Article by Scott Beaver, Senior Product Marketing Manager, Oracle Netsuite
As organizations embrace data-driven business models, remote and hybrid work environments and global supply chains, cloud computing is more popular than ever. New capabilities and deployment models continue to emerge, offering businesses of all sizes and across all industries greater choice in how they consume, use and benefit from their cloud investments.
Companies can take advantage of all of this without the need to purchase and maintain their own IT infrastructure, helping to conserve their IT budgets. That’s particularly attractive to smaller and fast-growing businesses that can now access advanced technology previously out of reach.
What Is Cloud Computing?
Simply put, cloud computing allows companies to access computing services via the internet without needing to purchase or set up their own infrastructure locally. Common business cloud services include data storage and analytics, development platforms and business software, such as human resources (HR) and enterprise resource planning (ERP) systems. Consumer-facing cloud platforms range from media-streaming platforms to videoconferencing software. This list is hardly exhaustive, with new cloud services constantly emerging to meet the changing demands of businesses and employees. For instance, cloud collaboration platforms and videoconferencing solutions have become increasingly popular among businesses in recent years as more organizations embrace remote and hybrid working models.
Companies can choose to run their entire IT infrastructure in the cloud or implement cloud-based solutions for specific aspects of their operations. Typically, they pay for the services they need on a subscription basis, giving them the flexibility to pursue the precise technology capabilities they require.
What Are the Trends in Cloud Computing?
Cloud computing trends demonstrate how this technology is changing the way businesses operate and how they allocate their IT budgets. Significantly, public cloud users (who share computing resources) no longer have to purchase and maintain hardware and other infrastructure or manage IT upgrades and software patches — that responsibility now falls on their cloud vendors. This leaves businesses and their IT teams able to focus on core business objectives like innovation, new product or service offerings and hiring new talent. It also helps to level the playing field for growing businesses that had been unable to afford the steep price tag of advanced technologies they can now access through a subscription.
Underscoring this shift, Gartner indicates that worldwide spending on public cloud services will total $397.5 billion in 2022, an increase of 47% since 2020, according to research firm Gartner. For its part, market intelligence group IDC forecasts total worldwide spending on cloud services will exceed $1 trillion in 2024. Additional trends revolve around new cloud delivery models, technologies, operating models, security and application development.
19 Key Trends in Cloud Computing
Cloud computing is now seen as a linchpin for businesses that want to work smarter, focus on what they do best and complete projects faster. From warehouse managers looking to strip complexity from their shipping operations to retail bank CIOs spearheading the development of new online banking applications, the use cases for cloud computing are virtually limitless.
With access to on-demand computing power, highly scalable platforms and a more flexible approach to IT spending, the cloud has gone from emerging technology to an indispensable IT resource. Below we outline 19 trends, grouped into five categories, that are shaping the future of cloud computing.
Cloud Delivery Models
Cloud services can be delivered in a variety of ways. The delivery model a company chooses to use varies based on its functionality requirements and the maturity of its IT and data governance needs. While public software-as-a-service (SaaS) solutions remain the largest market segment, vendors increasingly offer solutions that cater to a wide range of customers and requirements.
- SaaS: Software-as-a-service (SaaS) applications deliver software over the internet that users access via a browser. The vendor manages the hardware, database, security and infrastructure, while users typically have some ability to configure the software to their needs. In the business context, these applications are often departmental. For example, customer relationship management for sales, service and marketing, HR software for HR.
- PaaS: Platform-as-a-service (PaaS) cloud solutions provide developers with the software and operating systems they need to build cloud-based applications, be it a mobile app for better inventory tracking or a consumer-facing social media platform. Companies are also beginning to use PaaS cloud systems for their network security, since they can easily be customized to suit specific security requirements. Spending on PaaS cloud services is forecast to reach $71.5 million in 2022, up 54% from 2020, according to Gartner.
- Multicloud: Certain businesses want to distribute internal computer processing and storage requirements across multiple cloud platforms and applications, often from different vendors, based on their needs. It’s common for them to choose different cloud providers for different functions, like ERP, security and marketing technology, for example. While an all-in-one business management platform that supports numerous functions is the best option for many companies, they may still require complementary solutions to help with other areas of the business. Businesses might also spread out their use of public clouds for compute resources to avoid lock in and gain leverage in negotiations. According to a survey of 750 tech decision-makers from IT consulting firm Flexera, organizations are using 2.6 public clouds and 2.7 private clouds, on average, and they’re experimenting with more.
