitting. I’m glad we didn’t.

Jeff Bezos, CEO and Founder Inc

Apparently, much like basic computer language and the evolution of rock and roll, it happened in the ‘60s when a gaggle of visionaries dreamt up various concepts around delivering computer resources through a global network, much like the delivery of any public utility of that decade.

Every Cloud.

And now? Some heads in the Cloud are making an awful lot of money.

Take Inc as a prime example (pardon the pun). Their Amazon Web Services (AWS) offering now contributes more than 50% of the firm’s overall operating profit. Amazon’s revenue in Q1 2016 rose by 64% to $2.4 billion with operating profits tripling from $195 million in Q1 last year to $604 million in Q1 of this year. So you do the “math”, that’s an impressive amount of dollars coming from something that started out as an auxiliary service to support the company’s core e-commerce business.

So why is AWS so successful? For simple reasons, really

• It’s inexpensive – companies pay for what they use
• Because of the “pay for what they use” model it’s scalable and flexible, providing many benefits for start-ups to large enterprises allowing them to “set up and forget” their IT
• A variety of service offerings to suit many different needs and palettes – AWS is 10 times the size of its nearest competitor offering multiple services including servers, storage, networking, remote computing, email, mobile development and security.
• Secure and consistent – data heavy-weights including Netflix, Instagram and very recently CRM giant Salesforce trust the Cloud, need we say any more?

In an annual share-holder letter in April this year, Bezos characterised AWS as a bold and unusual bet, so is it worth the risk for all?

Big guns including Microsoft Corp. are evidently pouring huge amounts of dollars into their cloud product Microsoft Azure as are Google, Rackspace Hosting, Inc. and Softlayer (acquired by IBM) with their own offerings. But there’s a lot of catching up to do and as big sums of money are needed to invest, it’s unlikely they can ever compete with AWS margins. Additionally, with Cloud pricing wars known in the tech space as the “race to zero”, even after AWS has repeatedly cut prices, their margins remain buoyant.

Interesting then that according to a recent Gartner study around Critical Capabilities for Public Cloud Infrastructure as a Service (IaaS), amongst the main providers that were included in the study including the top two AWS and Microsoft: CenturyLink, CSC, Google and Virtustream all outperformed AWS on their computing resilience, which could actually make them a better choice where single VM availability and reliability are critical. So it seems niche service offerings may be the strategy to in some-way compete effectively with AWS.

Banking on IT.

What about on our home-turf, are our UK data-sensitive industries such as FS really as Cloud comfy as their US counter-parts?

Five years ago, reports suggested that 48% of UK companies researched were already using cloud-based services with 31% saying they were planning to do so within the coming year. And now over four in five UK organisations have formally adopted at least one Cloud service with the majority maintaining a hybrid set-up for the foreseeable future with Heads of IT citing “maintaining key applications on premise.” So substantial dipping the toe in but not quite 100% Cloud submerged.

“Psst… Amazon Cloud is not new to banks, most of them are using it, they’re just not talking about it,” suggests where they go on to advise that global banks such as JP Morgan Chase and Capital One have already been flirting with data in the Cloud in some shape or form for a while now. Meanwhile, challenger banks in the UK such as Tesco Bank and OakNorth are straight-up using it already for core systems.

Lest we forget some of the recent issues with large high street banks where ‘system failures’ resulted in missed transactions and delayed payments for their customers, costing these financial institutes, arguably, a lot of cash. According to the, this is down to some banks running out-dated processes that are prone to failures from large, patched together, complex IT systems acquired through mergers and acquisitions that, moreover, cost millions of pounds a year to maintain. Perhaps a Cloud or Hybrid strategy could provide a more reliable, secure, less costly solution?

Cloud Proud.

Are we Cloud comfy? Look at the example of iCloud from Apple Inc, as of today it has 782 million users uploading billions of highly personal data files weekly into the Cloud and simultaneously we seem increasingly comfortable making online purchases, with the UK e-commerce market to top £60bn this year as an up-surge in mobile and tablet use fuels an £8.9bn increase in online sales in 2016 alone. At the same time Banking apps, let alone online banking, rapidly eclipse branch banking with these apps being used 11 million times a day across the UK in any one month - and it’s on the up and up.

Some say that along with social, mobile and analytics; Cloud technologies and models have earned a place as one of the core disruptors of the digital age and it seems there are an abundance of further disruptive opportunities for the Cloud this year such as analytics solutions, self-service ‘copy and paste’ data integrations and easier hybrid Cloud strategies.

And if you have Cloud security skills it’s all rock and roll. The Cloud computing market continues to expand at a phenomenal rate and according to a recent report from IDC, worldwide spending on public cloud services will grow 19.4% annually through to 2019. As more businesses transition to the Cloud a tech market that already offers 18 million jobs worldwide will surely, impressively grow with security skills including compliance, ethical hacking, platform specific knowledge, communication, encryption and app skills in Docker, Chef and the like becoming even more hunted, globally.

Who knew we had the “Swinging Sixties” to thank for the utility based computer services premise that has since become our very own Cloud evolution? #CloudProud