Worldwide end-user spending on public cloud services is forecast to grow 18.4 percent in 2021 to total $304.9 billion, up from $257.5 billion in 2020, according to recent research from analyst firm Gartner. It finds that the proportion of IT spending that is shifting to cloud will accelerate in the aftermath of the Covid-19 crisis, with cloud projected to make up 14.2 percent of the total global enterprise IT spending market in 2024, up from 9.1 percent in 2020.
Today, adopting cloud technology has never been easier. Many of the obstacles and challenges that held customers and business back have now been broken down or eliminated. There are still some prevailing misconceptions, the most pervasive being a lack of understanding or common agreement of what ‘the cloud’ actually is, and the ambiguous and amorphousness of this term is still leading to confusion as it is used so interchangeably to describe a range of differing service models.
Given the number of cloud models, organizations typically need partners who can guide them on their journey to the cloud, understand which models are right for them and deliver implementations that are cost-effective and provide the most value.
Commonalities of cloud services
First, and perhaps more obviously, cloud computing services are all delivered via the internet. A key tenet of a cloud service is in its omnipresence. It is an on-demand, always-on and always-accessible offering where users have immediate access to available resources, from any location and when they need it.
Second, and one of the primary attractions and benefits of cloud computing, is the use of pooled resourcing, where service providers combine computing and infrastructure to support many customers simultaneously. This enables both physical and virtual resources and loads to be dynamically allocated to keep up with customer demand. Services can be deployed by the provider as multi-tenant (or public cloud), meaning that every customer shares the same computing resources, or can be deployed as single-tenant (or private cloud), where everything is set up to serve just one customer. Multi-tenant is cheaper and easier to maintain or upgrade but comes at the cost of flexibility and security. Single tenant is more flexible and secure but requires greater technical involvement from the customer to maintain or upgrade, and is more expensive.
A third characteristic – scalability – enables service providers to strategically expand these services vertically and horizontally – and a subset of this feature, elasticity, is used to describe the way that short-term demand surges or rapid provisioning requirements are handled. These processes are often performed using automation software to configure applications or services instantly and handle any resource-loading automatically.
A fourth characteristic is that these services are delivered on a consumption basis via a pay-per-use model, which shifts traditional IT procurement of infrastructure assets in a Capex spending model, to a subscription-based Opex-pricing model. Borrowing on lessons learned from the telecommunications industry, many vendors offer measured service usage to ensure that resource and services are monitored and consumption is calculated and fed into monthly billing.
Cloud computing models
Software-as-a-Service (SaaS) is the most familiar offering, where ready-to-use applications such as Netflix, Zoom or Microsoft 365 are accessed either directly through a browser or via a download and installation to a device. In a SaaS model, the vendor handles everything from infrastructure to support and ensures users are always running the latest version of software.
Infrastructure-as-a-Service (IaaS) is where hosting, networking and storage resources are rented by businesses for application deployment, data storage, disaster recovery and analytics. These services are offered as alternatives to on-premise infrastructure, and help businesses expand their resources without having to invest in expensive on-site hardware.
Platform-as-a-Service (PaaS) which is likely to be the least familiar offering, provides a development environment for building and deploying applications without the need to build and maintain any software development infrastructure. This service provides developers with the hardware and software tools needed for application development, managed via a self-service portal.
Benefits of cloud services
Cloud services offer many benefits. Cloud supports a lower total cost of ownership (TCO). It can offer fixed costs, fixed timelines and a fixed roll-out of product capability. A cloud environment is scalable, which means that enterprises using cloud can just add service blocks or remove them as their business needs change. As such, they can free up capital for investments that are more closely linked to their core business.
Another key advantage is faster time to market. Cloud removes many pain points that businesses experience in the development or adoption of new systems and solutions. The cloud transforms software deployment. Traditional implementations can take months and sometimes years. With cloud computing, you can have a fully working application in a matter of hours, which allows organizations to capitalize on the latest market trends and upgrade their business model rapidly. It also enables organizations to concentrate on their core business, and not have to limit innovation or expansion of the business due to on-site infrastructure constraints. Moving to the cloud enables businesses to simply ‘do business’ – to focus on the core activities and cognitive outputs that add value to the organization – leaving the majority of traditional IT-related issues to be managed by someone else.
Delivering enhanced innovation
One of the greatest advantages that cloud software provides businesses is its ability to deliver tangible innovation that can be used to bring benefits across multiple applications. Historically, the fact that innovations occur in a scattered fashion has represented a difficult-to-solve challenge for many industries. Start-ups, developers and innovation specialists are often creating solutions for specific niche markets in platforms and languages that don’t really relate to wider business applications.
Today, however, the environment and culture around cloud software are fast changing. The ongoing evolution of the cloud means that businesses can increasingly harness innovation and use it to achieve tangible business benefits. We see much greater use of common formats, languages, and platforms. In the ERP world today, we are seeing the development of new vendor ecosystems and platform services that are being utilized for rapid innovation. Intelligent technologies like robotic process automation (RPA), machine learning and conversational AI are becoming more accessible to businesses, who are able to capitalize on them without the learning and expenditure barriers that may have previously existed.
As more platforms enter the marketplace, it is becoming increasingly key for vendors to deliver less proprietary and siloed protocols and more open source and open standards, meaning greater interoperability between common and competing systems, that allow them to exist in a cohesive ecosystem. This kind of capability will allow best-of-breed solutions to operate in harmony, in turn enabling organizations to scale and deliver high value at low incremental cost, without a root and branch redesign of their entire business systems landscape. Enterprises today are not looking for a single, monolithic ERP system to take over their entire business. Businesses increasingly want a platform for life but they are also looking for solutions that can closely integrate and ‘play nicely’ with their other best-of-breed systems, and platforms that evolve in line with ever-changing market demands.
SAP has introduced a new packaged offering, RISE with SAP, in response to the changing market and the desire for businesses to find innovative new ways of redesigning their business processes for better business outcomes. The package contains SAP S/4HANA (Public or Private) bundled together with a range of infrastructure, platform and business process services, to allow organizations to move quickly to a cloud computing model and have everything that they need into a single subscription cost. CEO, Christian Klein, said: “Geopolitical tensions, environmental challenges and the ongoing pandemic are forcing businesses to deal with change faster than ever before. Companies that can adapt their business processes quickly will thrive — and SAP can help them achieve this. This is what RISE with SAP is all about: it helps customers continuously unlock new ways of running businesses in the cloud to stay ahead of their industry.”
Collaborating to achieve cutting edge
Certainly, for many organizations, migrating to the cloud offers that powerful combination of business agility and access to new technologies that ultimately really supports innovation. The scalability of cloud enables organizations to quickly ramp up for a temporary data overload, or add computing power to meet their real-time business needs. It also gives them that easy accessibility to the content and tools they need to deliver innovation.
Cloud is capable of providing business users with constant, ‘everywhere’ access to content on their preferred device. It also gives organizations the capability to develop new solutions and grow their business with new technologies such as IoT and artificial intelligence, which are available only as cloud services.
Any organization looking to migrate to cloud and take advantage of enhanced innovation, will need a partner to guide them on their way. A third-party implementation and solutions provider can be key in helping to fine-tune an organization’s vision around why they want to move to the cloud, what they expect to gain from it and how to take the first step in the right direction. They can help define goals, provide recommendations and build a transition roadmap that can help turn the cloud’s promise of innovation into a tangible reality today.
Mike Robinson, UK Head, S/4HANA Cloud, delaware United Kingdom