- Private cloud: A private cloud is a cloud computing model where services are provided over private infrastructure for the use of a single business, typically managed by that same business. Businesses choose private clouds to gain the benefits of cloud services through vendors without incurring the costs of building out and maintaining the cloud infrastructure themselves.
- Hybrid cloud: Many companies opt for a hybrid cloud model that combines public cloud services with the deployment of a private cloud, which is dedicated to a single business. This is especially true of organizations that collect sensitive data or operate in highly regulated industries like insurance, where data privacy is essential. A hybrid approach is attractive because it offers the necessary level of control without holding businesses back from innovation and scale as they roll out new services for their customers. The global hybrid cloud market is expected to be worth $145 billion in 2026, up more than 180% from $51 billion in 2020.
- Serverless: Serverless computing is a form of cloud computing that lets businesses access IT infrastructure on-demand, without the capital investment and need to manage the infrastructure themselves. The difference between generic cloud computing and serverless is based on how resources are allocated — serverless is a subset of PaaS used by companies who need a lot of processing power, but only in short bursts. Compiling software code is one example. Serverless models are gaining traction among companies big and small that want to build new applications quickly but lack the time, resources and/or budget to deal with the infrastructure. This lets growing businesses take advantage of greater computing power at a reasonable cost, while large organizations can roll out new digital services without adding to the burden of their already-stretched IT teams. Indeed, 25% of developers will use serverless computing by the end of 2021, global research firm Forrester predicts.
Category 2: Smarter Working with the Cloud
The cloud has emerged as more than a vehicle for computing power. Cloud storage and platforms also drive more efficient working practices, time and cost savings and innovation, helping companies modernize the way they work.
- Machine learning and artificial intelligence: Cloud-based artificial intelligence (AI) technologies, including machine learning, are helping businesses draw additional value from the ever-growing volumes of data they collect. From logistics companies analyzing the efficiency of their transportation networks to ecommerce brands testing the performance of their websites in real time, AI algorithms empower businesses to glean new insights from their data and improve the way they work. Companies that don’t have the budget or talent to build AI infrastructure of their own — and many don’t — can still take advantage of it by running systems from cloud service providers.
- Automation: Automation is a key driver of cloud adoption, particularly when it comes to improving the efficiency of business operations. With their data and systems centralized on the cloud, companies can automate many of their internal processes, be it the consolidation of data from different locations or the creation of business intelligence dashboards. Today, many organizations are looking to tighten connections between different pieces of software with the aim of better managing their growing cloud footprints and ensuring that solutions from different vendors work together seamlessly.
- Delegation of IT ops: As more vendors launch solutions that can be hosted on external servers, some businesses will elect to outsource portions of their IT operations to third parties. Rather than hiring dedicated teams to build, manage and maintain their systems, companies can cut their operating costs and focus on the core product or service. That said, they must be mindful of their sensitive data and technologies when deciding which operations to outsource so as not to compromise their governance or compliance practices.
Category 3: Compliance and Security Trends
IT security and data compliance are major concerns for businesses and customers alike, and today’s cloud solutions have evolved to address these concerns. Vendors have imbued their offerings with leading data controls and defenses that reduce the risk of human error when managing sensitive data.
- Complexity of compliance: With companies collecting more data from a growing number of sources and governments enacting data protection regulations such as the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA), compliance has become a priority for companies. Cloud storage and applications improve access to business data, which gives companies added control over how the information is managed. Data governance is now a core consideration for all IT investments, particularly when implementing solutions that will handle sensitive financial data or other personal information about customers.
- Better cloud security: IT security threats are on the rise. The number of global ransomware attacks, for example, whereby cybercriminals steal a company’s data and hold it hostage until they are paid a ransom grew by almost five times in 2020. Leading cloud providers back up their solutions with best-in-class IT security practices, mitigating much of the threat.
