The Covid-19 pandemic is serving as a catalyst to cloud adoption across the world as organizations embrace digital ways of working. A recent report by Gartner predicted that worldwide spending on cloud services will grow by 19 percent in 2020, even as the overall IT spending will fall by around 8 percent during 2020 as a result of economic uncertainties. Increased preference for Operational Expenses over Capital Expenses, the need to build agile, resilient business operations models and higher adoption of enterprise mobility tools and services to enable a mobile workforce are key factors driving cloud adoption in the new reality.
Here, we delve into what the cloud and infrastructure services market will look like in the new reality, which cloud type will find more favor among enterprises, and the emerging cloud computing trends.
The new reality demands cloud transformation
While the cloud has been around for long and proven its mettle enough, many businesses in the pre-Covid era were slow and/or reluctant to move their core applications to the cloud. Concerns around security, compliance, and lack of visibility and control were key reasons keeping enterprises from going full throttle on cloud adoption. The Covid-19 pandemic, however, changed the equation almost overnight. Forced to adapt to remote work quickly, businesses immediately saw the multiple benefits of cloud ranging from business continuity to cost savings and everything in between.
Let us deep dive into some of the key factors driving cloud adoption in the new reality:
#1 Cost pressures: Given the budget tightening mandate that most organizations are operating with today, the cloud’s flexible pay-as-you-go pricing structure is appealing most to businesses. CFOs are pushing to defer capital expenses in the current financial year, while rooting for cloud enabled digital transformation at the same time. The previous hesitance to change is giving way to willingness and an increased appetite for risk – a definite positive that has emerged from this crisis. Cloud computing enables IT to ramp up/down processes as needed, optimizing asset usage and helping reduce IT overhead costs significantly. Moreover, leading cloud providers are now willing to invest a portion of their yearly fee to move customer workloads to the cloud, giving a clear signal to organizations to move faster on their cloud journeys. Besides turning huge capital expenditures to operational expenses, embracing the cloud enables organizations to monetize their physical facilities and datacenters (save on rentals/real estate costs) to free up working capital. When a US based multinational beverage corporation shifted more than 20 percent of its IT to the cloud and put a for-sale sign on its datacenter at its headquarters back in 2016, it signaled a change to come in IT monetization practices.
#2 Increasing business demand for new services: With the pandemic changing consumer behavior, spending appetite, and ways of living and working significantly, most companies are looking to rejig and/or add new products and services to their portfolio quickly. The cloud with its faster provisioning and elasticity benefits helps enterprises roll out new applications faster, experiment with new business models in a fail-fast manner, and respond to demand and supply volatilities with agility. Majority of organizations consider “the ability to quickly meet business demands” as a key driver for cloud adoption. Leading cloud providers are increasingly offering Artificial Intelligence, Machine Learning and Big Data analytics solutions to support quick and more informed releases of new business features.
#3 Enhanced focus on data security: Previously, the business argument of organizations in terms of embracing the cloud was: ‘yes, it’s great, but what about the security?’. Thankfully, over the years, leading cloud providers have bolstered their security postures and enterprises are realizing that cloud computing is now far more secure than traditional computing. Rising costs of datacenter storage operations, and the alarming growth in data breach, theft and loss incidents also play into organizations’ preference for cloud in terms of security. Most cloud systems deploy multiple layers of security, app role-based authentication, store data in multiple locations (for protection against hardware failure and corruption), and offer built-in security features, such as the ability to remotely wipe data or shut down any part of a system if a risk/threat is detected. In fact, Gartner has predicted a growth of 33.3 percent in Cloud security spending in 2020, bringing total spending up to $585 million. Cloud-based security has made some software solutions much more resilient to a downturn and will shield the security market from the full effect of a recession.
#4 Resilience & availability of cloud infrastructure: With business continuity emerging as a key focus area today, the high availability-low latency features of cloud that drive business resilience are particularly enticing to most organizations. By enabling unlimited network capacity, mobile access to corporate data via smartphones and devices, and automatically allocating more/less storage to a database as required, cloud platforms enable digital ways of working remotely for employees, field staff, etc. Embracing the cloud also offloads internal IT from ensuring infrastructure availability and refresh to stay current with ever evolving technology as availability and maintenance are handled by cloud providers based on the level of service subscribed to. A popular media company recently achieved its goal of 99.99 percent uptime by embracing the cloud.
Will everything move to the cloud in the post-Covid reality?
While the shift away from traditional data centers was already underway since past several years and has definitely seen a boost since the pandemic struck, not all workloads will move to the cloud. Mission-critical business processes requiring greater oversight and more granular levels of control than is available via cloud infrastructure and hosted models will continue to remain on-premises for most large organizations.
To reduce spend on data center storage, colocation is expected to gain traction as it offers higher availability, reliability, energy efficiency, and dedicated facilities management with the ability to scale quickly on demand. On the public cloud vs. private cloud debate, experts predict a hybrid strategy to emerge stronger in the new reality. That’s because a hybrid multi-cloud architecture enables organizations to get the best of both – public and private cloud platforms, customize their cloud framework and deploy a model that best serves their unique business needs, critical workloads, and future initiatives.
Take for instance, a multinational computer technology company, that has recently overhauled its cloud strategy in favor of hybrid cloud as a response to the pandemic. In a recent Everest Group survey, 72 percent of respondents described their cloud strategy as hybrid-first. While large enterprises with complex IT architectures and security loops can find hybrid cloud adoption difficult, the inherent flexibility, agility and efficiencies afforded by the hybrid cloud far outweigh the challenges.
With the right cloud strategy, roadmap, and talent in place, hybrid cloud is poised to become the future of work in the post-Covid world as it empowers employees, drives innovation, and enables digital transformation at the pace of change – a key ask for enterprises of all sizes in today’s volatile, uncertain, complex and ambiguous (VUCA) world.
Manish Garg, Vice President & Business Head – Cloud & Infrastructure Services, Europe, Wipro
