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The Age of Cloud: Current Trends and Prospects of ‘Cloud Computing’

– Today and Tomorrow of Cloud Service (1) –

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Korean and global IT markets have been undergoing stagnation since the financial crisis of 2008. Even in such a hard time, however, there have been some hot IT items and one of the hottest items has been ‘cloud computing’. ‘Cloud’ is now quite familiar to us as multiple cloud services like i-Cloud and Dropbox have become available.

Recently in Korea, the bill for the cloud computing, the Act on Promotion of Cloud Computing and User Protection, passed the National Assembly. This law which aims to support the cloud computing industry is planned to be enacted in September, and many in the industry expect the cloud computing market led by the government to grow soon.

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Cloud, Reviving the Stagnant IT Market

The cloud market is rising in the market as the reviver of the Korean and global IT market going through stagnation. The budget for cloud is also growing following this trend. The budget for cloud, which only took 3.6% of the entire IT budget, took 12.3% in 2014 and is expected to take up to 22% by 2018.

We can see the growing necessity of cloud in major global companies’ as well. Many major players in the industry are expanding their cloud-related projects—SAP, for example, is trying to raise the sales of cloud services and solutions such as HEC and Ariba, while Accenture is building up their hybrid cloud business.

In Korea, the cloud computing market was worth about $558.8 million in 2014 with a 23% growth rate and is expected to hit $677.5 million in 2015 with a growth rate of 21%. Unlike in the past where awareness of cloud was low with negative perceptions, lately more people are showing interest in the cloud and the SMB market as the its cost-reducing effect is more widely known.

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Korean cloud computing market (Source: KRG, 2015)
** Including Cloud SI, SBC/VDI, PaaS, SaaS, IaaS(Cloud infrastructure construction)

As we see from these examples, business related to cloud computing at major companies is growing drastically. One interesting fact here is that each company has a different background in how they started promoting their cloud related projects.

First, the major global internet service providers like Amazon and Google accumulated their IT resources and skills by supporting their core businesses like shopping malls and portal ads. With this, they could expand their cloud business and are now raising their existing businesses along with it.

Global solution vendors like HP and IBM formed a cloud-related ecosystem based on their own products, while other global IT service companies like CSC and Rackspace are expanding the enterprise of cloud services using the skills they’ve gained from providing other services.

What about Korea, then? Telecommunication companies such as KT Corporation are pushing the cloud business to create a new convergence project outside of their existing communication businesses, using their data centers and circuits. Search portal companies like Naver are expanding the cloud territory based on the skills accumulated from their search and advertisement business.

Potential of the Cloud Business

As mentioned above, Korean and global IT companies are entering the cloud market with various approaches. Why are so many companies jumping into this market, then?

The biggest reason is because the market is changing. Now that the new technological convergence including big data and IoT is growing in the IT market, cloud is destined to be more emphasized as the generic technology. It’s basically growing into a new norm of the market to replace the construction-based IT industry.

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Each companies’ cloud business strategies

Private Cloud, the most preferred for enterprises

Most cloud services we see in the media are public clouds. The actual demand from corporations, however, is concentrated in private clouds and this is because many companies are concerned about public cloud services and want to build their own clouds. Private clouds in fact take 83.2% of the entire cloud market and companies are switching their virtual servers into private clouds. With this, many companies are showing interest in hybrid clouds which combine both public and private services.

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The proportion of public cloud and private cloud

Cloud professionals to adopt cloud systems

Although many companies prefer private clouds, it’s much harder to build private or hybrid clouds without accumulated skills and know-how, since it has to be customized according to the specific needs of the client unlike the usual public cloud. This is why skilled companies are required to adopt cloud environments.

LG CNS provides integration services with a legacy system and migration as well as a cloud consulting service for optimization in order to help clients. LG CNS has the know-how not only for basic infrastructure, but also for applications and middleware such as DB and Web/WAS. It’s also worth mentioning that LG CNS is equipped with experts from diverse fields including OSS (Open Source Software), U2L (Unix to Linux) and cloud platforms. With these, LG CNS holds the ability for cloud construction and services for all clients from smaller businesses to major corporations.

Its agile response to the changes toward cloud made it the first company in Korea to adopt VDI which solved the issues of security and smart working at once. Many companies are leading the industry with VDI thanks to the technical skills of LG CNS

LG CNS also participated in the government integrated data center’s emergency support cloud operation project. With this service, the government can increase resources easily and immediately through the cloud, to support in cases of emergency such as the year-end tax and the forest-lodge reservation. The know-how accumulated from the experiences as a major SI player can now be applied to cloud services.

Today, we learned about the current status of the cloud market and its newest trends. I hope you had a chance to get the general sense of why cloud is so crucial in today’s IT market.

In the second posting, I’d like to discuss in detail about private clouds, which are becoming a new norm in cloud for enterprises.

Written by Eunhwa Shin, assistant manager for LG CNS cloud business 

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