- SASE: With employees accessing more services and data from their own devices, which sit outside their companies’ IT networks, businesses are rethinking their approach to security and risk management. Secure Access Service Edge (SASE), a term coined by Gartner, is a cloud-based approach to IT security that caters to the changing nature of work. Companies with a SASE architecture benefit from network security services such as secure gateways, firewalls, zero-trust network access and more, all based in the cloud. This is a robust approach to IT security that empowers businesses to deliver new cloud services quickly and with peace of mind that their systems are well-protected.
- Cloud-based disaster recovery: Disaster recovery has been moving to the cloud, with 20% more companies expected to move on-premises disaster recovery to the public cloud by the end of 2021, per Forrester. While similar to traditional disaster recovery, cloud-based disaster recovery backs up a company’s data on an external cloud server and is generally more cost- and time-efficient, with the added bonus of being managed by an external provider. What’s more, businesses can add, change and remove data from these external systems as they see fit without having to scale their own IT infrastructure. It’s also common for businesses to rely on cloud-based disaster recovery for critical servers and applications, such as large databases or ERP systems.
Category 4: Innovation and Application Development
As companies look to differentiate themselves by quickly launching new products and services, cloud-based platforms are evolving to support their development needs at a record pace. From purpose-built coding environments to decentralized data storage, cloud computing has opened the door to new possibilities in application development.
- Containers and Kubernetes: Containers offer businesses a dedicated, cloud-based space where they can build, test and deploy new applications. This allows developers to focus on the details of their applications and IT teams to focus on deploying and managing solutions as they are developed, making the entire process quicker and more efficient. Of 1,324 IT professionals surveyed in a 2020 Cloud Native Computing Foundation report, 92% said they are running containers in their production environments.Kubernetes is an open-source container orchestration solution that simplifies the process of deploying and managing applications developed in containers. In addition to automated scaling of applications based on customer demand, the software also monitors the performance of new services so businesses can address issues proactively. The same study found 91% of respondents use Kubernetes, primarily in production.
- Edge computing: This form of cloud computing brings data processing — collection, storage and analysis — closer to the sources generating the data, rather than a centralized cloud. This reduces latency and powers the use of edge devices. Edge computing is the driving force behind smart devices, such as smartphones, smartwatches and smart cars, and the interconnection of all the data generated by these technologies. Gartner predicts 75% of business-generated data will be created and processed outside of a centralized cloud by 2025.
- Cloud native: Cloud-native applications allow businesses to build and deliver new software to their customers more quickly than traditional monolithic cloud applications, which run on a single hardware or software hub. Instead, cloud-native applications are built as a network of distributed containers and microservices. That means multiple teams can work on new features at the same time, accelerating the pace of innovation.
Category 5: Cloud-Based Operating Models
In addition to supporting more efficient technology operations, cloud computing has led to increased collaboration between employees across teams, departments and geographies.
- Collaboration: Remote work is not a new phenomenon, but it has become far more common recently and the rise of cloud collaboration platforms has made the approach more viable. Secure networks, conferencing and communication platforms have become must-haves for modern organizations. Adroit Market Research predicts that the enterprise collaboration market could reach $45 billion by 2025, as more employees opt for real-time communication. Collaboration platforms are also becoming more advanced, ranging from spreadsheets that update in real time and other types of work management software to advanced data warehouse modeling tools that keep teams across geographies up to date.
- Virtual cloud desktops: A virtual cloud desktop, also known as desktop-as-a-service, delivers the entire desktop operating system and software applications as a cloud-based service directly to a laptop, desktop or other device. Companies only pay for the time their staff spend logged in to their devices, and they don’t have to pay for hardware upgrades. Virtual cloud desktops can also be scaled instantly, which means companies always have the licenses and devices they need to support their growing workforce. The global market for virtual cloud desktops is predicted to reach $10.2 billion by 2023, growing at a compound annual growth rate of 16.5% since 2017, according to Allied Market Research.
- Cloud costs: The upfront costs of cloud computing are much lower than those that come with buying and setting up on-premises IT infrastructure and systems. The same applies to having to maintain and upgrade hardware and software, along with the cost of staff charged with those duties. However, that’s not to imply migrating to the cloud is always an inexpensive proposition. If not managed properly, the variable cost nature of the cloud may potentially exceed budget and increase total costs over the long run.
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