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Post-pandemic: Looking at the long-term legacy of Covid-19 on enterprise cloud adoption rates

The onset of the coronavirus pandemic in early 2020 is known to have had a big impact on the pace and scale of enterprise cloud adoption this year, but will the effect be temporary or permanent?

The adoption curve of public cloud was already on an upward trajectory at the start of 2020, but there is no denying that the Covid-19 pandemic has conspired to drastically accelerate the pace and increase the scale of many enterprises’ off-premise migration plans.

In the nine months since the pandemic began, Computer Weekly has heard numerous anecdotal accounts from IT leaders about how the situation has prompted them to rejig their digital transformation plans so that projects that were set to take years to deliver are being implemented in a matter of weeks or months.

The reasons for this are not hard to fathom – the pandemic has forced enterprises around the world to reconfigure their operations rapidly to enable their employees to work remotely, which is made easier by adopting cloud-based systems.

At the same time, the economic fallout from the pandemic has forced many companies to seek ways to cut costs and adapt their business models in the face of changing consumer behaviour as countries across the world have gone into lockdown and ordered their citizens to stay at home.

Cloud gives them the business agility to pivot as needed in response to such changes in customer demand, while also enabling them to shutter the on-premise datacentre and server rooms that would have eaten up sizeable portions of their annual IT budgets in maintenance costs alone.

Speaking to Computer Weekly, Nick McQuire, senior vice-president of enterprise research at market watcher CCS Insight, said cloud has played an integral part throughout the pandemic in enabling firms to maintain business continuity.

“It is all down to the killer combination of remote work, the need early on in lockdown to rapidly move operations online to maintain business continuity and, most of all, the commercial and technical elasticity that the cloud offers, which really helped businesses cope with the huge spikes in demand during Covid-19, have all sparked this rise in adoption this year,” he said.

“And this can be seen, of course, in the 2020 revenue numbers of the big three hyperscalers, who have certainly capitalised on the opportunity.”

Also, an analysis by Synergy Research Group into how Covid-19 has affected growth figures within the wider cloud infrastructure, software and platform-as-a-service sectors suggests that the pandemic contributed to a $1.5bn boost in these areas during the third quarter of 2020 alone.

“Quarterly spending on cloud services  – mainly infrastructure-as-a-service, platform-as-a-service and software-as-a-service – got a very noticeable boost in Q3 which can be attributed to Covid-19,” said John Dinsdale, chief analyst at Synergy Research Group.

“The growth rate was up three percentage points over what would have been expected.”

The data further shows that spending on cloud infrastructure, software and platform services topped $65bn in the third quarter, which was up 28% on the equivalent period in 2019.

“At Synergy, we track cloud market numbers very closely and we knew there would be strong growth in Q3, but the actual growth was higher than we’d expected,” said Dinsdale. “There is no doubt that Covid-19 was the main reason for that boost.

“Workloads are being shifted to public clouds even more quickly than anticipated and hosted software apps are especially attractive for enterprises navigating their way through a worldwide pandemic.

“Rapid adoption is also being helped by a plethora of hybrid cloud services which are helping to smooth the path towards greater usage of public clouds. Whatever a post-pandemic world may look like, we don’t expect those trends to reverse.”

And Dinsdale is not alone in thinking that. The pervading view among industry watchers and stakeholders seems to be that the pandemic is likely to have a lasting impact on how enterprises view cloud technologies and their willingness to deploy them.

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On this point, Amazon Web Services CEO Andy Jassy recently went on record at the public cloud giant’s annual Re:Invent user conference to predict that, in the years to come, 2020 will be considered a pivotal moment in the history of cloud computing adoption.

“In the first nine months or 10 months of this [pandemic], virtually every company in the world – including Amazon – has tried to save money any way they can,” said Jassy during his keynote presentation at this year’s show. “What we’ve seen – and this happens a lot when you have a period of discontinuity like a pandemic – is that companies take a step back and rethink what they’re doing and what they want to stop doing.

“One of the things we’ve seen is that enterprises we’ve been talking with for many years about moving to the cloud, where there’s a lot of discussion and dipping their toes in the water but not [a lot of] real movement, many of those enterprises have gone from talking [about cloud] to having a real plan.

“I think this is going to be one of the biggest changes you’ll see when you look back on the history of the cloud. It will turn out that the pandemic accelerated cloud adoption by several years.”

As CCS Insight’s McQuire puts it, it is clear that enterprises now “trust and depend” on cloud more than they did before the pandemic started.

“Cloud computing has, arguably, been the biggest technology beneficiary of the pandemic and we have seen quite a dramatic acceleration of adoption in 2020,” he said. “According to our most recent surveys of senior business and IT leaders across US and Europe, the number of businesses that expect to have more than half of their IT workloads in the cloud by the end of year is expected to double to 56% of organisations.

“A quarter of respondents expect to have over 75% of their workloads in the cloud by the same period. When you compare that to before the pandemic, on average just 20% of workloads had moved to the cloud. This is big expected change.”

But while the experts agree that 2020 has had a transformational impact on the pace of cloud adoption in the enterprise, Blair Lyon, vice-president of cloud experience at US-based cloud hosting company Linode, feels that the rush to use cloud this year may give IT leaders pause for thought in 2021.

“This year forced a lot of companies’ hands when it came to the cloud,” he said. “Suddenly cloud was the only way to work and best-laid IT plans were thrown out the window. I don’t see that trend changing. Cloud has become fundamental to our everyday, and accepting radical change is our new reality.”

However, once the disruption caused by the pandemic starts to level off, if and when the world starts to return to normality at some point in 2021, IT leaders may have to spend some time tweaking the cloud deployments that Covid-19 may have rushed them into.

“Anytime humans adopt new things quickly, there is the potential for mistakes,” said Lyon, “whether that’s overcorrecting on infrastructure capacity, implementing new technologies ineffectively, or throwing things into the cloud they probably didn’t need to. And many, if not most, did so without the expertise and staffing required to do so effectively [during the pandemic].

“Companies did what they had to do under unprecedented uncertainty and pressure to make it all work, but 2021 should hopefully give companies an opportunity to take a breath and make sure the cloud implementations they put in place are the right fit for the future of their business, not just for getting them through the chaos of 2020.”

Lyon added: “This coming year will be an opportunity for companies to look at what they have done so far, see what went well and what could be optimised, and then make any necessary adjustments.”

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