Expert opinion

Cloud Market 2021: Customer Expectations vs. Reality

408
5 minutes

The year of 2020 challenged all market players, especially when it came to remote work adoption by businesses and governmental organizations, and, ten months after, it is still the case for many of them. Simultaneously, lockdown restrictions raised the demand for online services and online shopping dramatically.

For example, Stockmann has boasted a 12-times increase in online orders since the lockdown start, while the audience of training and consulting websites grew by 20-30% as early as April-May 2020. To support sales, providers of such services, as well as online retailers and marketplaces, had to boost computing capacity in the shortest possible time. This was the time for the cloud to prevail over other infrastructure services, helping companies to quickly adapt to changing conditions.

What to expect in 2021? Making forecasts is a thankless job; however, there are some noticeable trends, which, in our opinion, will impact the cloud market, given, primarily, customer requests and expectations.

IT developers rule the roost

Even if the pandemic suddenly ends right away, the demand for online services will continue. First, consumers got used to order goods and services online and will stick with this habit. Second, business and government digitalization will push companies to develop their digital tools faster. Online competition is reaching a brand-new level, while also increasing the role of IT developers in organizations. Here, cloud providers respond by targeting their offerings at this growing audience as well, focusing on both IaaS and PaaS. Simply put, these are pre-configured platforms being leased out to deploy and develop apps, such as Kubernetes as a Service. The PaaS segment has doubled over the past four years and will grow even more because of the pandemic and digitalization. In addition to fault-tolerance and scalability, a cloud platform now needs to have rich functionality, mainly because more and more IT developers are using the cloud.

Private cloud case

Digitalization also impacts those industries where the use of public clouds is usually limited, such as the government sector, manufacturing and energy enterprises, and some banks with the most stringent requirements for security and compliance. Flexible capacity expansion for business apps is still in demand in these organizations, which more and more often resort to private clouds. Due to confusing use of terms, this service is sometimes understood as either virtualized on-premise infrastructure or dedicated equipment in a provider's commercial data center. In both cases, we are talking about servers that are solely owned by the customer (as opposed to a public cloud, where the entire resource pool is distributed among many customers). According to IDC, the private cloud segment in the Russian market slightly exceeds 15%. It seems however that it will get stronger over the next year or two as organizations look for greater flexibility, adaptability and IT cost reduction. The latter is mainly relevant to infrastructure outsourcing, which makes it possible to avoid capital expenditure and promptly upgrade personal data storage systems to meet regulatory requirements for public information system hosting.

Manage this

Hosting a system in a cloud is not equal to complete abandonment of infrastructure support. Customer's IT staff still needs to work hard to configure and migrate VMs, monitor ongoing processes, and maintain information security, but in-house team not always has time for this. Increasingly more often, such tasks are outsourced to a cloud provider as Managed Services. As a result, the customer delegates routine processes, forgets about the shortage of skilled personnel (to reach 300,000 people a year by 2024, APKIT reports), and saves the ever-increasing trouble of finding and retaining the employee they need. The more business-critical the system, the bigger the trouble is. For example, DevOps engineers are in the greatest demand now. On average, searching for a professional can take 1-2 months or even more, with a salary reaching 250k – 450k rubles per month. Budget and time constraints slow down the time-to-market and thus retard business development. This is why, such customers engage specialists available in the market, usually on a T&M basis (primarily those responsible for Ops, i.e. operations, such as deploying and configuring Kubernetes clusters, setting up monitoring and logging systems, updating certificates required for developers, etc.). Such an approach helps reduce personnel engagement cost and obtain a high-quality product.

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In addition to technology per se, customers are concerned with how wisely a provider can select them, depending on a particular business task. The service provider is no longer a request performer, but consultant and business partner. For this reason, its expertise and feedback by other customers in the same industry are critical when choosing a provider. Remarkably, the contractor's reputation matters more and more over time. Major cloud platform failures, poor support, and, which is even worse, unethical behavior (for example, hindering migration to another cloud) quickly become known to all market participants through the word of mouth. In general, this can indicate both that the number of large cloud market players is still small and that the cloud services are rapidly growing in terms of value and impact on customer's business.

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