Could SaaS & IaaS Irrevocably Change The Hosting Infrastructure Of Today

Web hosting has come a long way in the past two decades. What was essentially considered a quintessential in-house element for corporate businesses has become extremely commoditized in the past few years. Nearly 88 percent of enterprises today use public cloud while 63 percent of them use private clouds today. With the advent of various cloud delivery models like SaaS, PaaS, IaaS, hybrid clouds, etc. hosting and content delivery have evolved quite a bit since the turn of the century.

Where will this take us in the future? According to some studies, small businesses are taking the lead from large enterprises in migrating to the cloud. A report from Emergent Research and Intuit predicts that by 2020, nearly 78 percent of small businesses would be fully adapted to the cloud. This figure was about 37 percent last year.

There are two important drivers to this – first is the growing confidence small businesses have placed on security in the cloud. Unlike what many in the technology industry predicted – the constant spate of attacks on cloud infrastructure in the recent past did not deter businesses from migrating to the cloud. Instead, it improved the state of infrastructure to make cloud infrastructure much more secure and trust-worthy.

The second driver towards this is the attractive pricing models of SaaS tools. Hosting in 2020 will not be just about owning all applications and tools in your own in-house or third party servers. Instead, hosting will include integration of your applications with tools owned and operated by third party service providers who are responsible for executing specific tasks required for your business. For instance, a retail business will no longer be required to own and run resource-intensive software applications to predict future demand. They would instead route their data through a third party service that will process the data and return the output – the costs are more optimal in this case and is hence a win-win situation.

The commoditization of hosting solutions will however throw a unique challenge – the inability to keep a tab of resource allocation. Typically, businesses carry out what is called the diagramming of the IT infrastructure. This helps them chart out the potential choke-points and inefficiencies in the system that need to be bridged or fixed. However, when businesses rely extensively on third party service for infrastructural requirements, they often do not have the complete information on the resource requirements. Going back to the example of a retailer – it is not possible to know the exact amount of resources used by a third party SaaS provider to run the demand-prediction software.

This effectively creates a barrier and makes it difficult for businesses to revert to in-house infrastructure or even migrate to rival providers.  This is a pretty critical challenge since businesses may not realize the diminishing cost advantage in a hypothetical scenario where SaaS providers stop being as cost efficient compared to in-house solutions as they are today.

The truth is that the migration to cloud networks and SaaS is a non-reversible process. It will be interesting to see if competition will continue to keep cloud infrastructure costs low as it is today, or of the monopoly of cloud against in-house infrastructure could shoot up the costs in the near future. How do you think this will swing? Share your thoughts in the comments below.