Cloud Computing

Three trends that steered enterprise cloud in 2022

Supply chain disruptions, data pileups, and the Big Three’s dominance shaped the enterprise cloud market this year.
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· 5 min read

If a business isn’t in the cloud by now, the odds are good that it’s already operating in its shadow.

Cloud adoption trends that accelerated at the beginning of the Covid-19 pandemic have continued, with Forrester data showing 94% of enterprise infrastructure decision-makers have at least one cloud deployment. Meanwhile, new technology like AI has only made managing deployments more complex.

Here are three key factors that shaped the enterprise cloud market in 2022, according to experts who spoke with IT Brew.

Continued supply-chain disruptions. Supply-chain issues might have driven workloads to the cloud, but they also affected many major providers. In July, for example, The Information reported that dozens of Azure data centers around the globe were operating with limited capacity for customers. One cause of slowing cloud revenue growth identified by Reuters in August was a lack of some physical components key to finishing server builds.

“If you click the button to fire up a new server, and you can’t, well that’s an outage for you,” Kurt Seifried, chief blockchain officer and director of special projects at the Cloud Security Alliance, told IT Brew. “It’s less about what people want to do and…becoming about what is available and what they can do.”

“If you have a project that can wait a year or two, then you don’t need to do that project,” Siefried added. “You can just cancel it.”

Seifried added there’s also been a shortage of talent for cloud roles necessary to run increasingly complex deployments. “I can build a Kubernetes lab at home with half a dozen or a dozen systems and simulate 50 or 100 systems,” he told IT Brew. “Easy peasy. [But], how do I start thinking about scale at Amazon or Google levels of like, a million systems or 10 million systems?…There’s no onramp.”

“There’s this lack of technical knowledge, but also a lack of the culture and the cultural understanding of it,” Seifried said.

Data in search of a problem. Many firms are stockpiling large amounts of data without plans on how to use it, J.Gold Associates founder and principal analyst Jack Gold told IT Brew. That’s a problem he refers to as “data discretion.” Even with a purpose for all that info in mind, Gold warns companies can run into problems with access if it’s siloed or spread across multiple databases.

“Most companies generate incredible amounts of data, much of it never even gets used,” Gold said. “Whether that’s cloud or in-house almost doesn’t matter,” Gold added. “But how do you get better insights from all of the data you’re generating?”

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According to Gold, in 2022 he saw many firms that adopted cloud “didn’t get the kind of performance and capabilities that they expected.”

That trend is “based on the fact that they didn’t have a good…perception upfront of what the cloud was actually going to give them, and didn’t know the best way to leverage cloud,” Gold cautioned. “So, that becomes an issue for companies as well; you need to have some cloud expertise to be able to get the best return from your cloud investment.”

AWS, Google Cloud, and Azure dig in. Amazon, Google, and Microsoft may be brawling with each other for market share, but their competitors are losing ground. According to Fierce Telecom, Synergy data in April 2022 showed that while other cloud providers like Alibaba, IBM, and Salesforce had grown revenues by 150% since 2018, their collective market share has dropped from 48% to 36%.

“It’s starting to become clear to regulators, and I suppose to customers as well, that the Big Three providers have more or less entrenched their positions,” Vili Lehdonvirta, a professor at the Oxford Internet Institute and author of Cloud Empires, wrote to IT Brew. “There were no more huge swings in market share and none of the smaller providers were able to challenge the three kings in a serious way. Switching a live service from one cloud provider to another is in many cases so complicated and expensive as to be practically impossible.”

While some customers are leaving the cloud and others are “doubling down on multi-cloud,” Lehdonvirta added that another effort to increase competition is regulatory proposals like the EU’s proposed data act, which has cloud-switching provisions.

“I doubt that any of these will break the reign of the Big Three,” Lehdonvirta wrote. “That would probably take a wider rebellion.”

Companies that believe they can simply migrate cloud providers should be wary, Gold warned. In addition to costs like acquiring new expertise or rebuilding apps, contracts often prohibit customers from moving without stacking on fees.

“Most of these guys will charge you a fee, there’s a data egress charge,” Gold said. “Basically, it’s a tax on your data to move it.”—TM

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Top insights for IT pros

From cybersecurity and big data to software development and gaming, IT Brew delivers the latest news and analysis of trends shaping the IT industry, like only The Brew can.