Cloud computing spend increased by a third in 2020 – TechHQ

The enterprise IT space over the last year has seen a rising prominence in cloud computing. Since the advent of the pandemic that, among other things, caused a massive shift to work-from-home schemes across the world, cloud infrastructure services spending too grew briskly.

This is according to industry analyst firm Canalys, which claims that total cloud services market expenditure for full-year 2020 grew by 33% to US$142 billion, up from US$107 billion in 2019. Despite an initial slowdown in large consultative-led projects, demand was higher than expected.

In the last quarter of 2020 alone, cloud infrastructure services spending increased 32% to US$39.9 billion, Canalys said, following heightened customer investment with the major cloud service providers and the technology channel.

Total expenditure was over US$3 billion higher than the last quarter and nearly US$10 billion more than Q4 2019 according to Canalys data. This is again the largest quarterly expansion in dollar terms, as continuing pandemic restrictions drove intense demand for a cloud to support remote working and learning, e-commerce, content streaming, online gaming, and collaboration.

Amazon Web Services (AWS) maintained its majority market share at 31%, enjoying 28% growth over 2020s third quarter and making investments across its global partner ecosystem to sustain its momentum.

After a mixed Q3 in terms of customer performance, AWS had a resurgence in customer investment. Microsoft Azures growth rate, on the other hand, accelerated once again, up by 50% to reach 20% of the market share, maintaining its second-place.

Microsoft has also benefited from the continued high demand for Teams, Windows Virtual Desktop, and other Microsoft services running on Azure as lockdowns tightened.

Google Cloud had the greatest growth of the big four cloud providers, seeing a 58% increase to reach 7% market share, putting it in third place, just ahead of Alibaba Cloud.

Alibaba Cloud grew 54% in the same time to account for 6% of the total market. It remained the leading cloud service provider in the Asia Pacific region, including China. It updated its hybrid cloud strategy during the quarter, with the launch of its Hybrid Cloud Partner Program and on-premises appliances targeting small and medium-sized businesses. The program will enable partners to plan, design, and resell Alibaba Cloud services with free licenses and unlimited CPU cores.

Canalys said demand for cloud services stayed strong across all enterprise customer segments, including industries most affected by the pandemic, such as retail and manufacturing.

Its research analyst Blake Murray said, The rate of digitalization, led by cloud, is gathering pace. Companies are now more confident about releasing budgets for business transformation. Large projects that were postponed earlier in the year are being re-prioritized, led by application modernization, SAP migrations, and workplace transformation.

Murray also said healthcare, financial services, and pharmaceuticals are among the industries leading the way, but even those under the most pressure are diverting investments to the cloud, opening up new revenue streams and diversifying business models.

At the same time, small and medium-sized businesses continue to turn to cloud services to help them maintain their operations and control costs. Murray reckons that the approval of Covid-19 vaccines and the start of mass vaccination programs will further increase business confidence throughout 2021, while remote working and learning will continue.

This will maintain dependence on cloud services and drive momentum in spending, though customers will become increasingly aware of the cost, security, and complexity challenges of greater cloud adoption.

All the major cloud providers are also increasing their investments in the channel, both to leverage the consulting and managed services capabilities of partners, and to expand sales capacity to drive cloud consumption.

Microsoft holds the largest share of the indirect channel with Azure, though AWS and Google Cloud are gaining ground. Meanwhile, as customers deploy different workloads across public, private, and edge cloud infrastructures, they are looking for independent partners with capabilities across multiple cloud providers.

As organizations start to consider moving more mission-critical workloads to the cloud, they will look to partners to define the right cloud platforms and strategies, as well as solve the most pressing issues around cost management, security, sovereignty, and hybrid IT integration.

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Cloud computing spend increased by a third in 2020 - TechHQ