What the future holds for cloud and digital transformation

24 October 2022 Consultancy.uk 5 min. read
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The majority of business sectors such as retail banking, software and insurance, have now adopted cloud technology – but that does not mean the technology will not bring further changes to these industries. Carlton Hopper, UK Managing Director at digital transformation firm GFT, explains the trends of cloud adoption to look out for in the coming months.

Overall, it’s sunny skies for cloud technology. The ‘great cloud migration’ is far from over, with increased application driving adoption. According to O’Reilly’s 2021 report, 90% of businesses are using the cloud, up 2% from 88% in 2020. The increase in accessibility for businesses has proved imperative to the cloud’s steady growth. 

Adoption will no doubt continue, as growing businesses look for scalable technological infrastructures and long-established companies acknowledge the lifespan of their legacy storage systems is, to put it nicely, limited. It is also understood that the cloud works as a stepping stone toward the easier adoption of emerging technology, so we’re seeing the sentiment of ‘migrate or stagnate’ gaining traction.

Carlton Hopper, UK Managing Director, GFT

Multi-cloud proliferation

Regardless of the sector, data from Statista suggests a shift from singular to multi-cloud strategies - a luxury originally afforded only to large businesses and banks. 90% of large enterprises operated via a multi-cloud approach in 2021, with an expected increase to 94% in 2023. Mid-size enterprises are forecast to experience an 8% increase to 84%, whilst small businesses have the largest jump with a 19% increase to 79%. 

Multi-cloud adoption is case-dependent, and so isn’t necessarily superior to going with one provider. However, businesses are adopting the approach to take advantage of the various strengths contained within each provider. Multi-cloud approaches provide flexibility for businesses as they are less likely to be ‘locked in’ to exclusive contracts and can therefore chop and change based on provider innovation and service offerings - which currently and will continue to alter and improve.

Due to improvements in both service and availability, multi-cloud adoption will likely increase beyond 2023, especially for SMEs looking to scale operations and data costs simultaneously as well as industries that were not forerunners of adoption but are catching up as their operations digitise (such as insurance). Naturally, the pandemic has affected the latter, with the move from physical data to digital. 

Sustainability and cost savings

As the objectives of COP26’s 2030 net-zero target looms, countries and companies will increasingly look toward more sustainable operations. The way technology is applied to everyday business functions is a considerable point of focus. Cloud services are better equipped to aid business alignment with carbon-neutral goals; for a variety of reasons that have just as much to do with outdated and unsuitable legacy storage structures as it does with cloud innovation. 

The majority of legacy storage systems are incompatible with emerging sustainability goals. On-site legacy systems are incapable of scaling power use dependent on the energy required, meaning these systems always store the maximum process power possible, regardless of use fluctuations and skyrocketing energy costs. Hardware systems were designed and implemented when sustainability was not top of the list of global concerns, so legacy hardware is not optimized to save unneeded energy, proving very difficult and expensive to do post-implementation. We expect these types of storage to decrease in the coming years.

In contrast, cloud providers scale costs based on energy usage, meaning customers only pay for energy they use. Additionally, energy use often comes from carbon-neutral sources, and if it isn’t now, it most likely will be by 2030. These functions are key to why GFT’s 2022 research revealed 81% of bankers adopted cloud technology to save costs. 

Cloud providers already acknowledge the pressure to facilitate sustainable solutions, with large providers like Google and AWS pledging to operate on completely carbon-free energy, 24 hours a day, by 2030. Other providers will follow suit, so the sector will see a greater shift toward greener solutions catalysed by business demand.

The hurdle: Talent in the cloud

Regardless of the benefits of cloud technology sector-wide, there is one often under-considered hurdle that must be overcome, with a definitive and purposeful leap. The lack of tech talent is the biggest challenge for digital transformation at present and in the immediate future. With the vast majority of businesses already onboarded and using some form of cloud functionality, the talent shortage for digital transformation specialties will catch up to us sooner rather than later.

The value of trained, experienced, cloud-literate data experts cannot be overlooked. Some academic studies indicate that each cloud specialist generates as much as $1.4 million in sales, measured partially by data that revealed public firms adopting cloud technology had profits 2.3% to 6.9% higher than non-adopters in the last decade. Despite this, educational initiatives, early-career opportunities, and cloud-based events are still scarce, inaccessible, and consequently, under-engaged by tech-savvy students and workforces. 

Amazon shared figures that 53% of IT leaders said they are struggling to acquire the necessary candidates to support cloud initiatives within their organisations in 2017. 5 years later, the 2022 AWS commissioned IDC survey of 610 IT leaders in Europe and North America found that 71% of participants considered the cloud skills gap as an ‘urgent concern’. 

This provides a conundrum for both the digital transformation sector and those who stand to benefit from it. Businesses can adopt digital transformation technologies, but if there is a lack of knowledge and expertise to run and maintain them, they will not reach their full potential. 

So, regardless of the future trends of increased adoption, ever-expanding services, or a shift to multi-cloud strategy prevalence, the most important factor for the cloud’s future is addressing the skills gap. How we go about this is a different story, but providers, academic institutions, and businesses will need to work together swiftly, before the gap widens further.