Cloud Computing

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Cloud Computing

Cloud computing is on the rise, with an increasing number of businesses adopting the technology. Many industries are bracing themselves for the transformation to leverage the technology for business growth. Below is a summary of key findings on how cloud computing will affect the future, its current use and industries impacted by the disruption.

Industries with Most Cloud Computing Usage

List of Industries With Most Cloud Computing Usage
  • According to technology news site Solutions Review, five industries are currently utilizing cloud computing solutions by integrating the cloud into their vertical. The five industries are healthcare, finance, education, automotive and manufacturing.
  • With an emphasis on client safety, security and privacy, the healthcare industry is adopting the cloud to store client data. In addition to that, the industry is also utilizing cloud-based diagnosis systems where machine learning and predictive analytics are used to medical diagnoses and recommend treatment options.
  • In the finance industry, a number of banks and insurance firms are adopting SaaS programs to "keep track of records and handle other back office tasks" while cloud-powered artificial intelligence (AI) and machine learning solutions are implemented in capital markets "to design investment strategies and financial data management."
  • In the education industry, cloud solutions may be used to maintain data privacy and security compliance and enhance collaborative environments for students.
  • A common cloud environment for suppliers and manufacturers to share data is useful for the automotive industry to stay up-to-date on their supply.
  • As for the manufacturing industry, cloud solutions may be used in every part of the process--for instance, cloud-based enterprise resource planning (ERP) solutions may be used to transfer business management practices to the cloud, which allows for quicker processing of orders of any size.
  • In addition to the five industries mentioned above, business technology news site ZDNet identifies three other industries: retail, government and agriculture.
  • From data storage, collection and organization practices to cycling of goods and inventory, cloud solutions have a big impact on the retail industry.
  • A Gartner analyst suggests the most prominent use of the industry clouds is in the government sector, with offerings for specific government versions that secure classified data.
  • In the agriculture industry, the cloud may be used to "capture information about its environment--soil sensors, machine sensors, seed or grain sensors, sensors around animals."
  • More data on cloud usage may be found in the "Cloud Usage Report 2019" by Nutanix.
In summary, the industries with most usage of cloud computing are healthcare, education, finance, automotive, manufacturing, retail, government and agriculture.

List of Industries Where Cloud Computing Is Predicted to Grow
  • According to Forbes, more technology-dependent industries are pressured by executive management to become 100% cloud-based. This is particularly the case for three industries: manufacturing, high-tech and telecommunication/utilities. Thus, it should be expected that cloud computing will be widely used in these industries in the future. See the figure below for details.
  • According to IDC forecast, three industries--namely banking, professional services and discrete manufacturing--"will account for more than one third of all public cloud services spending throughout the forecast [period of 2018 to 2023]."
  • The highest projected growths in spending on public cloud services for the forecast period of 2018 to 2023 are in professional services, telecommunications and retail. See the figure below for details.
In summary, industries that will see growth in cloud computing usage are finance, healthcare, high-tech, manufacturing, education, telecommunications, retail, and professional services among others.

Current and Predicted Future Use Cases

  • Solutions Review identifies 7 cloud computing use cases for every business: hosting applications and services, cloud storage, unifying global operations, increased collaboration, backup and disaster recovery, scaling resources, and web traffic spikes.
  • Advanced Systems Group identifies 5 most common use cases for public cloud computing as infrastructure scaling, disaster recovery, storage and deduplication, platform development, and host services.
  • Data Flair, on the other hand, identifies 4 cloud computing use cases: private and hybrid cloud, IaaS and PaaS, big data analysis, and disaster recovery.
This section focuses on 6 of the use cases mentioned above, including:

