Digital demand puts cloud computing on track for the next step

Although cloud computing has been ubiquitous for nearly two decades, investment in its infrastructure by large companies remains slow as many industries cling to old technologies.

But that is set to change soon in markets such as the UK, North America and Germany, where large business cloud use is, according to industry data, poised to enter. a new step.

Cloud computing – essentially the transfer of data and IT services to third-party servers – is widely seen as an essential tool for businesses looking to become more agile and hope to embrace artificial intelligence and data mining. .

Due to the additional computing power required, many companies have turned to cloud providers like Amazon’s AWS, Microsoft’s Azure, and Google Cloud, as well as a thriving industry made up of smaller local players.

The next technological growth markets in cloud computing

CLOUD COMPUTING: COUNTRIES TO FOLLOW 2020-2024

weDespite high relative adoption of cloud services in 2020, use by large enterprises will continue to grow, driven by the flexibility benefits that come with digital transformations.

GERMANYThe adoption of cloud services by the manufacturing sector will accelerate to support the growth of the digital workforce, with a shift from the private cloud (servers used exclusively by a business) to the public cloud (servers operated by a third party and available for the greatest number).

UKDespite relatively high cloud penetration, a shift to a cloud-centric approach by large UK companies, especially financial services groups, is planned.

FRANCEA cloud-centric approach to new digital development is becoming mainstream, with the cost and flexibility of cloud computing driving further adoption.

Source: FT-Omdia index of digital economies

Since 2011, UK cloud spending “has grown at a significant rate,” said Simon Hansford, managing director of UK cloud provider UKCloud. “As more companies implement digital transformation and look to the future, this trend shows no signs of slowing down, he notes.

The Covid-19 pandemic has increased the importance of the cloud, as industries adapt to support a more digital workforce and to meet the needs of digitally-driven customers.

Yet in many markets, analysts believe large companies have underinvested in the cloud. By 2025, the share of global technology spending allocated to cloud computing by large companies will remain below 20%, according to data from Omdia, a technology consultancy. The average share of IT spending in the cloud will drop from 8.9% in 2020 to 12.4% in 2025, with the rest of IT spending being consumed by infrastructure, network, application and personnel costs.

Daniel Mayo, analyst at Omdia, says that while start-ups and small businesses have found it easier to run their businesses from the cloud, it has proven more difficult for large companies to move away from their legacy systems. . For them, the transition to cloud solutions can take five to ten years.

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“Big companies are making steady progress now,” Mayo says. He adds that advances in AI and automation have made the cloud now seen as an enabling technology, rather than just a method of reducing data center spend.

“Cost is not necessarily the determining factor,” he says. It could be accessing the intense computing power required by today’s advanced cloud services. “It’s harder to do it internally,” says Mayo.

This is evident in industries that have long resisted cloud computing. Telecommunications companies were among the first to offer cloud-like services in Europe, but quickly lost the battle to the “hyperscalers” of Silicon Valley, including Amazon, Google and Microsoft.

Nonetheless, telecom companies have started to think about how they can leverage the cloud on their own, as shown by Vodafone’s partnership with Google to co-develop cloud-based technologies to sell to their respective customers. Dish, a soon to be launched US network, will run its entire network on AWS servers.

Dish’s decision shows how businesses, from banks to telecom companies, are poised to move critical functions to the cloud.

Omdia predicts that North America, UK, Nordic countries, Benelux, France, Germany and Australia will soon become ‘late majority’ markets, where average cloud spending will reach between 17 and 20%. This will be driven by an increasingly cloud-centric approach from banks and government departments in markets such as the UK and France.

Growth in Latin America and Asia-Pacific is expected to be higher, according to Omdia, but in line with IT spending in those markets.

A hybrid cloud solution, where a mix of third-party cloud computing and on-premise technologies is used, will remain the reality for many large enterprises, while legacy systems will remain difficult to modify. For a telecom company, for example, it is simply too risky to move entire network functions to the cloud en masse, as the risk of disruption would be too high. However, more companies may be tempted to follow Dish’s lead, if this proves successful.

These trends could boost the government’s ambitions to increase the digital skills of the workforce as more investment is made in cloud analytics and away from traditional IT spending. “We envision a thriving market in the coming years, supporting highly skilled and high-paying jobs across the country,” said Hansford of UKCloud.

All of this will have a significant impact on the tech industry itself, says Mayo of Omdia, noting that it will have to adapt to a cloud-driven market. “There will be a big impact in the tech industry that will have to ask how they are going to provide these services to their customers,” he says.

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