Cloud Optimization Equals Service Instability

The slowing economy is causing businesses to rethink and scrutinize their cloud and managed service investments, putting pressure on the recurring-revenue model.

Market analysts continue to project that cloud spending will increase from 25% to 30% annually in the foreseeable future. The expectation is that customers will continue to move applications, infrastructure, and workloads into cloud environments to capitalize on flexible expenses and agile management.

But cloud computing and subscription-based services may not be as resilient as people believe. Amazon warned of softness in the cloud computing segment twice in the past six months. Despite posting better-than-expected earnings for its first quarter, Amazon said it’s seeing customers optimize their cloud spending.

“Optimize” is code for cutting and slowing spending.