The impact of cloud infrastructure and services on enterprise computing is both deep and wide. Business of all shapes and sizes have experienced the shift. Nowadays, whatever your position on cloud services may be, the reality is almost everything is heading to the cloud in some form.
The market data bears it out. Global spending on public cloud services will more than double between 2019 and 2023 to almost half a trillion dollars, according to research from IDC. ”Organizations are looking to leverage public cloud services to strengthen customer experience and enact plans for digital transformation, says Eileen Smith of the research firm.
Here are four key ways in which cloud growth is transforming enterprise computing as we know it.
1 Growing Confidence in Cloud Security
The cloud expertise of enterprise IT teams is maturing fast. There is an increasing awareness among IT departments of what it means to move workloads into cloud environments and the pitfalls to avoid. For most IT professionals navigating the cloud, this is not their first rodeo.
There’s also a more developed sense of how managing security in the cloud is different from on-premise solutions. The cloud’s focus on authentication and authorization, rather than perimeter-based security, marks a fundamental shift in approach.
Of course, cloud security is hardly free from vulnerability, a reality sharply revealed in the recent Capital One breach. Here, dark stars aligned—the misconfiguration of a web application firewall (WAF) allegedly allowed a former AWS employee with insider knowledge to fraudulently obtain temporary security credentials. Capital One swiftly acknowledged responsibility and sought to reassure customers it was urgently responding to the breach.
In spite of such lapses, the direction of travel is clear. Even government agencies, from the TSA’s recently revamped cloud strategy to the Department of Defense’s awarding of its 10-year ‘JEDI’ contract (valued up to an eye-watering $10 billion) to Microsoft, are lining up to modernize their IT infrastructures through cloud growth.
In fact, the power of cloud service providers is such that questions are being raised in the other direction about the role the cloud giants play in maintaining key sectors such as financial markets. Have the cloud service providers become the equivalent of critical utilities, and should they be regulated as such?
2 AI Investment Driving Cloud Growth
Another force pulling companies into the cloud is the promise of cutting-edge AI solutions as pioneered by the hyperscalers.
The prospect of automating processes through AI is not only luring enterprises into the cloud, but helping organizations get their data into the cloud in the first place. Migrating data has never been a straightforward affair, involving a litany of stakeholders and numerous considerations around how to prep and structure the data earmarked for migration.
Enter automated data classification tools that assist in the preparation of data for cloud transfer. These cloud-native solutions are capable of identifying commercially sensitive or personally-identifiable information that a business may wish to handle differently. Unsurprisingly, demand for data classification solutions is growing fast, with a projected tripling in market size between 2018 and 2023.
Automated data classification is just one element of the cloud-native revolution transforming the look and feel of enterprise computing. Cloud vendors are working systematically to lower the barrier of entry for enterprises hungry to better leverage artificial intelligence.
Until recently, there has been a tendency to keep AI workloads on premises in response to concerns around the higher latency and costs associated with crunching algorithms in the cloud. The cloud service providers are tackling this objection head on, optimizing their hardware for machine learning and looking to get the right hardware and software solutions in front of the enterprise customer at the right time and price.
Organizations are responding with their pocketbooks. In the seven years between 2018 and 2025, global spending on AI software solutions is expected to increase more than twelvefold to $118.6 billion, a staggering increase by any measure. This shift alone will transform the face of enterprise computing.
3 The Irresistible Rise of Software as a Service
Blame it on the SaaS. Whether it’s customer relationship management (CRM) or enterprise resource management (ERM) software, for companies nowadays some level of cloud deployment is almost inevitable. Even software giants such as SAP, long dominant in on-premise ERP, recognize cloud growth is the future amid concerns from customers that it is overly difficult to move SAP-managed data into remote hosting.
The reality is very few organizations continue to rely entirely on traditional software in the data center, even in areas of high commercial sensitivity. As Workday CEO Aneel Bhusri put it in comments earlier this year, “The cloud is now viewed as the preferred deployment option versus on-premises. That’s been the case in HR and CRM for a while, and it’s definitely beginning to happen in finance now as well.”
4 Hardware Innovation and the Hybrid Cloud
Perhaps the ultimate play in the hyperscaler book is counterintuitive at first sight: offer a hybrid solution and bring the best of the cloud directly into the data center.
It may, in fact, be the smartest move of all. Increasingly savvy, the cloud service providers recognize that not everything flows easily out of on-premise data centers: sometimes the more effective approach is to engage the customer on-premise or at the edge. This approach, while often more expensive for the enterprise, has benefits: lower latency for mission-critical workloads, dedicated resources for commercially sensitive workloads, direct control over perimeter security, and none of the headache involved with remote data transfer.
Of course, the adoption of hybrid cloud is nothing new: the cloud has existed in the data center for some time, tilting the scales in favor of cloud-native solutions regardless of where the deployment may physically live. With services such as AWS Outposts, Google Anthos, Microsoft Azure Stack or private cloud solutions offered by the likes of Dell and HPE, the barrier between public cloud and enterprise data center will continue to break down.
And it isn’t only about moving cloud hardware and software into the enterprise data center. Consider Google’s recent announcement it is to set up an office in Minnesota to work locally with the Mayo Clinic as part of a multi-year agreement bringing advanced data analytics to healthcare monitoring. For industry leaders such as VMware boss Pat Gelsinger, the future of computing has long been hybrid.
Battle for Cloud Dominance
The growth of cloud computing may prove to be the most significant IT development in the first half of the 21st century. It’s no longer a question of whether to use cloud services or not, but how to use them—and what to do in the event things go wrong.
At times, the battles among the hyperscalers feel intergalactic: activity among the CSPs is massive and febrile. Google Cloud, enjoying a fresh lease of life under former Oracle boss George Kurian, claims to be unfazed by trade uncertainty on the international stage. Oracle is taking up its cloud cudgels again, just at the same time AWS completes its migration away from its rival’s databases. Meanwhile, Microsoft is busy doing cloud computing megadeals left, right, and center. Even IBM is back at it, hoping its $34 billion Red Hat acquisition will give it renewed momentum in the cloud computing mix.
“Cloud is increasingly dominating the IT landscape,” said John Dinsdale of Synergy Research Group. “Amazon and Microsoft have led the charge in terms of driving changes and aggressively growing cloud revenue streams, but many other tech companies are also benefiting. The flip side is that some traditional IT players are having a hard time balancing protection of legacy businesses with the need to fully embrace cloud.”
However it plays out, there is little doubt that the future of enterprise computing is cloud-based and that the huge reach of the hyperscalers will define the face of the data center for the decades to come.
For enterprises, the growth of cloud computing may prove to be the most significant IT development in the first half of the 21st century. It’s no longer a question of whether to use cloud services or not, but how to use them—and whether or not to go all-in.
Read more about what the hyperscalers are doing to drive sustainability within the cloud data center.