Disaster Recovery and Backup
  • According to software company Nakivo, "[c]loud disaster recovery is a cloud computing service which allows for storing and recovering system data on a remote cloud-based platform."
  • In traditional recovery, a secondary data center is required to store copies of critical data as backup, which can be extremely expensive, time-consuming, and complex to manage and monitor. Recovery in the cloud, on the other hand, is cost-efficient, scalable, and reliable. More details may be found here.
  • Based on virtualization, cloud computing allows data to be "copied or backed up to an offsite data center and spun up on a virtual host in a matter of minutes." See the figure below for how cloud recovery is faster and most cost-efficient.
  • According to a 2019 survey of 400 organizations by Unitrends, 60% of respondents use the cloud for backup, recovery or archiving, an increase from 48% in 2016. When separate by size, "61% of small (1 – 50 employees), 58% of mid-sized (51 – 1000) and 60% of large organizations use the cloud as part of their data protection." It is projected that 80% of all organizations will use for data protection in 2020.
Cloud Storage
  • According to Microsoft Azure, "[c]loud storage is a service which lets you store data by transferring it over the Internet or another network to an offsite storage system maintained by a third party."
  • There are three main models for businesses: public cloud storage services, suitable for unstructured data, private cloud storage services, providing more control over data, and hybrid cloud storage services, a blend of the previous two models to provide more flexibility.
  • The cloud is widely used for storage, with 84% of all organizations using the cloud to store data or backups--93% of small, 82% of mid-sized and 81% large enterprises--according to the 2019 survey by Unitrends.
Scaling Resources and Functionalities
  • Scalability allows a system "to increase or reduce its performance, resources and functionalities according to user’s needs," providing "a very flexible infrastructure, customizable for each company’s requirements and able to respond to specific needs immediately." It is a key feature of cloud computing, where high levels of scalability optimizes the overall efficiency of the system and provides cost-savings.
  • There are two main types of scalability: horizontal and vertical scaling. Horizontal scaling is the process of scaling "by adding more machines into your cloud architecture so that they work as a single unit." Vertical scaling, on the other hand, is done "by adding more power to the existing machines in terms of more CPU, RAM and storage."
  • According to cloud computing service company Avatara, the third type of scalability is diagonal scaling, which "is a combination of vertical scaling and horizontal scaling. In this model, vertical scaling is employed until the server’s maximum capacity, whether memory, computing resources, or any number of other scenarios, is achieved. Once this occurs, horizontal scaling takes place, expanding outward in order to maximize opportunities for growth. Most business, whether intentionally or inadvertently, favor diagonal scaling due to the increased opportunity."
  • Additional information and explanation of cloud scalability may be found here.
Hosting Applications
  • "Cloud hosting is a server and network infrastructure that uses software to divide a single physical server into multiple virtual servers. Often, these devices are referred to as virtual machines, or VMs."
  • According to IBM, cloud hosting, which "makes applications and website accessible using cloud resources," uses "a network of connected virtual and physical cloud servers hosts the application or website, ensuring greater flexibility and scalability."
  • Key features: "applications and solutions are deployed on a cloud network rather than an on-premises, single server; resources scale to user needs; organizations only pay for the resources they use; cloud hosting can support SQL (including MySQL) or NoSQL databases; solutions are automated and controlled using APIs, web portals, and mobile apps."
  • In one of its case studies on software developer eZuce, IBM finds that deployment speed is increased by 98% and costs are reduced by 20% when switching to a high-performing cloud hosting platform.
Cloud Services
  • There are three categories of services: software as a service (SaaS), platform as a service (PaaS), and Infrastructure as a Service (IaaS).
  • The most commonly used cloud application service, SaaS "is becoming a dominant way for organizations to access software applications." It allows accesses to "a specific software application hosted on a remote server and managed by a third-party provider." Salesforce, Workday, or Microsoft Office 365 are among the popular SaaS products.
  • According to the Computing Technology Industry Association (CompTIA), "[s]ome companies predict a rebirth of SaaS technology that will be heavily focused on mobile devices" while "[o]ther companies are putting stock in the trend that artificial intelligence (AI) will dominate the SaaS market in the fields like logistics, transport and retail."
  • According to Accenture, "PaaS is a popular choice for businesses who want to create unique applications without making major financial investments." It allows organizations to access "a pre-defined environment for software development that can be used to build, test, and run applications."
  • The simplest option for businesses, IaaS allows organizations to migrate their "hardware—renting servers and data storage in the cloud rather than purchasing and maintaining its own infrastructure." It provides the same technologies and capabilities as a traditional data center, including full control over server instances.
  • The difference among the three is that "IaaS offers the most control to the customer as they are responsible for their applications, data, runtime, middleware and operating system" while PaaS only allows users to manage their applications and data and SaaS allows them to manage their own data within the software. See the figure below for illustration.
Big Data Analysis
  • Big data basically refers to a large collection of data. Because of its size and sensitivity, it is essential that big data is stored in a secure and efficient environment such as the cloud.
  • It is projected that a total of 463 exabytes of data will be globally generated each day by 2025, driven by the increase in the adoption of the Internet of things (IoT) and growth in global IaaS market.
  • Using cloud computing for big data "provides a solution which is both scalable and accommodating for big data and business analytics" with the hardware virtualization of cloud computing providing the possibility to store significant amounts of data powered by "scalability, fault tolerance and availability."
  • According to Forrester's forecast, the shift to cloud computing for big data is already on its way with global spending on big data solutions via cloud subscriptions is projected grow almost 7.5 times faster than on-premise subscriptions for the period of 2016 to 2021.

