Reflections on 2016

Normally, I prefer to look forward and share my thoughts about the technology advancements and new opportunities the new year might bring as well as the potential pitfalls that I can help our clients avoid. However, a long drive back from Virginia to upstate New York got me reflecting on the significant changes we saw in 2016.

First, people who haven’t spent much time in this part of the country (or those who haven’t managed to escape the city much) may think of this area as one big metro after another. Actually, there are a lot of rural areas from mountains to rolling farmland. It’s a feast for the eyes, but I also enjoy listening to the radio while I drive, and reception can be a bit of a challenge in spots.

While “scanning the dial,” I stumbled across something called Federal Radio. This station carries programs dedicated to offering advice to businesses, mainly small, looking to win contracts with the federal government. The segment I caught was all about cloud computing. The content wasn’t deep, nor could it in any way have been considered “thought leadership,” but it left a lasting impression on me nonetheless.

At StoredTech, we do a significant amount of business with government agencies as well as the businesses that serve them. Just a couple of years ago, we were assuring these organizations that the cloud was a safe, secure place for applications and data.

Now, the message from this station was “if your application can’t be deployed in the cloud, don’t bother selling to us.” If the federal government has taken a cloud-first attitude, that tells me the cloud is here to stay.

The Cloud Hits Mainstream
We’re seeing a huge uptick in interest in the cloud both from first-time cloud customers as well as from those looking to expand their presence in the cloud. In Right Scale’s 2016 State of the Cloud Survey, 95% of respondents were using a cloud of some form or another. If that sounds high, rest assured it’s not an outlier. Other studies tend to show rates of between 80 and 90%, often depending on what types and sizes of businesses make up their sample.

We work with businesses from large, multi-national organizations to smaller mom and pops. While some of them are early adopters of new technologies, many of them are cautious and reasonably risk adverse. Almost all of them have dabbled in cloud computing with Software-as-a-Service (SaaS) applications. This was a no-brainer for applications like expense reporting that weren’t dealing with mission-critical data. These days, however, we’re seeing a lot more interest in moving core applications like Microsoft Office (Office 365) and even CRM and ERP to the web. It helps that Microsoft has a very convincing and thorough cloud security message that spans its applications and infrastructure resources. Microsoft Azure has been around for a while, but 2016 was the year Microsoft hit its stride with their public cloud platform.

With security less of an obstacle to cloud adoption, the path has been paved for small and midsized businesses to confidently adopt the cloud in increasing numbers and for a greater percentage of their workload. In 2015, Forbes claimed that 78% of small businesses will have fully adopted cloud computing by 2020. I think cost concerns may drive the percentages may be even higher.

One reason so many of our clients have adopted cloud computing is that it allows them to reclassify a capital expense as an operating expense and is easier on their budget. Instead of shelling out hundreds of thousands to millions of dollars in hardware that will be outdated within a couple of years—if not sooner—cloud computing allows you to pay a monthly fee for infrastructure and applications that are continually refreshed. (By the way, ensuring your hardware and applications are up-to-date not only improves performance, but it also helps thwart the latest security threats.)

We’ve had more than one client come to us, asking for a proposal to replace their existing hardware. We’re happy to give them one, but often with the caveat that we believe they would be better off in the cloud. It’s not always the case with every situation and every application, but when we feel it is best for them, we don’t hesitate to say so. Thankfully, most of them take us at our word. Our bottom line suffers a bit, but it’s the right thing to do.