Cloud adoption is accelerating in Saudi during the pandemic as organizations seek to rapidly deploy applications, tools, and services suited to remote working. But how clouds are being deployed, and the reasons why, have changed. Mohammad Abulhouf, General Manager, Saudi and Bahrain, at Nutanix, outlines the three reasons why organizations in the country are moving more of their assets to the cloud and what this change in mindset will mean for how progressive businesses are run.
But first, let’s look at the business IT context today. It is no secret that cloud computing has saved businesses by providing a way to keep going through lockdowns. The emerging consensus of wisdom suggests that many, if not most, companies will allow more flexible and home working even after the pandemic has ceased to dominate decision-making.
That means that the cloud’s ongoing transition continues, often as part of a broader business transformation strategic exercise. The scale of this can’t be overstated. Gartner suggests that 45% of spending on infrastructure, applications and business process outsourcing will shift to the cloud by 2024. That’s a growth in cloud infrastructure services spending that will be worth $63 billion in 2020 and $81 billion next year, compared to $44 billion last year. Meanwhile, the traditional datacenter sees a sharp decline, with spend down 10% to $188 billion in 2019. So, there’s plenty more to come, but the trend line is very clear.
“The proportion of IT spending that is being allocated to the cloud will accelerate even further in the aftermath of the Covid-19 crisis, as companies look to improve operational efficiencies,” says Ed Anderson, Distinguished VP Analyst at Gartner. And the number of applications and services that are on-premises become fewer and fewer.
45% of spending on infrastructure, applications and business process outsourcing will shift to the cloud by 2024
Reasons to Change
But the reasons for cloud deployment are also changing. Cloud initially soared, in part, because the subscription billing model made more sense than the old enterprise software licensing. Capital expenditure was replaced by operating expenditure, and companies paid on a utility basis. Financial flexibility was the cloud’s trump card, and it meant that cloud users could trial ideas at very low cost and very quickly. In many ways, the cloud brought the Silicon Valley ethos of ‘fail fast’ into the corporate mainstream.
Now, however, things have changed. Companies actually accept that they might end up paying more for cloud over time compared to on-premises IT but accept this as a price worth the outlay. And three factors are driving a second wave of cloud acceptance or what Gartner calls ‘cloud shift’. These are agility, security and AI: let’s look at them one by one.
Agility. In uncertain times, companies need the ability to try things out, change strategy quickly and dial capacity up and down on an ‘as needs basis. High-street retailers moving online, restaurants becoming delivery-only providers, face-to-face meetings becoming Zoom calls, complex ‘what if’ scenario modelling for strategic change… all of these are examples of why it’s critical to move fast and only the cloud has that affordable flexibility and capacity.
Security. Initially seen as a weak point of cloud, the argument has become reversed. Few organizations can protect themselves as effectively as the cloud providers that run some of the world’s largest datacenters, have visibility into every conceivable incoming threat, can build in processes that detect and monitor suspicious behaviour and can afford to hire squadrons of experts in their fields. All of this means that security has become a cloud positive.
Cloud is also acting as an on-ramp for companies seeking to try out new things and provides the tools, the elastic compute power and infrastructure to do this. Look, for example, at Google Cloud AI as a way to access pre-packaged solutions, building blocks and developer tools. AI has arguably proceeded more slowly than the hype would suggest, but most of us will agree that it is one of the most powerful technologies that can be deployed over the coming years to automate and accelerate decision-making, processes and the creation of insights.
These three factors are driving more and more cloud adoption
These three factors are driving more and more cloud adoption, but what sort? I believe that it’s inevitable that companies will run multiple clouds to avoid lock-in and to be able to shift workloads, when needed, over time. Using more than one cloud platform will also support disaster recovery, business continuity planning and regulatory compliance. The new focus of attention will move away from individual clouds that will be used for their merits on a ‘horses for courses’ basis. Instead, the power base will move towards ‘data planes’ that provide a way for CIOs to manage across APIs and move services dynamically between clouds to maintain optimal business flexibility and operational fluidity.
Of course, this won’t happen overnight. These changes will take multiple years, and challenges such as application modernization shouldn’t be underestimated. It’s likely that most established companies in Saudi will continue to run some operations from their datacenters for a while yet. But the organizations that are already acting and moving to multi-cloud will be the most secure, fast-moving and decisive. And they will be best placed to bounce back first and be prosperous, whatever gets thrown at us in 2021.