Why Industry Cloud Is the Next Big Thing

Industry cloud as a solution has been gaining a lot of attention lately. A study conducted by Tech Pro Research, a division of reputed technology blog ZDNet and TechRepublic, found enthusiastic responses to the question “Are you considering industry cloud as a solution?” The respondents considered industry cloud secure, agile, inexpensive and domain specific. The survey findings do not infer any implications on other types of cloud services. Other cloud services that are horizontal in nature have their own unique strengths.

What Is Industry Cloud?

The defining feature of industry cloud is its domain expertise. All industry cloud providers cater to a specific industry such as pharmaceuticals, financial and banking, insurance or manufacturing. There are a lot of industry cloud providers. For example, see the table below:

So, industry cloud solutions come with specialized tools, processes, business services and configurations tailored for a specific industry. All industry cloud providers hire domain experts. For example, Veeva, which is focused on life sciences, has Matt Wallach as its president, who previously ran the life sciences division of Siebel.

Differences Between Traditional Cloud and Industry Cloud

The main differences between industry cloud and traditional cloud are provided below:

• Domain — Industry cloud is focused on specific domains, while traditional cloud services provide generic services to almost all domains. Industry cloud is vertical and traditional cloud is horizontal.
• Revenue model — Industry cloud providers are going to earn a big portion of their revenue from reference selling because the people who run these providers usually know each other or have worked together in the same industry. Traditional cloud, on the other hand, is widely spread and its revenue model will be based on the on-demand or subscription model.
• Market share — Considering the size of the horizontal market and the competition, it is difficult for traditional cloud service providers to occupy large chunks of market. Industry cloud providers, however, can occupy a big share of their own niche. For example, we can consider Doximity, which is a secured social networking platform for doctors. Forty percent of doctors in the U.S. are currently subscribed to this cloud-based social networking platform.

Reasons Industry Cloud is the Next Big Thing

There are strong signs that industry cloud is going to make an impact. The survey conducted by Tech Pro Research revealed findings that confirm that industry cloud is coming. The salient findings of the survey are given below:

Percentage of Respondents Using Industry Cloud

The statistics below show the percentage of respondents using or not using industry cloud:

• 38 percent of the respondents are already using industry cloud.
• 19 percent plan to use it in the next 12 months.
• 23 percent plan to use it in the future, though no timeline has been set.
• Only 20 percent do not have industry cloud in their plans.

Percentage of Small and Big Companies Using Industry Cloud

Industry cloud is already being used by both small (fewer than 50 employees) and large (1,000 or more employees) companies. Statistics show that:

• 58 percent of big companies are either already using industry cloud solutions or plan to use it in the next year.
• 59 percent of small companies are either already using industry cloud solutions or plan to use it in the next year.
• Mid-sized companies are slightly behind when it comes to using industry cloud or even planning to use it. 54 percent of the companies with 20-249 employees are either using it or plan to use it and 46 percent of the companies with 250-999 employees are either using it or plan to use it.

The top three reasons, as the survey found, for using industry cloud are security, cost and agility, in that order. Sixty-nine percent of respondents think security is the topmost factor behind adoption while 67 percent feel operational cost is the main factor. (For more on cloud costs, see 5 Things To Know About Cloud Pricing.)

Beyond the statistics, it has been noted that the budget has been increasing. Forty-three percent of the respondents said that they were increasing their budgets, while only 18 percent said that they were reducing their budget. Currently, those with no budget allocation are probably those who do not use industry cloud or are using free services such as Dropbox. (To learn more, see A Beginner’s Guide to the Cloud: What It Means for Small Business.)

The survey, it appears, has painted a positive picture of industry cloud and its prospects. Scott Matteson observed in the Tech Pro Research report,

“The road ahead leads to a promising and profitable era for industry cloud services as significant numbers of companies recognize the value they can provide. This is a time for great creative potential thanks to the vertical depth of the industry cloud, and the vendors who will take and retain the lead are those who establish products that are seen as must-have offerings to customers due to compelling technological and business benefits.”

Case Study on Industry Cloud Implementation

Let’s look at a case of industry cloud implementation in the U.K.-based newspaper Financial Times, and the benefits that accrued.

The websites and other online public interfaces of Financial Times can find it extremely stressful when there is a huge load of incoming traffic on their servers. If the servers are not equipped to handle such loads, they are going to crash, and that is a massive disappointment for visitors. So, Financial Times wanted a solution so that the server load could easily scale up whenever there are huge amounts of traffic coming in. They needed a scalable, robust and stable solution. So, the FT platform was developed.

The FT platform automates the software and the virtual infrastructure that runs on top of the in-house servers and the Amazon Web Services (AWS) EC2 platform. After the setup was put in place, Financial Times enjoyed the following benefits:

• The FT platform provides support to the core bases of the online version of Financial Times – the Apache Tomcat software and the Apache HTTP Server. As a result, the software developers are able to test, build and deploy code into the production server within 24 hours. With the old platform, the entire process would take 30 days. According to John O’Donovan, CTO of Financial Times, “We have massive improvements in times-to-market: it used to take us 99 days to deploy some infrastructure and we’ve now got that down to minutes.”
• It is much easier now to manage the legacy infrastructure. Financial Times has control over the building blocks of the cloud platform and it can move applications across its in-house virtual machines that are running on AWS and Cisco UCS servers.
• Financial Times has also been able to control costs after moving its data warehouse to Amazon Redshift. The cost of supporting business functions are 80 percent lower now.

Conclusion

Industry cloud is definitely gaining a lot of traction, mainly because of its niche-specific offerings. This remains an interesting debate on whether generic cloud services are threatened because of these developments. But there is also a school of thought that both generic and niche cloud service can coexist because they each have their strengths and weaknesses. But the migration of quite a few companies from generic cloud to industry cloud cannot be ruled out.

The beginning of industry cloud as a solution has been encouraging. It will be interesting to watch its progress in the future.