Already in the new post-COVID-19 era, we continue to witness a steady trend of accelerated cloud adoption worldwide. Although the number of companies transitioning to the cloud was on the increase even before the pandemic, no one has ever expected such a fast-paced development since then.
If we research some recent cloud adoption data, we will find that the cloud computing market was estimated at $371.4 billion in 2020, as by 2025 this figure has been forecasted to grow to more than twice to $832.1 billion. With 90% of all enterprises being on the cloud and public cloud being projected to grow by 18.4% in 2021, this needs a closer look.
So, which are the reasons behind this accelerated trend of turning to the cloud? Are there any other related business implications? Are there any challenges? Also, is this a part of the general wave of digital transformation brought about by COVID-19 and are there any industry-specific dynamics?
Let’s try to find some possible answers to these questions by exploring some leading business insights.
How did cloud adoption change as a result of COVID-19?
The rising number of companies embracing the cloud has been highlighted everywhere. One authoritative such example is represented by the latest Flexera 2021 State of the Cloud Report.
As part of its research, the report raised the question of how COVID-19 affected organizations cloud plans. 90% of respondents confirmed that their cloud usage was higher than originally planned. See how respondents’ answers look on the snapshot below:
Source: Flexera 2021 State of the Cloud Report
*Concepts from the chart include enterprises (with >1000 employees) and small to medium-sized businesses or SMB (with <1000 employees)
Obviously, such a change in the planning of cloud adoption indicates that the impact of COVID-19 on the overall business operation has been profound. In practice, the pandemic effect could be felt on almost every aspect of the traditional business style – from business and work models to budget planning and procedures.
If you are interested in the consequences of the “new normal” and the “next normal” in the years to come, read more here.
Key reasons for accelerated cloud adoption
According to Forbes, the phenomenon is due to several key reasons. They may be summarized as follows:
- Need for better business resilience – if cloud transformation previously was associated with modernization, innovation, and cost optimization, the COVID-19 has now brought a new set of business priorities. Some of these include the need for flexibility, availability, faster disaster recovery, remote workforce management, etc.
- COVID-19 evolution of business operations – due to the increased consumer demand for digital products and services, the whole online spectrum witnessed significant advancement. To illustrate, we can mention the recent exponential growth of e-commerce, e-learning, telemedicine, etc.
- Need for business continuity in the age of distance working – with remote working being the new norm, the cloud environment provided an alternative for achieving business continuity and seamless collaboration.
- Sector-specific investments – healthcare, education, public sector – the huge investments made in sectors such as healthcare, education or the public sector led to new cloud-specific offerings, which facilitated the overall cloud advancement in its own right.
- New customer requirements – during COVID-19, the focus on environmental sustainability gained new importance for winning the trust of customers. Hence, choosing the cloud was motivated by environmental considerations too.
If you would like to explore these in further detail, please see here.
Challenges of cloud adoption
One could easily guess that such a massive transition to cloud technologies could not have happened without its challenges. And they must have a point!
Going back to the Flexera 2021 State of the Cloud Report, we can see the following top cloud challenges identified by the report respondents:
Source: Flexera 2021 State of the Cloud Report
Looking at the chart above, we can easily see that the biggest concerns organizations faced in their cloud adoption were related to their cloud security, IT budgets, business governance and access to cloud specialists.
Ensuring business compliance is equally important taking a share of 75% of all answers. Yet, another prominent factor, indicated by Forbes (referred to above and missing here), appears to be the emergence of new business models.
Some industry-specific insights
As we mentioned above, the COVID-19 resulted in huge cloud investments in specific sectors such as health, education, public sector, banking and fintech (to name a few).
At first sight, this was the logical response to the urgent need of finding a vaccine, ensuring equal access to distance education for all, relevant digital services to citizens during the COVID-19 series of lockdowns, etc. Similarly, both individuals and businesses more than ever started using various applications to manage their finances at a distance (read more about fintech cloud developments here).
Such sectoral transformations contributed to the overall enhanced importance of the cloud. The fast advancements in specific industries also had a bearing on the general consumer expectations towards the digital medium as a whole. As a consequence, this changed the competition among companies which now happens over the digital domain as well.
These and other similar trends were discussed in further detail by a relevant article by McKinsey. The next figure shows their relevant findings about consumer digital adoption across industries:
The accelerated cloud adoption as a result of COVID-19 has been continuing today. It is a global trend that is noticeable across industries and has been impacting companies of all sizes.If you are interested in discussing your cloud transformation plans with a trusted cloud consulting partner, do not forget to give us a shout.