Five top cloud industry growth opportunities in 2021

Next year looks bright for third-party managed or professional services providers

Hybrid cloud, colocation and managed services are among the top areas of opportunity for players in the cloud industry next year, according to new analysis from business research and consulting firm Frost & Sullivan. 

From Frost & Sullivan’s perspective, the cloud is the foundation for digital transformation in today’s market and the pandemic has worked to accelerate enterprise cloud journeys, in turn ramping up the demand for all things cloud. 

This assertion, of course, would come as no surprise to any organisation operating in the IT channel, with cloud and cloud-based services long holding a position of utmost importance for most business customers in the market. 

Regardless, it’s certainly true that since the pandemic hit there has been a significant uptick in the demand for quick shifts to the cloud and an increasing appetite for long-term solutions aimed at decoupling business IT infrastructure from a physical footprint. 

According to Frost & Sullivan, 52 per cent of organisations worldwide now use public cloud Infrastructure-as-a-Service (IaaS), with another 34 per cent expecting to add IaaS in the next two years. 

All of this is good news for service providers playing in the cloud space, with Frost & Sullivan’s research indicating that around 64 per cent of organisations worldwide have engaged third-party managed or professional services providers to assist with their cloud journeys. Another 27 per cent are considering it. 

Against this backdrop, there are a number of areas within the cloud market that are likely to represent the areas of greatest growth opportunities over the coming year for providers of cloud services and the partners that work with them. 

Here are five of the top growth opportunities next year and how providers can make the most of them, according to Frost & Sullivan:

Hybrid and multi-cloud

Already, 43 per cent of organisations globally use a multi-cloud configuration, while another 41 per cent are planning to add such an environment within the next two years, according to Frost & Sullivan.

At the same time, 42 per cent of organisations globally currently use a hybrid cloud setup, with another 43 per cent planning to add hybrid cloud to their infrastructure footprints in the coming two years. 

To make the most of the opportunities around hybrid and multi-cloud, according to Frost & Sullivan, cloud service and platform providers should be investing in open source technologies and application programming interfaces (APIs) that enable users to easily migrate and integrate applications across infrastructures. 

Data migration

This is a biggie, with Frost & Sullivan claiming that nearly half — 48 per cent — of businesses have an initiative in place to become ‘data-centric’ and to leverage data and analytics or artificial intelligence (AI) to improve operations. Moreover, 42 per cent expect to begin such a program within two years. 

However, more than half — 59 per cent — of businesses indicate they have encountered obstacles that have added significant time or cost to their data migration projects. 

That said, the convergence of data backup and recovery, data protection and data management platforms are expected to address the challenges to migration. 

With this in mind, platform and service providers need to take a holistic view of the enterprise data migration challenge by expanding the functionality of their solutions, according to Frost & Sullivan.

Read more on the next page...

Page Break

Managed services

With 64 per cent of organisations globally engaging third-party managed or professional services providers to assist with their cloud journeys, and another 27 per cent considering it, managed service providers are in for a pipeline full of work in the coming year. 

“As the COVID-19 crisis has revealed, it is not enough to place a few workloads in a public cloud,” the business research and consulting firm said. “To prepare for the post-COVID-19 economy, businesses need assistance in transforming their operations and organisations.”

The services of greatest demand include backup and recovery procedures, managing organisational and cultural changes and developing a cloud strategy and roadmap. 

According to Frost & Sullivan, all cloud industry ecosystem players — in particular managed services providers — should make an effort to mask the worst of the complexity of cloud transformations from businesses, giving them the headspace to focus on their applications and business operations, rather than workload integrations. 

Colocation

Far from seeing demand dry up as public cloud gains pace, the colocation market is seeing rapid growth, with data centre and interconnection facilities in great demand. Both retail and wholesale colocation continue to grow. 

Indeed, 47 per cent of organisations use colocation services today, according to Frost & Sullivan’s research, with another 37 per cent planning to add it to their infrastructure mix in the next two years.

Frost & Sullivan suggests this growth is being driven by a broader need for decentralised compute and storage resources which, in turn, is being influenced by the rise of edge computing, with workloads moving closer to where the data is collected or used. 

“Colocation meets that need for enterprise and service providers,” Frost & Sullivan said.

Digital overconfidence

Finally, the plight of what Frost & Sullivan calls ‘digital overconfidence’ — a scenario in which organisations erroneously judge their own digital capabilities and maturity to be above and beyond their competitors’ — represents an area for providers to capitalise on.

According to the business consulting firm’s research, 67 per cent of businesses worldwide assess their digital disruption efforts to be ahead of others in their industry. 

At the same time, however, only 16 per cent of businesses meet the highest standards in Frost & Sullivan’s own Cloud Maturity Model, which looks at factors such as hybrid and multi-cloud adoption, modern app development and flexible networking, among other elements. 

The COVID-19 pandemic has in some ways highlighted the rift between those organisations that are truly digitally advanced and those that are comparative laggards in their digital journeys, regardless of how they see themselves.

What this means for technology services providers is that they have the opportunity to help businesses understand not only the benefits of adopting a comprehensive hybrid cloud strategy, but also the risks of not taking appropriate action.