Back

Cloud technology driving a new computing era

02 Sep 2016

Advances in cloud computing are driving growth in the software market globally, with cloud enabled technology forecast to more than double its market share over the next five years.

As businesses and consumers make greater use of internet-based computing to store and manage their data, the nature of computing itself has changed, says Macquarie Securities Group Senior Software Analyst Sarah Hindlian.

"What is happening is a fundamental decentralisation of computing. Computing is no longer occurring within physical boundaries" Hindlian says.

Cloud computing is a form of computing where software applications and infrastructure services are delivered over the internet rather than stored on a computer’s hard drive.

Hindlian says this shift is driving innovation among software vendors and the businesses that use cloud-based programs, creating a globally accessible workforce.

Cloud services are rapidly changing the entire computing landscape as the global availability of internet bandwidth increases and businesses become more comfortable with shifting to cloud service providers for their office operations, a move that will lower set-up, maintenance and labour costs by eliminating some of the need for physical facilities such as data centres.

Hindlian says 17 per cent of the computing market is currently cloud enabled, but forecasts this could grow to at least 50 per cent of the software marketplace in the next decade.

Worldwide spending on public cloud services is expected to grow at a compound annual growth rate of 19.4 per cent from nearly $US70 billion in 2015 to more than $US141 billion in 2019, according to the International Data Corporation.

That is more than six times the rate of overall IT spending growth.

One of the major advantages of cloud technology is that it is a form of "on demand" computing that can be scaled up or down depending on the needs of an individual or business.

Public clouds make use of third-party providers for storage and processing, while a private cloud applies the same principles, but can be using a company’s own intranet system.

By 2019, two-thirds of global spending on public cloud services is expected to be on programs delivered as a service through the cloud and paid for via subscription, rather than purchased as a hard disk in a technology store and installed onto a computer.

Hindlian says this shift is driving innovation among software vendors and the businesses that use cloud-based programs, creating a globally accessible workforce.

Despite substantial growth, security and privacy concerns around cloud computing remain.

Confidentiality and secure access have been the biggest concerns surrounding cloud computing with government regulations and privacy protections having to adapt to the shift to the cloud.

Hindlian says that as more enterprises make the transition, those concerns will ease and the growth in the technology will help drive advances in security software.

There is already a market of tools designed to protect data as it is in transit and as it arrives at an endpoint or a particular device.

One relatively new market is called cloud access security brokerage, which is a software tool that sits between an enterprise’s own IT infrastructure and that of its cloud provider. For example, it can ensure that a company’s own security protocols can be extended to devices used off site when they are accessing company data hosted by cloud providers.

Hindlian highlights the biggest risk of cloud technology as being the possibility that an unauthorised person could gain access to data. For that reason, there has been heavy focus on authentication processes, such as double password protection and access keys.

"The market is really evolving to address these changes but there’s still a long way to go," she says.

Find out more about Macquarie’s research capabilities