‘Cloud adoption is expected to continue at a torrid pace’
“It’s only a matter of time before all businesses are floating in cloud,” says Stewart (Photo courtesy of Deloitte)
In December 2020, I, along with Deloitte colleagues from Japan, China and the United States, filed a global report predicting the ongoing shift to the cloud. We forecasted growth among the biggest public cloud providers to be over 30 per cent for 2021. In response, many felt that number seemed too high.
Astonishingly, we were too conservative. Every quarter, I compile the publicly announced cloud revenues from the largest public companies, and cloud growth and adoption is not only higher than our 30 per cent prediction, but accelerating: in 2021, year-over-year growth was 31 per cent in Q1, 36 per cent in Q2, and 38 per cent in Q3.
The growth is even more impressive when compared to non-cloud IT infrastructure, which is suggested to be up only two per cent for all of 2021.
Cloud computing is the alternative to “on premise” infrastructure. As opposed to housing servers on location, the cloud allows data to be stored or processed off-site at a datacentre that might be a few kilometres away or even on the other side of the world. It may be at a datacentre owned by your own company (private cloud), by a large third party (public cloud) or a mix of the two (hybrid cloud.) According to some studies, well over half of all enterprise computing was in the cloud by the end of last year.
In my view, the reason for greater-than-expected growth isn’t that those companies who were early adopters are now accelerating their cloud-based operations, it was that companies that had been dragging their feet on cloud adoption are finally jumping off the fence, motivated by a mix of lower prices, greater flexibility, the ability to grow rapidly, access to services not otherwise available and more.
While I am not permitted to name them publicly, I work with dozens of companies annually, both in Canada and globally, as part of my role as director of research for the technology, media and telecommunications (TMT) industry for Deloitte Canada. Those companies work not only in the tech, media and telecom space, but also include public sector, financial services, consumer and industrial products, real estate and natural resources. In my firsthand experience, a large subset has been cautious on cloud for years. They raised issues around reliability, privacy, security, sovereignty, complexity and more. And these have been legitimate concerns. But two separate trends—a pandemic push, along with vendor drag along—seem to have caused a tipping point.
The pandemic has forced many companies into using the cloud. It may be the result of labour shortages or surges in demand but, whatever the reason, they were not unlike a kid thrown into the deep end of the pool. Given a choice between drowning or figuring out how to stay above water, the decision was obvious.
But something interesting happened: once a company has figured out how to go faster in their cloud journey, once they have overcome any challenges and set up the policies and procedures required to move quickly, they realized that the cloud is a viable permanent solution. Companies across several sectors are now telling me that they aren’t going back to their traditional models and are going to keep up this accelerated shift to the cloud.
Mind you, not every company was forced to move to the cloud in the early days of the pandemic. Some were able to stay largely on the cloud transformation sidelines … until their software solutions vendors came to them with news that, across business intelligence, database, marketing and (especially) enterprise resource planning software vendors, solutions that had been available both as on-premise or cloud versions were being moved exclusively to the cloud. Now, companies that otherwise weren’t planning to shift to the cloud are finding themselves being pulled along.
Where do we go from here? The revenues from the combined biggest public cloud players are over $200 billion in 2021 and, despite uncharted growth, cloud adoption is expected to continue at a torrid pace. It’s no longer a question of whether or not companies should, or will, take some or most of their business to the cloud. By now, it’s only a matter of time.
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