At the moment, it can feel like every day brings with it more bad news for business. The coronavirus pandemic is first and foremost a world health emergency, but no one can deny the severe economic impact the lockdowns will cause as the pandemic subsides. In fact, many companies have already been forced into dire straits.
But isn’t all doom and gloom; for some sectors, the coronavirus pandemic has created new opportunities as demand for their services has increased. One sector in particular has experienced an influx of demand: the cloud sector.
Coronavirus Provides Boost to Cloud Sales
The coronavirus pandemic has forced the hands of many companies. To survive, they have had to evolve – and turn to the cloud.
Although there was some movement towards the cloud pre-lockdown, investments were generally nominal. Research suggests that just 5% of IT budgets were dedicated to the cloud before the pandemic. But social distancing and lockdown measures have meant that a vast majority of companies can no longer operate normally. Instead, they have transitioned to remote working by accelerating their digital transformation agendas. Now, cloud service providers are seeing greater investment as companies invest more of their IT budget into the cloud.
So far, the global COVID-19 pandemic has had a “mildly positive impact” on cloud sales, according to Synergy Research. In Q1 2020, spending on cloud infrastructure services reached $29 billion – a 37% increase year-on-year. This was in line with expected market growth, but the fact that the cloud sector has withstood the pandemic while other sectors have suffered downturns means that the future is looking bright for the cloud industry.
“While COVID-19 is having a devastating impact on communities and economies around the world, indications are that it is having a mildly positive impact on the cloud infrastructure services market,” claimed John Dinsdale, Chief Analyst at Synergy Research Group in discussion with Cloud Pro.
Dinsdale went on to say: “For sure the pandemic is causing some issues for cloud providers, but in uncertain times the public cloud is providing flexibility and a safe haven for enterprises that are struggling to maintain normal operations.”
In uncertain times, the public cloud is providing flexibility and a safe haven for enterprises that are struggling to maintain normal operations.
Chief Analyst, Synergy Research Group
Catching Up on Digital Transformation
Maintaining normal operations has been the aim of the game for many organisations. But while some organisations have either initiated existing business continuity plans or accelerated their digital transformation agendas, others have been caught unawares. For Chris Drake, Principal Analyst, Global IT Technology and Software at GlobalData, the story is clear: companies that prepared and invested in cloud computing resources are doing better than their less-prepared rivals.
“Any organisation that actively resisted digitalisation is now confronted with a harsh reality. This [has put] cloud providers in a strong position,” said Drake. “It is likely to spur demand for cloud computing and other IT Solutions, including edge computing, as organisations accelerate and adjust their digital transformation strategies.”
Across the board, we’re now seeing a concerted effort from companies to accelerate their digital transformation strategies. Where there was cultural resistance to digitalisation, there is no longer, as company executives begin to see the value of an off-premises, cloud-driven IT infrastructure.
As the full impact of the COVID-19 pandemic continues to pan out, we’ll see further investments in cloud technology. To learn more about how cloud investment is changing, and how organisations are using it to build crisis-proof IT infrastructure, check out our webinar, Crisis-Ready, Crisis-Proof. We brought Commvault and The Future as a Service together for a discussion on the future of cloud investment, and the insights may surprise you.