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Business adoption of cloud computing is happening fast. This sector alone is predicted to outpace growth in the overall IT industry fivefold. But this brings challenges for hardware and software vendors and for the IT administrators who are using their products, says Antone Gonsalves in ReadWriteWeb. The IDC research he quotes suggests that by 2016 companies will spend $100 billion on cloud services, an annualized growth rate of 26 percent. And the SaaS market will be a huge chunk of that, accounting for 60 percent of the public cloud by 2016.

New Models for Vendors

Both software and hardware vendors will need new revenue models in this new cloud-based business environment, and that could bring benefits for IT administrators at midsize businesses. Software vendors will have to broaden their offerings beyond the Fortune 5000 to target a wider range of customers. That may lower the entry point for IT administrators looking to get into cloud services at an affordable price. (And they WILL have to get in. A Washington Technology article points out that cloud computing is no longer an optional extra, but a must-have in business.) Within the hardware business, providers that now target IT departments directly will shift to supplying the companies providing cloud services. Those companies will ramp up demand as cloud business becomes more widespread.

Implications for Midsize IT

So what does all this mean for midsize IT? There will be big changes ahead. Rather than administering their own networks, servers, and applications, they will see much of this responsibility shift to cloud servicevendors. There are positive and negative aspects to this. A major advantage is that they won't need to invest as much in either hardware or software as vendors will be responsible for providing and maintaining services. Cost-saving is always a bonus, especially for a midsize business. And if IT administrators don't have to manage as much hardware or software, they will be able to focus on buying services that deliver value and innovation to customers.

They will be able to focus on integrating cloud offerings with existing systems--or replacing those systems altogether. But there's also a big question mark over the level of control they will have over out-sourced services. IT administrators are likely to spend much more time setting expectations with vendors and assessing how those are met. While this is a huge change in organizational culture for IT departments at midsize businesses, perhaps the benefits of quick service deployment and a low cost base will help to ease the pain of the transition.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us onFacebook. Follow us on Twitter.

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