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2016 forecast: Industry clouds on horizon? IDC thinks so

Coming in at No. 8 in market research outfit IDC’s tech predictions for 2016 and beyond, was this: “industry clouds.” In a webcast, analyst Frank Gens said companies like John Deere and UnitedHealthcare are turning industry cloud platforms into “epicenters of innovation, growth and disruption” — and he said half of U.S. organizations will either create or partner with one to distribute or source their innovations by 2018.

The predictions highlighted developing technologies like the Internet of Things — 22 billion devices are forecast to be hooked into to it by 2018 — and familiar ones that nonetheless are growing madly, like cloud computing. But industry clouds was a new one on me, so I turned to Eric Newmark, an IDC analyst who helps life-sciences organizations make technology decisions. He also leads the company’s industry cloud platform service.

“Industry cloud is at its essence about buyers becoming suppliers,” Newmark said, referring to buyers and suppliers of cloud computing services. It’s a sort of joint cloud venture for vertical markets: An organization in a specific industry creates a cloud platform for other organizations in that industry — for example, a hospital offering cloud services to other hospitals — or organizations come together on a customized cloud platform to work toward a common goal.

“So it’s more of a many to many not just a one to one,” Newmark said.

Industry clouds a ‘win-win’

There are three models for development of industry clouds, he said. In one, an organization offers up a particular expertise in the cloud for others, who pay for it on a subscription basis. In another, a vendor creates a cloud platform specifically for an industry. And a third is a partnership of user organizations in a specific industry and one or more technology vendors. It’s the most popular model today. For everyone involved, Newmark said, the models are a “win-win.” (See “Industry cloud boon for IT, bane for unwary tech vendors.”)

“The end-user company creating the industry cloud gets to create a new revenue opportunity for themselves,” he said. “All the other entities on the other side of the coin that decide to consume this as a service win as well because they don’t have to re-create the wheel for themselves.”

An example of the partnership model began at Mercy, a healthcare operator in the Midwest. It created a data center as a service for itself as a cloud backup service. It was so successful, Newmark said, “they realized that ‘Wow, this is something that other hospitals could use.'”

So Mercy partnered with several technology vendors to create Mercy Technology Services, which first started offering its cloud backup service. As more hospitals signed on, Mercy offered more services, like application management and telemedicine, and now aggregates data from constituent hospitals to provide data analytics services and insights on how to improve medical care.

Collaboration leads the pack

Healthcare is the forefront of the industry cloud market today, Newmark said. He credited the changes introduced by the Affordable Care Act as a catalyst for entry.

“I think that people have been trying to solve a lot of the different challenges and problems in the healthcare space — tackling things collaboratively has made a lot of sense,” he said.

Life sciences is another area where the collaborative nature of industry clouds is a boon. Sharing R&D may shorten the path to a disease cure, for example — and collaborative partnerships of this sort in the industry have existed for decades, Newmark said. Oil and gas and other utilities companies are slower to come together on the platforms. They’re highly competitive, and “there’s less of a history of working together.”

There are between 100 and 150 industry clouds today, Newmark said. But he expects there will be around 500 by 2018 and 1,000 by 2020. In revenue, hundreds of millions of dollars today will balloon to tens of billions in just three to five years.

Let us know what you think of this post; email Jason Sparapani, features writer, or find him on Twitter @jmsparapani.

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