Infographic: the Cloud computing industry is growing

Infographic: the Cloud computing industry is growing

For the best part of two decades, investment in its infrastructure by big companies remains sluggish, as many industries cling on to old technologies.

The UK, North America, and Germany, where cloud use is poised to enter a new stage, according to industry data.

Cloud computing is an essential tool for companies looking to embrace artificial intelligence and data mining, and is widely seen as a necessity for the transfer of data and IT services to a third-party server.

Because of the additional computing power required, many companies have turned to cloud providers such as Amazon s AWS, Microsoft s Azure and Google Cloud, as well as a thriving industry made up of smaller, local players.

Since 2011, UK spending on cloud technology has grown at a significant rate, says Simon Hansford, chief executive of UKCloud. The importance of the cloud has been increased due to the Covid 19 flu, as industries adapt to support a more digital workforce and to cater to digitally-focused customer needs.

In many markets, analysts believe that large enterprises have underinvested in cloud. According to Omdia, a technology consultancy, the portion of the overall technology spend allocated to cloud computing by big businesses will be below 20 percent by the year 2025. The average amount of IT spending on the cloud will go from 8.9 per cent in 2020 to 12.4 per cent in 2025, with the remaining bulk of IT spending being consumed by infrastructure, network, applications and staffing costs.

Daniel Mayo, an analyst with Omdia, says that it's been more difficult for large enterprises to move away from their legacy systems because of the fact that start-ups and smaller companies have found it easier to run businesses from the cloud. The transition to cloud solutions can take five to 10 years.

Mayo says that large enterprises are making steady progress. He said that the cloud is now seen as an enabling technology and not just a way of reducing spend on data centres because of advances in AI and automation.

He says that cost is not necessarily the driving factor. It can be about accessing the intense computing power that today s advanced cloud services require. It is more difficult to do that in-house, Mayo explains.

It is evident in industries that have long resisted cloud computing. Telecoms were among the first to offer cloud-like services in Europe, but soon lost the battle to hyperscalers from Silicon Valley, including Amazon, Google and Microsoft.

Telecoms companies are beginning to consider how they can harness the cloud, as demonstrated by Vodafone's tie-up with Google to develop cloud-based technologies to sell to their respective customer bases. A soon-to-launch US network, Dish will run its entire network on AWS servers.

Dish's decision shows how companies are willing to move critical functions to the cloud, from banks to telecoms groups.

Omdia believes that North America, the UK, the Nordic countries, Benelux, France, Germany and Australia will soon become late majority markets, where the average spend on cloud computing will reach between 17 and 20 per cent. In the UK and France, banks and government departments are starting to take a more cloud-first approach to that, which will be driven by an increasingly cloud-first approach.

Growth in Latin America and Asia Pacific is likely to be higher, but in line with IT spending in those markets, according to Omdia.

A hybrid cloud solution, using a mix of cloud computing and on-premise technologies, will remain the reality for many large enterprises while legacy systems are hard to change. It is too risky to move entire network functions to the cloud en-masse, for a telecoms company, because the risk of disruption would be too high. If successful, more companies may be tempted to follow Dish's example.

As more investment goes into cloud analytics and away from traditional IT spend, government ambitions could be spurred to increase the digital skills of the workforce. Hansford, UKCloud spokesman, believes that the market will be thriving in the years to come, supporting high wage, high skilled jobs across the country.

All this will have a significant impact on the technology industry, says Omdia s Mayo, noting that it will need to adapt to a cloud-first market.