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Cloud XaaS - The perfect alignment between supply and demand

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Cloud XaaS - The perfect alignment between supply and demand

Foto José Gomes
José Gomes 3 minutes Share

According to some recent estimations, XaaS global market should register 25,5% CAGR between 2021 and 2026. These are impressive figures and very significant growth. So it is essential to understand the main reasons for this growth in order to allow companies to take full potential from “as a Service” models.

As we all know, in 2020, we’ve experienced a powerful digital acceleration in our economies and businesses. Every vertical, business area, company’s size were heavily impacted by it. The Cloud, in its many setups, has had a central role in this acceleration. I find two indicators in IDC’s reports pretty eloquent: the IT Spending on corporate clouds, both private and public, has increased 35% in 2020 compared to 2019. And at the same time, Cloud costs have decreased 8%.

In 2021, companies are at a fast pace with their digitalization processes (those who don’t, they should be). Some of them are using this period to make some significant changes, optimizing their operations and processes, replacing some legacy systems, investing in new technologies, and finding the “missing piece” to incorporate innovation and reinvent their business models, in order to keep a competitive advantage and being sustainable in the Market.

So, the future of Cloud is quite inspiring and challenging. A slow, although consistent, economic recovery is expected, at least until 2022, and the perspective is to keep having an increasing adoption of cloud services being more and more innovative and playing a central role in Businesses.

But why do we have such high cloud adoption rates?

First of all, that’s the consequence of cloud’s value proposition, based on “as a service” models, as it is probably its main benefit:

  • During the pandemic, “as a service” models were the ones with the best response to market and companies needs: to reinvent and adapt their business models, now buying and consumption behaviors, need clients demands, the need to address clients in the digital channels, remote work transition, speed-to-market, resilience, agility, scalability (among other buzz words!)
  • All these needs simultaneously in companies desperate to reduce operational costs to go through these crises and general lockdowns. To rationalize financial, human, and material resources were vital.

It makes no sense to have adoption constraints to these “as a service” models, besides the natural and traditional concerns regarding security, lock-in, regulatory, intellectual property, or transnational policies.  

There could be some change resistance due to the rising adoption of hybrid and multi-cloud environments. This adoption, especially in big companies with large IT departments, can raise some almost philosophical discussions about the role of IT and their part as the agent who guarantees all governance of these broader, more complex, and various technological ecosystems.

In conclusion, I’d say that “cloud as a service” models are here to stay. The cloud, in its different setups it is central these days. All reports and independent surveys estimate a continuous and accelerated growth of cloud-based models, with a particular focus on hybrid and multi-cloud setups, and, of course, taking into consideration the 100% digital startups that have “all-in-cloud” business models since day one!

This go-to-cloud pattern and applications exposure to internet-based services will continue, simply because it’s a pattern that is totally aligned with the Market’s 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 that the tendency is to have more and more cloud-based application workloads and subscription models of all kinds (XaaS – 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

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