Cloud XaaS - Supply and demand, perfectly aligned

According to some estimates, between 2021 and 2026 the global market for Cloud XaaS, or Cloud-as-a-Service, could represent 25,5% of the CARG. A truly impressive number. So much so, that today it is essential that companies understand this phenomenon in order to take advantage of these as-a-Service models and all their benefits.

In 2020, due to circumstances, the world witnessed the hyper-acceleration of the digitalization of economy in all its aspects, with the Cloud technology assuming a central role – numbers such as the 35% year-on-year increase in IT spending on enterprise Cloud, both public and private, as well as the 8% year-on-year decrease in spending outside the Coud, prove this role as undeniable.

Arriving in 2021, the reality is digital acceleration within organizations is in full swing, and those left on the outside should seriously reconsider their position. Today, “getting your business in order” is fundamental in order to increase operating process efficiency, through advanced technological solutions that help to adjust innovation and business models to this new reality, so that companies prevail and, above all, gain a sustainable competitive edge in the market.

And this is the scene in which the future of the Cloud seams ever more positive. In line with the increased relevance, adoption, development and alignment with IT needs that the Cloud technology has gathered, the economic recovery curve also looks promising and sustainable, even at the slow pace that is expected at least until 2022.

So, it’s very important to understand the events that lead to the Cloud’s high adoption rates.

First, it’s a direct result of a business value proposition based on as-a-Service models – the great benefit of the Cloud. Why?

• During the pandemic, the as-a-Service models were the ones that met the market needs the best: they reinvented businesses, helped create new models that are adapted to new demand requisites, focused on service and on digital channels, they accelerated the adoption of innovation, speed-to-market, remote work, and the also increased resilience, agility, scalability, flexibility of organizations (among other key factors);
• All this, while companies were looking to reduce the lack of financial, human and material resources (due to the abrupt reduction in the top line and the erosion of margins) through optimized investment strategies and the increase of operational efficiency.

The barriers to the adoption of this technology are also lower and less significant, besides the traditional issues of safety, lock-in, regulation, intellectual property and relative to transnational policies. Furthermore, solutions as the adoption of hybrid and multicloud environments may help tackle or replace this resistance all together – an issue most associated to organizations with large IT departments, and amplified by questions of an almost philosophical nature, which normally refute the role of IT as a governance promoting agent, of increasingly broad, heterogeneous and complex ecosystems.

In conclusion, the Cloud-as-Service models are here to stay. Nowadays, the Cloud technology in its different setups and models is almost mandatory. Every report and independent survey predict a continuous and accelerated growth of cloud-based models, with a particular focus on hybrid and multicloud setups, and, of course, taking into consideration the 100% digital startups that have “all-in-cloud” business models since day one.

It's expected that this go-to-cloud tendency and its importance to online services will continue to grow, simply because these behaviors are totally aligned with market needs: companies are looking to focus their resources on business-related tasks, there is an increasing preference for models that don’t require initial large amounts of investment (OPEX vs. CAPEX), the need to reduce operational costs (by reducing software licensing fees and technical specializes support services, for instance), to reduce time-to-market, among other aspects.

Mapping market’s demand with main cloud benefits – agility, flexibility, pay-as-you-go – it’s easy to understand why the tendency is to have more and more cloud-based application workloads and subscription models of all kinds (everything as a service).  

In other words, Cloud XaaS supply has aligned with the Market’s demand.

José Gomes

IT Operations, Cloud & Security Associate Director at Noesis.