The Malta Independent on Sunday
Cloud providers can take several steps to support their continued growth
The cloud market will likely emerge from the pandemic stronger than ever. Deloitte Global predicts that revenue growth will remain at or above 2019 levels – that is, greater than 30% – through 2025 as companies move to the cloud to save money, boost agility, and drive innovation.
First, to paraphrase Spider-Man, “With great growth comes great capital expenditures.” Higher-than-expected growth is good news, but to keep up with it, cloud providers will likely need to spend more on capex. In 2019, total hyperscale spending on capex (which includes both IT infrastructure and physical infrastructure spend) was over US$120 billion. Given the continued growth in revenues, it seems likely that hyperscale capex will continue to grow at double digits, reaching US$150 billion by 2022. Additionally, investment isn’t needed just for capex. For cloud providers, artificial intelligence (AI) apps and dev tools are critical to attracting and maintaining enterprise customers and require investment or acquisition.
Also, as cloud moves from roughly onethird of enterprise workflow to roughly two-thirds, and that more quickly than expected, concerns around privacy and security should urgently be addressed. As just one example, the health care industry, which has been among the fastest to shift to cloud during the pandemic, will likely increase its exposure to new vulnerabilities, especially if the migration is not done properly. As articulated by Healthcare IT News: “While cloud computing better optimises the use of resources in health care, it also creates significant risks. This is especially true when cloud adoption happens faster than proper due diligence can be applied by information security personnel. This trend will persist well after the pandemic.”
One emerging development for hyperscale cloud providers is the intelligent edge. The intelligent edge places computing power, specifically AI computing power, not in centralised data centres but closer to the end user, typically less than 50 kilometres. The intelligent edge is not a replacement for enterprise and hyperscale cloud data centres, but a way to distribute tasks across the network to increase timeliness, connectivity, and security. In the intelligent edge model, much of the data that used to always go to the data centre doesn’t go there anymore, and hyperscale providers should make sure this data finds its way back to centralised clouds for analysis and AI training – and ensure that they’re not cut out of access to this data. Another goal for cloud providers is to develop vertical-specific apps that must reside at the edge due to latency requirements and other factors. One way that hyperscalers can deal with both data transfer and app development is through partnerships.
For their part, cloud users should consider the following factors as they continue to migrate to cloud:
• The cloud migration strategy. Cloud migration isn’t just about moving to the cloud; it entails a state of continuous reinvention if cloud is to reduce costs and create new opportunities. Prepandemic, cloud migration was already often complex. Even a single application could be tied to multiple business processes, affecting vendors, balance sheets, and regulatory compliance, and different stakeholders could have different motives and expectations from the migration. A simple process could often turn into a fog of conflicting goals, broken dependencies, and cost overruns. Post-pandemic, all of these factors will likely be even more challenging. It is critical to “disrupt your market without interrupting your business” during the migration.
• Cloud, security, and COVID-19. As noted above, increases in cloud usage mean increases in the cyberattack surface, making security more important than ever – especially given the growth in usage driven by COVID-19. In an April 2020 survey of security professionals, 94% believed that the pandemic increases the level of cyberthreat. Almost a quarter said that the increased threat is “critical and imminent.” Only 15% believed that the cyberthreat will return to previous levels post-pandemic, while five out of six believed that the new threat level is permanent.
• Cloud costs and benefits. As multiple enterprises shifted rapidly to cloud during the pandemic, some saw costs balloon. Some companies saw costs rise by 20% to 50% just from the increase in usage, even without adding in the cost of new applications or data. As organisations migrate, there is also a cost of duplication, with organisations paying for both cloud and legacy systems at the same time as well as the cost of synchronising data between them. Going forward, companies should think about cost planning (for instance, to take advantage of reserving instances at a discount), which can reduce expensive fixes due to rushed deployments. Cost governance systems can also help maintain control over expenses. To conduct a cost-benefit analysis, companies can use a cloud value calculator to evaluate the gaps between the current state and potential future opportunities. This can help optimise infrastructure, increase staff productivity, and enhance business value.
• New opportunities for value. Moving to the cloud is not only allowing organisations to recover but positioning them to thrive post-pandemic, increasing resilience and supporting business continuity at first, and then allowing to them to do new things and offer new services. Going forward, cloud can support benefits including collaboration, automation, scale, innovation, and agility. For example, with regard to innovation, two-thirds of respondents in a 2018 Deloitte survey said that cloud fully allowed them access to the newest technologies. Another study showed that 93% of companies surveyed used the cloud for some or all of their AI needs, requiring less investment in infrastructure and expertise.
Thanks to COVID-19 driving enterprises toward cloud, the cloud market will likely emerge from the pandemic stronger than ever. Cloud providers and others in the ecosystem have the opportunity to capitalise on increased usage to grow and flourish, while cloud users can seek to explore new ways for cloud to create value. Already, cloud has become much more than an alternative computing approach; in the near future, it is poised to become standard operating procedure for all types of businesses.