Cloud computing is growing. More than 70% of companies have now migrated at least some workloads to the public cloud, and Gartner predicts enterprise spending on cloud computing will continue to grow rapidly in the aftermath of the Covid-19 pandemic.
Cloud computing is popular for good reason. The technology’s scalability and efficiency are attractive to organisations seeking a competitive advantage. Yet, cloud computing has its potential pitfalls too, and it’s important that businesses are fully aware of both costs and benefits ahead of adopting the technology.
What is cloud computing?
Cloud computing enables computer system resources to be accessible on-demand from remote servers, as opposed to a local server or personal computer. Cloud computing is elastic, so it can meet changing demand. With the quantity of data we produce growing exponentially, the cloud’s elasticity is a key benefit, allowing it to scale rapidly to accommodate large quantities of data.
Although cloud computing as a concept is not new, it’s only in the last decade that adoption of the technology has expanded significantly. A majority of companies are now using cloud computing in some form, and spending on the technology is only set to grow. Gartner predicts that worldwide public cloud end-user spending will grow 23% in 2021. The proportion of IT spending shifting to the cloud is also predicted to accelerate in the aftermath of the pandemic, with Gartner predicting cloud will make up 14% of the total global enterprise IT spending market in 2021, up from 9% in 2020.
During the pandemic, adoption of cloud computing services swelled as businesses were forced to accelerate their digital transformation strategies. Many industries relied on the technology to keep operations running in the pandemic, with lockdowns shuttering workspaces and people forced to stay at home. In the financial sector, Santander harnessed the scalability of the cloud to increase the volumes of its daily chats and its daily calls by a factor of four and 30, respectively. Cloud technology will continue to help industries adapt in the aftermath of the pandemic, and it will serve as a platform for other emerging technologies set to transform the business landscape.
Advantages of cloud computing
Scalability is a core benefit of cloud computing and this feature has been particularly advantageous during the pandemic, when businesses have had to expand their online activities rapidly. The cloud has provided a means for these businesses to escape the confines of legacy infrastructure.
Other advantages of cloud computing range from cost-cutting and insight generation to flexibility and agility. Initial costs of cloud adoption can be high, but in the long term the cost of cloud versus on-premises software tends to be cheaper because businesses do not need to keep spending money on maintenance and upkeep of hardware. Cloud computing also enables access to insights from big data, which drive innovation, better decision-making, and efficiency.
In addition to scalability, flexibility and agility are benefits of cloud computing that help organisations meet growing demand and adapt to challenges. In the cloud, it’s possible to develop, test, and launch applications quickly to keep pace with the evolving technology environment.
While security may be a concern for some organisations looking to adopt cloud technology, there are also security benefits associated with cloud computing. Encryption of data in the cloud protects it from hackers and unauthorised parties. Furthermore, many cloud-based services provide quick data recovery for a range of emergency scenarios, minimising downtime for organisations and meaning fewer costs accrue in the event of a breach.
Together, the efficiency, scalability, and flexibility of cloud computing amount to a considerable competitive advantage for businesses able to harness the technology.
How to avoid the pitfalls
Cloud computing is an increasingly attractive option for businesses, but too often adoption of the technology is divorced from business strategy. Businesses plough ahead without considering the outcomes they are trying to achieve, and this prevents them from reaping the full benefits of the transition to cloud. Adopting without planning can also lead to unexpected costs.
Every business’s needs are different, and therefore the suitability of different cloud solutions for each business will differ too. There is no out-of-the-box solution that will suit every use-case. This is a key reason why adoption of the cloud needs to be accompanied by a business strategy with defined end goals.
Crucially, businesses have a large degree of flexibility when building their cloud architecture. Hybrid cloud is one popular option, offering firms the ability to keep more business-critical workloads on-premise and still utilise the cloud to scale up new and innovative services. Other options include a multi-cloud approach to tap into the capabilities of multiple cloud providers. Looking further ahead, many analysts predict the next logical step is distributed cloud: businesses being able to run public cloud services across multiple different locations, closer to the end-user – vital for supporting future innovation in Software as a Service (SaaS) and edge computing.
The future of cloud computing
Cloud computing continues to be a vital technology for driving innovation and digital transformation, and it is set to continue its upward growth trajectory. As cloud adoption becomes more widespread, we are going to see increasingly specialised offerings from cloud providers, with tailored options for vertical industries. With innovative technologies from the Internet of Things (IoT) to blockchain and AI already relying on cloud computing, we’re likely to see future emerging technologies draw on its benefits as well.
Businesses have much to gain from choosing cloud computing. Yet, each business needs to decide on the right combination of technologies to suit its individual use-case. It’s also imperative that adoption of cloud computing is accompanied by a clear business strategy and a consideration of the potential costs, as well as the numerous benefits, involved.
NTT DATA's global team – including over 2,500 Cloud Architects, Practitioners and Engineers – helps our clients understand the full impact and opportunity of adopting fully native, multi or hybrid Cloud strategies. NTT DATA supports businesses to plan, build, manage and secure cloud deployments. As a trusted partner in cloud and business transformation, our extensive experience and global expertise helps businesses to set and achieve ambitious goals, turning cloud adoption into a competitive advantage.