This is a point of view by the authors to give an overview of the cloud market and emerging opportunities in this first article of a multi part series on cloud computing and application modernization as we explore and reason what has changed in the past 18 months and what does the post-pandemic era have in store for the cloud vendors and customers.
Introduction
The pace of digitization accelerated nearly 7X globally during the pandemic, as huge portions of the economy moved to digital channels and these trends are here to last. Cloud infrastructure is a critical enabler for this digital transformation and in the post pandemic world this trend of cloud adoption is only going to accelerate. As per a study by Gartner, worldwide end-user spending on public cloud services is forecasted to grow 18.4% in 2021 to total $304.9 billion, up from $257.5 billion in 2020. Cloud is projected to make up 14.2% of the total global enterprise IT spending market in 2024, up from 9.1% in 2020.
However, a more granular view gives a better assessment of what happened, and where the trend lines are headed. In a report from CloudHealth, here are a few takeaways:
- Total cloud spending increased in the aftermath of the COVID-19 pandemic. However, the leap in 2020 was not huge. This was partly owing to the free services offered by cloud providers during the pandemic and the cost optimization measures enforced by organizations in a bid to control operational expenses. However, in 2021 a significant jump of 18% is forecasted by Gartner in end user spending on cloud services.
- Spending on compute services, which is by far the biggest spend, actually decreased in the same period
- Container usage saw a big increase in 2020, even in verticals that saw decreased total cloud spending. Increasingly enterprises are looking into moving applications from physical hardware and virtual machines (VM) into containers and deriving benefits such as increased portability, faster application development & deployment etc.
- Cloud vendors and their System Integrator partners are focussed on helping customers derive the maximum value from their cloud investments, with strategic consulting and operational offerings.
Why Cloud and Why now ?
The pandemic has brought to the forefront a number of fundamental shifts which are driving growth in cloud adoption, few examples:
- Increased focus on business continuity planning & agility in the business
- Increased demand for e-commerce, e-learning, telehealth, video-on-demand etc
- Explosion in demand for remote work, hybrid work will continue to be the preferred model in the post-Covid world.
- Dramatic swings in demand cycles increasing the importance for pay per use models.
Conversations with enterprises on the rationale for moving to the cloud is now much broader than simply saving costs & having a better infrastructure. It is now about cloud making the business more adaptable & agile, about enabling innovation, reinvention and growth. Public cloud providers continue to make huge investments to enhance their platforms and move up the stack providing key capabilities that enterprises had to earlier build themselves. This is allowing enterprises to focus on capabilities that truly drive innovation & differentiation in their business. There are still some enterprises in the early stages of cloud adoption that are migrating workloads to the cloud solely for cheaper compute & storage. They are doing a simple lift & shift of their on-premises workloads to the cloud and are often disappointed with the ROI unless they include other critical aspects of the cloud migration such as automation of IT processes, leveraging cloud native technologies, cloud ecosystems and marketplaces etc.
The trend of companies adopting multi-cloud and hybrid cloud strategy continues to accelerate, almost all large enterprises are deploying workloads on more than one public cloud while also keeping some data on private clouds if necessary owing to data residency/sensitivity, regulations, latency and other reasons. Per an IDG Cloud Computing Survey, over half (55%) of organizations who have embraced cloud, currently use multiple public clouds, with 21% saying they use three or more. This is further corroborated by analysts at IDC who project that more than 90% of enterprises will use a mix of public, private and on-premises environments by 2022. That said, the disruption of traditional IT caused by cloud computing is here to stay and we should be moving from fear-uncertainty and disinformation (FUD) and chaos during the pandemic to a rapid and orderly adoption and refactoring of traditional applications in the post pandemic era.
Looking forward
Human species haven’t stopped innovating since the early days of human civilization. The need for automation has been increasing historically since the Renaissance and days of the industrial revolution when the printing press replaced handwritten manuscripts. We are said to be in the fourth wave of industrial revolution since 2010 but the post Covid-era could be labelled Industry 5.0 ! The remarkable pace of adoption of innovation and automation across industries especially with a customer service component can certainly be attributed to COVID induced lockdowns and fresh thinking and introspection when almost within weeks companies digitally transformed and devised strategies to enable remote work for most of their employees without missing a beat. That would not have been possible without the progress in Internet, cloud computing and automation technologies in the past two decades. Since 2020 we increasingly come across exciting real life success stories of Customer Service Innovation (e.g. Call Center AI ), Voice based user experience interfaces (e.g. Chatbots) and a plethora of AI/ML use case adoption (predictive maintenance, autonomous driving, advanced robotics etc to name a few). The common denominator is advancement in cloud technologies and its rapid adoption. The cloud market is growing fast and as various analyst reports have stated and is already huge but we are just getting started and may only have touched less than 10% of its potential. We will deep dive further in subsequent articles in this series.
About the Authors:
Himanshu Kapoor is a Customer Success & Professional Services Executive with extensive background in leading technology led transformation for clients and client facing teams at leading organizations like IBM, Cisco Infosys and currently Google. In addition to his expertise in Go To Market Strategy, he brings a deep understanding of public cloud platforms like Google Cloud & AWS.
Piyush Malik is a veteran of data-driven business transformations across multiple industry domains having served customers worldwide & leading multicultural teams spread over 40 countries and helping with digital transformation, cloud adoption and applied data science/AI/ML journeys. Having served in strategy, management consulting and application software leadership roles at PWC,IBM, Cadence Design in US as well as product management with Tata group in India, he is currently a SVP at SpringML, a Premier Google Partner, besides being active with several industry bodies and non-profits including ASEI
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