Cloud Realities: The state of the cloud market

Cloud streaming

The journey to cloud transformation is often underestimated. Starting with the cloud is the kernel of what we’re doing but it’s much more resonant. Embarking on a cloud journey will have a ripple effect across an organization and one of the best examples of this is Netflix.

Netflix started as a physical media distribution company, emailing DVDs and Blu-rays to clients, but quickly moved to streaming services with a platform on AWS, entering the market very early on. The magic of the story is the courage they then had to pivot away from their business model to take on the behemoth of Hollywood and create their own content.

Why is that so special? Well for one it takes a lot of bravery to change your business model, twice, to create two market disruptions: the first being the impact streaming had on the distribution of media – the blockbusters of the world and cinema exhibition of films – and then Hollywood itself, and second, changing the paradigm of how films and TV series are made, released, and shared with audiences.

Netflix’s jump wasn’t made in one giant leap but rather, in a series of iterative, bold decisions that combined good vision with strategy to make it a success. The greatest learning though was Netflix’s response to the market – they realized that you can resist change as an organization and keep things boxed in, but you won’t be able to see a new reality of the wider digital benefits out there.

Adoption trends for 2023

As we look forward to what this year holds, it’s time to think about key trends and predictions for what lies ahead.

According to Gartner, 95% of new digital workloads will serve on cloud-native platforms by 2025. While that’s still two years away, there are visible trends emerging now in terms of how cloud is being talked about:

• Sustainability is an increasingly important subject in the world of compute, as it should be. We’ve now heard net zero commitments from each of the big cloud providers and can expect that they’ll expand on these commitments over the next six months. What’s interesting is that cloud providers are giving some power back to organizations to make decisions about what powers their processing – meaning they’ll soon be able to elect whether to use carbon neutral or net zero processing power in the not-so-distant future. 
• Modernization is kicking off in earnest – early adoption was often driven by IT organizations but looking at what’s going on in vertical sectors there are more and more interesting things that can be done with IoT and platforms-as-a-service that can profoundly change how businesses function. Terms like industry cloud will become part of our dialogue as Cloud becomes the default choice across verticals.
• Platforms are everywhere. How you think about your cloud environments now will be platform centric. Gartner often talk about ‘Cloud Infrastructure and Platform Services’ or ‘CIPS’ – bringing together multiple parts that pull together highly operating offerings.
• Death of lift and shift has been overly exaggerated. This was a version of a migration where applications moved from running in a data center to running in the cloud. We’re still seeing lots of organizations wanting to take that path and our reality is cloud native, where we operate from, and believe that shift and lift still has a place, it just depends on how you do it.
• Cost is everything. Tying into conversations with our first guest, CxO Advisor, Daniel Hartert, we discuss why cost is at the baseline of every business case for the cloud. This has to be factored in terms of business value. Root to benefit realization has to be clear and something that we don’t yet, as an industry, have a full grasp on.
• The talent crisis continues. There are only so many experienced people to go around. We must open up ways to train and re-skill talent, as well as increase diversity and inclusion – a topic that has been on the agenda for a while now but is critically important to broadening our thinking on the future of the cloud.

Navigating crises

Speaking of current crises – part of our discussion with Daniel touched on the changing nature of the market and the challenges CxOs face in driving value from the cloud.

Given current economic challenges, cloud investment is one area that can’t afford to drop. We have to manage the way through the anticipated global recession in a creative and innovative way that provides access to things we haven’t experienced in the past. Cybersecurity, as one example, is a huge area for growth – but this largely operates in the cloud, and is more secure in the cloud than on-prem. The security environment can feel overwhelming, but the sooner businesses harness the power of the cloud, and the data that comes with it, the more likely it is that they’ll be on the winning side.

Without dwelling too much on the current crisis – or giving too many hints at what’s to come in our next blog – hopefully this gives us a level set on where the industry current is, and what’s to come for our reality in the near future.

Can’t wait until the next blog and want to hear more? Listen to the full episodes, featuring our own Dave Chapman, Sjoukje Zaal, and Rob Kernahan as well as CxO Advisor, Daniel Hartert.