Cloud Revolution: Cloud Shift, Cloud Models, and Cloud Future
Cloud computing is notably one of the most powerful engines that have kept the world economy growing and supply chains moving during and in the immediate aftermath of the pandemic. Cloud has enabled thousands of enterprises to shift their operations off-premises smoothly and swiftly by allowing millions of workers remote access to their data and files and thus, massively changing the business fabric. Cloud commerce, in turn, has given retailers unmatched flexibility in shifting their operations online and developing new digital experiences at an unprecedented pace. The sudden rise in the need for ‘remote’ has not only fostered brilliant ingenuity but also produced an immense array of growth opportunities that you can shake the proverbial stick at.
In this article, we take a deeper look into how the cloud has been shaping the business world for the past couple of years and what it has to offer in the nearest future.
Pandemic Influence: Stats of the Cloud’s Rapid Growth
Forrester research shows that during the pandemic, ‘the four largest public clouds maintained very strong revenue growth (AWS: 29%, Microsoft Azure: 47%, Google Cloud: 43%, and Alibaba: 59%) as companies accelerated cloud migrations and rushed out new apps to meet fast-changing consumer demands.’ For example, Moderna used AWS to accelerate its vaccine research, while Etsy used Google Cloud to cater to buyers of its 65 million products. In short, to put it in the words of Sid Nag, research vice president at Gartner, “The pandemic validated cloud’s value proposition,” meaning that the ability to use on-demand cloud models to achieve business continuity has greatly accelerated digital transformations and reinforced cloud adoption across many industries.
As the pandemic continues, cloud services become the centerpiece of any digital experience. According to Gartner, global cloud revenue is estimated to total $474 billion in 2022, up from $408 billion in 2021, which means that cloud revenue will surpass non-cloud revenue for relevant enterprise IT markets.
In 2022, Global cloud revenue is estimated to total $474 billion, up from $408 billion in 2021. (Source: Gartner)
As organizations become more decentralized and enterprise technology needs grow more complex, more companies are using cloud services for new initiatives, replacing existing systems, and gradually shifting to the cloud.
Cloud shift
The so-called cloud shift is happening as a result of organizations’ growing preference for cloud-first or public cloud services compared with traditional non-cloud options. As a result, the proportion of funds being allocated to cloud services will continue to grow as companies look to improve their operational efficiencies while taking advantage of the opportunities that cloud providers offer. This way, Gartner estimates that spending on cloud system infrastructure services will continue to grow rapidly, reaching $122 billion in 2022, while spending on data center systems will continue to fall.
End-user spending on cloud system infrastructure services will reach $122 billion in 2022, while spending on data center systems will continue to fall. (Source: Gartner).
The cloud shift opens up new opportunities as it enables organizations to develop new IT architectures and operating philosophies, thereby creating a foundation for next-generation IT solutions. This way, the major technological disruptors, in such forms as AI, IoT, advanced analytics, or edge computing, are almost always tied up to a cloud foundation, which makes the cloud an outright necessity for the development and enhancement of those technologies.
While seeking ways to prioritize and balance cloud adoption and modernization of legacy systems, companies should adopt a sensible approach that takes account of the company’s long and short-term goals, risks associated with shifting to the cloud, and current circumstances.
Cloud systems and cloud models
In this section, we’ll take a deeper look at increasingly evolving (and maturing) cloud technologies.
Public Cloud
At the core of cloud computing lies a public cloud. As the pandemic’s pace doesn’t yet falter and more customers become increasingly comfortable digitally and accustomed to the speed and convenience of digital experiences, the public cloud market is expected to continue to grow in size forcing companies to prioritize customer experience over cost savings. As a result, Gartner predicts public cloud spending to reach $482 billion in 2022 and exceed 45% of all enterprise IT spending by 2026.
End-user public cloud spending to exceed 45% of all enterprise IT spending by 2026. (Source: Gartner)
Desktop as a Service
Desktop as a Service (DaaS), which is the cloud version of Virtual Desktop Desktop Interface (VDI), has been steadily gaining hold, becoming one of the essential components of the ‘new norm.’ DaaS exceptional ability to hit the ground running in extraordinary circumstances, ensuring business continuity and delivery of mission-critical applications, has enabled many companies to keep up their business operations with minimum downtime. One such company was Vodafone who kept its 50,000 employed connected during the pandemic with a hybrid hyper-converged deployment of VDI and DaaS that involved Windows Virtual Desktops (WVD) on the Microsoft Azure public cloud. Not just private but also public companies are embracing DaaS technologies. This way, universities (such as Robert Gordon in Scotland or Creighton in the US) have been able to switch their whole departments to regular online learning within days. As hybrid work drives more DaaS initiatives, Gartner estimates that the DaaS market will grow 253% between 2021 and 2024, overtaking customer-operated VDI by 2024.
The DaaS market is expected to grow 253% between 2021 and 2024, overtaking customer-operated VDI by 2024. (Source: Gartner)
Disaster Recovery as a Service
Until recently, organizations didn’t even think of moving their Disaster Recovery (DR) operations outside their data centers, owing largely to the inconsistencies of networking and security protocols. However, as technology improved and vendors fixed many incongruities, viable options of robust and resilient cloud platforms have emerged to deal with secure data storage, backup, and recovery. More companies are now looking for automated Disaster-Recovery-as-a-Service (DRaaS) platforms on the cloud that help reduce their recovery times significantly. The DRaaS market is expected to grow further, reaching almost $7 billion by 2023, according to IDC experts.
