Although specialized cloud platforms have been around for several years, they’ve mainly focused on industries that face particular regulatory issues or have specialized requirements, such as financial services, life sciences, healthcare, manufacturing and government.
Now, vertical clouds are emerging across all industries. Research firm IDC estimates that there could be more than 100 of these industry clouds by the beginning of 2016.
Industry clouds offer several advantages to organizations. For one, they can help the public and private sectors to integrate and break down traditional silos, enabling better collaboration and information sharing within the enterprise.
“The basis for vertical clouds revolves around the idea that information is much more widely available as a service,” says Scott Lundstrom, group vice president and general manager of IDC Financial, Government and Health Insights. He notes that every industry has hurdles to clear, such as regulatory requirements and business transformation challenges.
IDC uses the term “industry clouds” to describe clouds made up of self-organizing digital networks and multiple participants within an industry.
Analytics fuel the engine of industry clouds. Digital networks make it easier for organizations to start with the data and then let the discovery of business insights drive the process, rather than applying data to a process as has been done historically, Lundstrom says.
Ultimately, vertical clouds will aggregate insights to enable an organization to compare itself with its peers, says Ray Wang, founder and chairman for Constellation Research. This will help the organization identify and shore up gaps in its processes and gain a competitive advantage.
“When you want to do benchmarking and compare across different companies, you now have the ability because the data sets are the same, the data structures are the same — something you couldn’t do when all these systems were separate and everyone had their own variations,” Wang says.
Additionally, having one repository for industry data and processes creates new opportunities for third-party development, says Jillian Mirandi, an analyst for Technology Business Research. Several cloud vendors are moving into verticals to expand their addressable markets and speak the language of the customer. For instance, an automotive customer is going to have a different set of requirements and needs than a research institution.
Vertical clouds also offer economies of scale, says Wang.
“There are certain things that all companies in certain industries do, so they might as well commoditize those processes so they can focus on something else,” he says.
For example, companies in the baking industry do certain things the same way, such as bill convenience stores or deliver goods to a customer, he explains. If businesses in those industries can do the same thing without having to reinvent the wheel, they can reduce their IT budgets.
Federal agencies also make perfect candidates for vertical clouds because of the federal cloud-first policy.
“Certain industries, like government agencies, require a much higher level of security,” says Jeff Kagan, an independent technology industry analyst, noting that vertical clouds are able to deliver.