Covid-19 forced many companies to rapidly adopt cloud-based technologies in a way that could never have been predicted. Whether it was how we communicated or how we collaborated, businesses needed to find a way to work securely in the new world we are currently operating in, and this has accelerated the adoption of cloud solutions in a short space of time.
If people move back to the office, what will happen to all the software tools and cloud service providers now in place? Furthermore, how will companies’ IT infrastructure change? Many businesses were already beginning to move certain areas of their IT estate from being hosted on-premise or in private rackspace in a data center to being hosted in the public cloud, where computing resources are shared across multiple businesses.
The public cloud is provided by the ‘hyperscalers‘, which includes brands such as Amazon Web Services, Microsoft Azure and Google Cloud. Each has built huge data centers to facilitate their public cloud services. Roll back the clock five years and there was a degree of nervousness about moving to public cloud despite its cost and flexibility benefits. This was because companies in certain sectors were nervous about their data security and there was a perception that businesses were less in control of their IT estate if it was hosted in the public cloud. Additionally, there was a belief that it was less secure.
These concerns were slowly being eroded prior to Covid-19 as central governments and financial institutions, both previously cautious when it came to their data security, began to move to public cloud. Covid-19 has proved to be a huge accelerant to this trend, as businesses needed both the software and applications to support their operations, but also the underlying flexible and secure infrastructure the cloud offers.
My prediction is that, if anything, the next 12 months will see an even greater level of cloud adoption as businesses increasingly become digital. Having gone through the rapid shift to cloud-based systems and infrastructure businesses are unlikely to take a backwards step from the operational efficiency and financial flexibility they now have in place and instead are likely to double down on their investment.
Businesses will want to see a return on their investment in the cloud and will expect to see more from their cloud computing providers. In particular they will look to start to optimize all of its benefits, such as data and analytics and AI.
The hybrid model and questions for the cloud
Some businesses may look back on a successful year and consider giving up their office presence altogether, however given the importance of training, collaboration and culture, it’s likely that the majority of businesses will keep a form of physical presence and operate a hybrid model going forwards.
This bodes well for cloud adoption, as the hybrid model still needs employees to be able to access the information and tools to do their job securely wherever they are. Choosing to adopt a hybrid working model is not without its challenges though, and I have no doubt leadership teams across the country are all thinking through similar questions, such as:
- How will meetings work? It’s a fairly straightforward question when everyone is in the office or everyone is working from home, but how will communication happen when operating a half-and-half model?
- For many, hybrid working may also mean flexible working, having all worked in a more flexible way over the last 12 months. How will team activity be tracked and collaboration maintained when people are not all online during the same times?
- Training and mentoring remotely has come on leaps and bounds in the last 12 months, however companies are not currently hiring at the same pace as they were pre-pandemic. When companies start to hire at the same rate, do they have the infrastructure in place to onboard and upskill at scale? Are newer, especially more junior, employees making meaningful connections across the company? How will the passive learning of an office environment be replicated for the benefit of more junior employee?
- Microsoft analysis of emails and meetings showed that while there has been a significant uptick in time spent in virtual meetings over the last year, a lot of that is with our internal network, and our wider network has shrunk. How will people ensure wider networks begin to grow and collaboration is enhanced, within the hybrid environment?
The good news is that the solutions to these questions will likely be found in the cloud. Tech will be key to solving them, and I would expect over the next 12 months significant evolution in the collaboration and communication tools we’re all using. Just this month, Microsoft announced that it had acquired Nuance Communications for $16 billion, giving Microsoft a company that specializes in voice transcription and related AI software. This transcription technology could in time get integrated into Microsoft’s core products such as Teams. It isn’t just Microsoft, most of the hyperscaler cloud platform providers are evolving their products, whether organically or through M&A, to retain their market position, capture growth and customer relationships as businesses continue to transition away from on-prem models.
The biggest challenge for cloud providers
The reason these providers need to evolve, is because the biggest challenge facing them will be customer retention. If we take online meeting services as an example, historically businesses would have had to invest in a service, such as WebEx, which is often costly and comes with a lot of equipment. Today, however, businesses are using cloud providers for this and can just turn services on and off with little upfront investment. This means that customers aren’t locked into providers in a way they once were.
As a result, cloud computing providers will need to over-deliver for their clients, retaining a high level of customer service as well as optimally iterating the features of products, so that they remain ahead of the curve. Only by continuing to invest in product and service will they benefit from the market’s rapid growth.
Daniel Bailey, Investment Director, ECI Partners
