By the time Corona 19 began to spread all over the world in March of last year, there was already a smooth transition to cloud in various industries. However, it was found that the adoption of the cloud-accelerated at a rate that was not previously expected due to the pandemic.
Enterprise spending on cloud infrastructure services (IaaS, PaaS, SaaS, hosted private cloud services) was $65 billion in Q3 2020, according to data from Synergy Research, which tracks global cloud investments and market share. , 28% higher than the third quarter of 2019 and 3% higher than the analysis of experts before the pandemic. That quarter alone, there was an increase of $1.5 billion. "The market in the third quarter was out of sync with the trend and growth was much steeper than expected," said John Dinsdale, senior analyst at Synergy Research. Logically, the impact of the pandemic is the only reasonable explanation for the rapid growth of the market.”
Spice Works & Ziff Dav (SWZD), a technology B2B market site that connects technology buyers and sellers across multiple industries including IT, marketing, HR, finance, etc., targeting 1,073 IT purchasing reps in North America and Europe in June and July 2020. And released the “ IT Status Report in 2021. ” From this, it can be seen that budget managers plan to more actively transition from having the hardware to operating cloud services. Hardware spending from 35% in 2019 to 31% in 2021 It is expected, while steadily decreasing year-on-year, cloud spending is expected to increase from 21% to 24% in 2021.
The companies that led the cloud transformation like this had a very good year with cloud-related stocks. Cloud-centric Exchange Traded Funds (ETFs), such as the Global X Cloud Computing ETF (CLOU ETF), a cloud computing enterprise investment product similar to the First Trust Cloud Computing ETF (SKYY), a cloud computing enterprise investment product with a market cap of more than $500 million. , Listed index funds), have far surpassed other stocks in the market in 2020.
Cloud spending continues to rise
According to Gartner's latest survey, global public cloud spending is projected to grow 18.4% in 2021, for a total of $304.9 billion. Survey data that follows shows that 70% of companies plan to increase cloud spending due to COVID-19. "The pandemic has accelerated cloud spending," said Ed Anderson, Gartner's vice president of research. Looking at overall spending, companies have moved to the cloud to control costs, support new telework patterns, and help keep the business viable.”
Technology industry market research firms are also unanimous on the topic of increasing cloud spending. After a slight slowdown in public cloud revenue growth at the end of 2019, Forrester raised its outlook for the public cloud infrastructure market in 2021 from 28% growth ($111.3 billion) to 35% growth ($120 billion) due to the pandemic.
IDC predicts that spending on cloud IT infrastructure will grow 10.4% per year to reach $109.3 billion in 2024, accounting for 63.6% of total IT infrastructure spending. Carla Arend, senior program director for software and infrastructure at IDC Europe, said: "Cloud investments have accelerated in 2020, and companies with successful investments will maintain investment levels and increase by an additional 20%."
Cloud investment will continue
These predictions suggest that all cloud investments made in 2020 are likely to continue in response to the pandemic. Gartner's Anderson says: “People tend to stay where they are when they switch processes or apps to the cloud. "By 2024, this is an increase of tens of billions of dollars overall."
Take, for example, Danny Atias, chief digital and information officer at the blood cancer charity Anthony Nolan. He had already had plans to move core systems such as donor CRM and high-performance DNA sequencing applications from the organization's own data center to Microsoft Azure and Google cloud infrastructure. And as the pandemic struck, this cloud migration strategy evolved into a massive campaign. “Last year we accelerated our strategy. Azure spend in 2020 is three times that of 2019, and the total cost of infrastructure and platforms is reduced by 40%, demonstrating the value of the cloud strategy.”
Not everyone is increasing cloud spending
IDC revised the model last November to account for the impact of the Corona 19 pandemic, and the level of IaaS investment remained surprisingly flat even after the adjustment. "It seems that both trends are happening at the same time," Arendt said. The slowing economy and accelerating adoption of cloud services are in line with the original predictions ahead of the pandemic. One-third of the market will cut spending significantly, so this should be taken into account even though cloud spending is generally accelerating. Gartner's forecasts haven't soared as dramatically as some might have expected, largely due to the impact of an overall slowing in spending due to the widespread recession caused by the pandemic. Initially, it surged, but at the same time, the overall budget was tightened. This has created an easing effect on what would have been a huge surge.”
However, the ongoing disagreement between cloud adopters and leading companies is expected to diminish by 2021. It's because companies realize that if they don't modernize quickly, they're on the verge of disappearing.
In a 2021 joint report by IDC and multi-cloud service provider Cloudreach, a survey of 200 US CIOs on cloud migration plans found that 29.5% of respondents accelerated their digital transformation plans as a result of the pandemic. , 33.5% showed that they adhered to the existing method. 16% of respondents planned a broader digital transformation due to the pandemic, and only 4% had no business transformation plans. In addition, 27.5% said that large-scale migration to the public cloud is 'essential to survival'.
Banking industry analyst Jim Maros said, “In 2021, financial institutions must determine what efforts to improve their digital banking experience, and prioritize their technology investments to support a multi-channel future. In other words, companies of all sizes need to evaluate their digital transformation journey, taking into account what happened in 2020. Cloud computing can support many of these initiatives to support agility, scale, product innovation, and analytics projects.”
Change your mindset to cloud preference
While the report figures show a widespread acceleration of cloud adoption, COVID-19 has also changed the attitudes of many companies toward the cloud. IDC's Arend said, “Many people I've talked to in person have seen a shift in cloud thinking at the board level in April and May. "In many transition cases, we consistently talk about the disappearance of ongoing skepticism about cloud services." "There will always be some doubts about conservatism or legacy investments and technology, but the cloud will work and It was the strongest evidence of being flexible, expanding, and resilient.”
During the pandemic, the industry sector that relied heavily on flexible cloud services to meet customer demand was retail, especially the grocery sector. A group of British retailer Sainsbury "In 2020, more cloud-based collaboration tools, such as Microsoft 365, had an employee 'three years of adoption' in three months," said CIO Phil Jordan. "The strategy hasn't changed, but what really changed was the adoption and barriers to adoption."
As the UK government changes its guidelines regularly throughout the year, Sainsbury has been able to leverage the flexibility of its cloud services to expand its e-commerce operations and meet fluctuating demands. Today, Jordan is looking for ways to move more legacy workloads, typically on the supply chain side of the business, to the cloud. "The urgency to use the same consumption model for all workloads has definitely accelerated," he said.
In March 2020, a lot of cloud spending was immediately driven by requests to work from home around the world, but the cloud proved to be very valuable during these fluctuating times. Companies will certainly not rely on the way they did business in the past. Eventually, the cloud transition has begun in all industries and will be an irreversible change. And leading suppliers are ready to reap the benefits for years to come.
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