Expert opinion

Using Clouds to Withstand Crisis

6 minutes

Sergey Zinkevich

We are living in a rocky year of a global crisis often referred to as new normal. Indeed, who could predict such a storm of business challenges in 2020? The year required transformation of a lot of processes and forced many businesses to shift their focus onto IT and complete transformation journey within weeks, which normally would take years. Sergey Zinkevich, Service Development Director, CROC Cloud Services, will tell how clouds have catalyzed the changes and how they can help resist the crisis.

Underlying technologies that enable cloud services may vary, but the core idea of cloud computing remains the same: business system data are processed on virtual machines in the cloud rather than on the company's physical servers. With this model and zero investments in hardware you can use server capacity immediately on demand. Later, if don't need cloud resources anymore, you can simply cease using them.

In 2020, the demand for clouds has skyrocketed. First, thousands of employees had to start working from home, and employers had no choice but to provide remote access to business systems. Second, some companies launched new e-services of all kinds from delivery to online healthcare. Almost every new service was powered by a cloud solution. That is why the public cloud market in Russia is expected to grow by a third, despite the crisis, reaching ₽93 billion by the end of the year, and ₽137 billion by 2023 at an average annual rate of 22%, according to the forecasts of TMT Consulting. Gartner, likewise, forecasts that despite the drop in corporate demand for services, spending on cloud services will remain elevated, and clouds will stay safe in the "green zone" unlike many other segments of the IT market. 

Advantages of cloud computing

Clouds allow for rapid IT infrastructure upgrade and scaling without significant capital investments. Instead of pouring tens of thousands of dollars into cords and metal boxes, business leverages an opportunity to rent computing resources and divert the cash flow to core business development. 

Grain Holding, a largest flour and bread maker, for example, opted to migrate at least 40 corporate systems supplying products for 11 million Russian consumers, to CROC Cloud. The holding needed well-organized IT, so having done the math, the management preferred a cloud instead of building own data center, thus making a good economic effect. Now, centralized vehicle routing reduces overheads and improves shipment and delivery time. The holding is going to use CROC Cloud as a basis to deploy a full-scale digital enterprise. 

Clouds are valued for the speed. Clouds are the only way to launch a new service quickly without spending weeks just to procure equipment, and many companies appreciated this advantage, especially during the pandemic. Going online was a real challenge for many enterprises, since neither the infrastructure nor the management were ready for it. Nevertheless, after a few months of stressful work customers learned to adapt to changes quickly. However, it would have been almost impossible without outsourcing. 

For example, one retail chain, realizing that its mobile app and e-commerce website were far from perfect, planned to redesign the architecture of services and roll them out to the market by the end of the year. But the lockdown accelerated the project implementation. The management set a goal of rewriting apps within just four months in order to increase profits from e-commerce and catch the wave of online sales growth. The company focused on strategic goals and marketing and outsourced infrastructure development and deployment, otherwise it would be impossible to accomplish the task within the tight deadline.

Online activity growth also prompted cloud use. 

I'll give another example here. Fashion retailer Stockmann used the cloud to save on their IT budget and provide their online store visited by more than 1 million shoppers every day with resources necessary during sales periods. This year, it was just bad luck that special offers and lockdown happened at the same time. Scaling of computing resources was inevitable for the company to withstand the double load: the retailer was getting ready to migrate right before its annual Crazy Days shopping event, which coincided with the April lockdown. 

Clouds are a good choice during crisis, because they can provide greater flexibility to customers. To increase profits, business should either cut costs or enter new niches, so any crisis is the time of both tightened belts and experiments. Yesterday you operated five flower shops, but today they are closed, and you have to learn how to handle orders via messengers and deliver them through popular delivery services. 

Piloting and testing of new products and services requires computing resources as well. Right here, right now, and at affordable price. Here come the clouds again. 

For example, a large Russian retail bank deployed a POS-based lending system to facilitate small loan issue right in stores and enable employees of partner stores to submit applications for a loan or payment by installments directly from their smartphones. Customers don't need to waste time waiting in line at the loan officer's desk, and loans are issued much faster: a photo of the passport taken by smartphone camera will suffice. Both applications and data from the POS-based lending system are processed in the cloud, and all mobile devices used by consultants are connected to that cloud through a secure channel. 

This is very similar to a situation when business needs more than resources for scaling or new services, but rather a full-fledged computing environment to develop and implement new technologies from artificial intelligence systems to machine learning and neural networks. Making new solutions work for business requires investments in development, algorithm customization, and specialists who can bring the idea to life. Clouds help simplify the whole process by providing a fully-featured development platform, though virtually. Customers only pay for capacities actually consumed to process big data. 

One more reason Russian companies choose clouds is a payroll saving opportunity. In the middle of 2020, the average salary of an IT specialist in Russia was ₽108 thousand, and that one in Moscow started from ₽150 thousand, according to Career Habr. You have to pay qualified IT specialists for the job, though they are not busy all the time, experiencing bursts of work mostly. Specialist shortage in the market complicates the search for employees either. It's not a big deal for cloud providers, however, as they keep and train a strong IT team, maintaining moderate employee costs due to efficient resource utilization. 

According to Stockmann representatives, for example, maintaining own infrastructure would cost dramatically more. This is why cloud outsourcing is oftentimes a more cost-effective problem solution. 

Summarizing all the above information, it's safe to say that clouds are and will remain a powerful resource for business development and modernization of the Russian economy. Ten years ago, you had to justify cloud technology advantages to business owners, but today clouds are used in more than half large companies. The cloud has a plethora of opportunities to offer business and power to digitize, optimize costs, and increase efficiency, helping business increase profit and gain a competitive edge.

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