By John P. Desmond, AI Trends Editor
Companies that have committed to cloud computing for IT services have shifted from seeing the primary benefit as increased efficiency, to it being increased revenue and improved profitability, according to a new study.
Based on a survey of 1,300 global, C-level executives and decision-makers from 11 industries and six countries, the report was conducted by Wipro FulStride Cloud Services, a unit of the global tech information services company Wipro. The FullStride Cloud Services unit was announced in July along with an investment of $1 billion in cloud technologies, capabilities, acquisitions and partnerships over the next three years.
The report anticipated that the trend of increased benefits from cloud computing will continue as the cloud becomes more intelligent, hyperconnected, and pervasive. The report defined cloud computing leaders as the top 19% of respondents based on cloud maturity, while beginners represented the lowest 32%, figures not based on revenue.
Rajan Kohli, Partner, Application Services, Wipro
“Cloud is no longer just for cost savings or building agility. Our new report demonstrates that cloud drives high-impact transformation and benefits at every level of the business, including the bottom line,” stated Rajan Kohli, President and Managing Partner, Integrated Digital, Engineering and Application Services, Wipro Limited, in an account in ITP.net.
Over the next two years, survey respondents expect that cloud will help increase revenue for 59% of firms; improve profitability for 54% and decrease costs for 49%.
Leading cloud computing user companies are also investing in additional technologies, which helped 21% of leaders achieve a return on investment “significantly above expectations,” compared with 10% of non-leaders, according to the report. The most frequently-employed complementary technology is AI, which 78% of leaders combine with their cloud purchasing, compared to 49% of the non-leaders purchasing AI.
By 2023, cloud leaders expect their biggest increases in usage of complementary technologies to be in 5G (53% increase in companies using), edge computing (31% increase) and grid computing (29% increase).
The report also found that 50% of leaders expect to boost their cloud investments for cybersecurity and risk-management over the next two years.
Cloud Growth Stats Project $800 Billion Market by 2025
For those who may be skeptical of such lofty projections around the benefits of cloud computing, here are some stats reported in techjury:
The public cloud computing market will be worth $800 billion by 2025 (Cision);
By 2024, enterprise cloud spending will make up 14% of IT revenue globally (Gartner);
Platform as a Service (PaaS) will grow by 26.6% in 2021 (Gartner);
70% of companies using the cloud plan to increase their budgets in the future (Gartner);
61% of businesses migrated their workloads to the cloud in 2020 (Flexera); and
Amazon Web Services (AWS) had a 76% share of the enterprise cloud adoption in 2020 (Flexera).
In second place in cloud services share is Microsoft’s Azure, with 69% of the market. Google Cloud is in third place with 34%. In the bottom two positions are Alibaba with a seven percent share and IMB with a 15% share, according to the techjury report.
As new providers get into the cloud computing services business, such as Wipro, the techjury authors expect downward pressure on cloud service pricing.
Capital One Has Committed to AWS
A look at selected specific examples of how companies have gravitated to cloud computing is illustrative.
Chris Nims, SVP of technology, Capital One
Capital One had a private cloud strategy at the beginning of its migration, but after not hitting their numbers, the company made a decision to commit to AWS. Today, Capital One is said to be the first financially-regulated company that runs entirely in the cloud, according to Chris Nims, the bank’s SVP of technology, in an account in Forbes.
By the end of 2021, the company plans to add more than 3,000 technologists, according to the account.
To become cloud-first, Capital One recycled 103 tons of copper and steel and built 80% of the nearly 2,000 applications it now runs in the cloud from the ground up. “In 2020, we closed our last data center,” stated Nims. “We have been on the massive digital transformation journey for the past several years to get out of data centers.”
Moreover, “We are truly all in on the cloud, and AWS has been instrumental in enabling us to take full advantage of the benefits of being in the cloud,” stated Nims. “Going all in on the cloud has enabled both instant provisioning of infrastructure and rapid innovation. We are able to manage data at a much larger scale and unlock the power of machine learning to deliver enhanced customer experiences.”
More than 75% of this year’s expected 3,000 new hires will be engineers, stated Nims, with expertise in areas such as cloud, data, machine learning (ML), artificial intelligence (AI) and security. The bank decided eight or 10 years ago that to compete, it had to develop its own software.
Pinterest On the Cloud Since Its Founding in 2010
Pinterest decided to build the company from its founding in 2010 on cloud services. The company’s current market cap is $35 billion. The company went public in April 2019.
In financial disclosures in its filing for an IPO, Pinterest reported plans to spend $750 million on AWS by 2023. At the time of the filing, they had spent over $300 million on AWS. Contracts with AWS disclosed in the filing obligated Pinterest to pay AWS the difference if the actual level of spending on the cloud service falls short of the commitment, according to a report on the blog of N2WS. The company supports businesses that commit to the cloud for computing services.
Pinterest started on AWS in 2010. Their business grew to 200 million active monthly users in 2017; in the second quarter of 2021, Pinterest had 454 million active monthly users worldwide.
Pinterest first moved to Docker containers, then started using self-hosted Kubernetes for orchestration, according to the N2WS report. This shift allowed them to optimize their cloud infrastructure, simplify their deployment and management processes, and save on infrastructure costs. In addition to using AWS for processing, Pinterest also uses various other services for storage and data analysis, allowing them to put more focus on their product.
If a company decided to pull out of AWS, it would face a “daunting task,” the authors of the N2WS report stated. “The re-architecting of components would require an enormous amount of work,” the report stated, adding, “It is safe to say that they will avoid such a move at all costs. Migrating data out of AWS would also be so costly that no company is likely to choose that option.”
Dropbox Dropped Out of AWS
Dropbox, offering storage and backup services in the cloud, decided to drop AWS in 2017. At the time, Dropbox had 500 million users and 200,000 business customers. The company had to move 50 petabytes—a five followed by 17 zeros—that was stored on AWS servers, according to an account in TechCrunch.
To support the workload, Dropbox had to build and equip three US data centers, plus assemble the network backbone to enable the needed communication between the US data centers and other facilities located throughout the world. The company made the move to get more control over infrastructure services it viewed as strategic to its business.
“For us, it was about quality and control and management,” stated Dan Williams, head of product engineering, to TechCrunch. “We know there are solid third parties out there with [high] quality and performance, but we felt ours could be equal or even better because we know the system so well.”