Expert opinion

Why Do Companies Use Clouds? Evolution of customer needs over the past six months

4 minutes

Sergey Zinkevich

The end of the year is the time to sum everything up, so we decided to analyze the most remarkable trends of the last two quarters. You might wonder "why this very period but not the whole year?" Here's the answer: starting with the second half of 2021, the worsening chip crisis has extended to almost all the economy sectors. Our research was aimed at evaluating the impact of the chip shortage on cloud business.

The crisis has an impact on cloud market, which is yet not as strong as we thought

We analyzed around 200 large requests for services during Q3 and Q4 2021 and identified the reasons why customers resort to cloud services. Equipment obsolescence and the need for upgrade encourage cloud migration in 28% of cases compared to 21% during the same reporting period of the previous year. When talking about the needs the cloud satisfies, customers mentioned "tight project deadlines", "prompt resource provisioning", and "fast access to new equipment". These needs can indirectly evidence extended delivery dates making things difficult for CIOs. However, chip crisis has not yet made cloud migration a massive phenomenon. The fact that the desire to get needed equipment will prevail in the future should not be disregarded since the component shortage will continue for the whole next year.

It should be noted that cloud migration is possible if the customer is mentally prepared for it, and security officers are loyal enough. Thus, companies which prefer on-premise architectures simply cannot immediately opt for an outsourcing model even if equipment delivery takes months, not weeks. Such customers use the cloud only for individual tasks, e.g. testing, or in rare cases, as replacement equipment to run systems no longer supported by their vendors.

What are the top-3 other needs encouraging cloud migration?

At the top of our rating is the need to improve business continuity, and not to cut on infrastructure expenses, as you might have thought. For many companies, IT is a non-core activity, but it determines the reliability, reputation and financial outcomes of the entire business. This is why customers build fault-tolerant environments with the help of cloud resources more and more often and employ them for data backup and creating backup data centers. The cloud draws attention of a company when it plans to migrate its data from international hosting service providers to Russia in order to comply with regulatory requirements (for example, Federal Law 152-FZ "On Personal Data"). Otherwise, the company will be forced to suspend its business. In Q3 and Q4 2021, 40% of customers mentioned the need for "business continuity improvement".

Companies often use the cloud to roll-out a new business or service, which is the best option when it is hard to predict the initiative potential and possible IT costs. It is unreasonable to order equipment exactly for a certain project as there is a risk to purchase more resources than needed or create a low-performance infrastructure unsuitable for growing workloads. The cloud is free from these disadvantages as it enables to flexibly manage capacities that can be added as the business grows or collapsed. A typical example is rolling-out GPB Mobile virtual operator from the cloud. According to the customer, it was impossible to calculate the exact size of the subscriber base and therefore anticipate IT expenses over two-three years. As a result, they opted for leasing resources for the sake of cost-effectiveness. The need to "roll-out a new business or service" was mentioned by 21% of customers.

Deployment and administration of IT development environments in the cloud is considered to be one of the most promising services, as the number of requests related to it has increased by 80% in the current year. This service accounts for only 11% of new contracts now, but in the nearest future the figure can significantly grow. The gained popularity is explained by two factors, i.e. the pandemic and shortage of specialists. The Covid-19 pandemic and subsequent switching to remote work have generated an unprecedented demand for online services. Almost all companies got down to adjusting their existing applications or launching new ones. They began to compete for online users. The winner of the race was the one who promptly prepared their IT infrastructures to develop customer services and hired qualified engineers. And this is the root of evil: the lockdown has worsened the earlier shortage of IT specialists in many times. A DevOps specialist is like a needle in a haystack now. Another problem is ever-growing salaries of such employees, burdening a payroll. This is why we notice more and more often our customers willing to outsource this function, so that it is the cloud provider who hunts for and holds the staff.

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