Hybrid Cloud
Since neither public nor private cloud can satisfy all business needs — there are security concerns, flexibility, and performance issues in both — 82% of enterprises have opted for a hybrid approach and 92% report to choose a multi-cloud strategy in an attempt to optimize their operations and strike the balance between the multiple options and available resources (Source: Flexara’s 2021 State of the Cloud). According to MarketsandMarkets, the hybrid cloud market will reach $97 billion by 2023.
Continuously evolving hybrid models enable organizations to lift and shift their current applications by buying up IaaS-like resources comprising of raw compute and storage. Uber, for example, has repeatedly stressed the importance the company places on its hybrid model to ensure both constant uptime and a close-knitted relationship between product development and deployment.
Cloud-Native Applications
Gartner predicts that by 2025, 85% of enterprises won’t be able to fully execute their digital strategies without cloud-native architecture and technologies. Cloud-native applications are applications that are specifically built for the platform they run on rather than an operating system or a physical server, meaning that they can connect with each other via APIs. Cloud-native architecture is, therefore, much more flexible and resilient; and cloud-native technologies, such as Kubernetes and containers, make the development of scalable custom-facing apps easy. Forrester indicates that if before the pandemic, only 22% of developers used containers to build apps on the public cloud, those numbers rose to 28% in 2021, clearly demonstrating a shift toward public cloud-native first. According to Gartner, cloud-native technologies will soon become pervasive, and anything non-cloud will be considered legacy.
By 2025, 85% of enterprises will embrace a cloud-first approach and won’t be able to fully execute their digital strategies without cloud-native architecture and technologies. (Source: Gartner)
As the cloud-native ecosystem evolves, we’re bound to see its consolidation with major players strengthening their positions, while changing operating models within the organizations will create demand for new roles and responsibilities to oversee the value stream of cloud operations and its alignment with product strategy.
Cloud Commerce
Cloud computing has been a straight life savior during the pandemic and certainly a game-changer for many companies that have leveraged its power to ensure business continuity when it was most needed. Cloud has proved to become a powerful enabler to data integration and consolidation as well as the technological foundation for building experience architecture. As companies strive to reclaim their brands from marketplaces in 2022, commerce tech spending will soar and companies will invest in ecommerce platforms, order management inventory control systems, and, of course, cloud, as it’s a sure bet to ‘commerce anywhere.’
In case your company is looking for a sustainable cloud commerce solution, Virto Commerce offers a SaaS version of the company’s flagship product, the Virto Commerce platform, that offers a wide range of out-of-the-box B2B-specific features and fast-to-market capabilities. Virto Commerce Cloud is an ideal back-end solution that can be used as a perfect middleware framework for enterprise-level storefront applications. Virto Commerce Cloud solution offers all the benefits of a managed-cloud approach as it eliminates common business concerns related to the IT infrastructure while giving the freedom to design and customize it.
Low-Code and No-Code Technologies
Low-code is an approach to web and app development that’s based on using as little or no coding as possible. Gartner predicts that by 2025, 70% of new apps will use either low-code or no-code technologies, which is a significant increase from just 20% in 2020. The rise in low-code application platforms (LCAPs), which use visual interfaces with Lego-like logic and drag-and-drop functionality, drives the increase in citizen development and allows business technologists to assemble new apps outside the IT departments without IT help.
By 2025, 70% of new apps will use either low-code or no-code technologies. (Source: Gartner)
Cloud-delivered secure access service edge (SASE)
Secure Access Service Edge (SASE) is a technology that delivers wide area network (WAN) and security controls as a cloud computing service directly to the source of connection (such as a user, device, office, or edge computing location) rather than a data center. SASE, according to Gartner, presents an incredible opportunity in the networking and network security market as it allows to secure anywhere-anytime access needs from devices and users. End-user spending on SASE is estimated to reach $6.8 billion in 2022, with 50% of organizations adopting SASE strategies by 2025.
Cloud adoption/transformation engine
Capturing the potential value from the cloud requires a special goal-oriented approach and, what McKinsey calls, a cloud transformation engine. A cloud transformation engine comprises three reinforcing elements such as strategy and management, business domain adoption, and foundational capabilities.
Strategy and management, for example, should define and shape the cloud transformation strategy that addresses economics, architecture, operating model, and security surrounding the cloud. Business-domain adoption is based on the idea that functionality and services from each business unit should be moved to the cloud in a way that creates business value at acceptable risk. Finally, foundational capabilities deal with establishing the cloud environment iteratively and enabling developer experiences through operations and security automation that can scale.
Conclusion: Cloud Future in 2022
As we’ve clearly seen, the pandemic has historically reshaped the digital world while putting a lot of revenue into the pockets of cloud providers. Unsurprisingly, the trend for digital transformation and ubiquitous cloud adoption will continue throughout 2022. We’ll see a shift toward modern application development, a proliferation of low-code technologies, universal adoption of cloud-native engineering, and, what’s more prominent, industry-specific clouds, which are the direct result of the continuous evolution of the global marketplace of cloud service providers (CSP).
In 2022, as CSP’s functionality differs mainly by marketing rather than functionality, providers will strive to compete by offering industry-specific clouds that will enable businesses to perform better in their industry-specific verticals. As regulators and governments continue to put regulatory and compliance (and sometimes outright political) pressure on tech companies, more nation-state intervention is expected for CSPs in areas that define the ‘how, why, and where’ of cloud operations.
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