Eight Ways in Which Cloud Computing Will Affect Consumers

Digital-First Infrastructure
  • It is predicted that the cloud will change infrastructure in the cities, which will be occupied by 6 billion people by 2045. With its capacity to store and analyze data, the cloud will improve the management of "smart elevators and parking lots, driverless cars and drone taxis, trains and subways, farms and power plants."
  • In smart cities, where significant volume of data generated and collected, cloud computing will provide the necessary computing capacity to build infrastructure in these cities.
  • Serving as a storage and analysis system for big data used in the city's infrastructure, a city’s cloud will host "PCs and server files, web page meta-data, images and video and data created by machine-to-machine communication."
  • Data and data-driven insights from one smart city may be sold to a normal city to provide a management system template for a relatively quick city transformation.
Accessibility
  • Unlike traditional technologies, which limit to specific locations where data is retrieved, cloud technologies allow for "advances in the ways that employees deliver customer experiences through connected data sources."
  • The ability to access data from any location not only improves the productivity of employees but the experience of customers who "are able to log in to self-service applications at the time and place that’s convenient to them."
  • Its "unparalleled accessibility of resources" only requires a connection to the internet to retrieve data, even if access to device is lost.
Personalization
  • Collecting significant data on customers is very important for companies to market their products and services to the right targets. Personalization through big data analysis allows companies to segment and divide their audience into coherent clusters--by personal, social, and behavioral characteristics.
  • As mentioned earlier, cloud computing has features that enhance big data analysis. As a result, the use of cloud technology will ensure that the dialog between companies and specific targets become "increasingly effective, targeted, and tailor-made."
Management of Data Used by Consumers
  • Also due to the increasing volume of data our society is using and the cloud's ability to handle big data, the technology "will enable us to store this rising tide of data and mine it for usable insights." As high-definition video is projected to account for 89% of individual user traffic by 2025, the cloud will help to cope with this massive volume.
  • Security is among the key benefits of cloud-based data management, driven by two factors--economies of scale and division of labor. As security is enhanced, consumers will benefit from it.
  • Companies that use cloud services "can spread the cost of data security for large volumes of customers across multiple cloud data centers," meaning "they can allocate more human and financial resources to security measures, including physical, technical and operational security." This is the benefit of the economies of scale.
  • Using cloud services also allows for better division of labor as companies "can allocate more resources across the business to security when using cloud services. However, they can also rely on cloud providers to focus solely on delivering IT services. A managed cloud provider brings in a new level of expertise to the data security operation that cannot be matched by traditional, non-cloud-based solutions."
Autonomous Vehicles
  • The estimated data storage requirements for autonomous vehicles (AV) resulting from radar, light detection and ranging (LiDAR) and camera is 4-6 TBs per day for test AVs and 8-10 TBs per day for some AVs. With the amount of data storage required, the need for cloud-based storage comes in play.
  • While many companies are developing "next-generation autonomous vehicles that will alter our roads and throughways and lay the groundwork for future smart cities," technical advances such as the cloud will help accelerate the development. These technologies are important in "providing a resilient and high-performance foundation on which to collect, manage, and analyze voluminous sensor data." In other words, the cloud is one of the enablers.
  • The industry disruption by ride-sharing services like Uber and Lyft will only be accelerated by the wide use of autonomous vehicles. With technology enablers such as the cloud, this will come closer to reality.
Improvement in Media and Entertainment (M&E)
  • Consumers are becoming increasingly demanding in flexibility and choices while their demand is also becoming unpredictable, "with spikes and surges in viewership that have to be dealt with in real time." The scalability and flexibility benefits of cloud computing will allow "the M&E sector needs to cost-effectively meet volatile demand, automatically spinning servers up and down as demand ebbs and flows."
  • "High streaming performance, with minimal delays and downtime," is an essential factor for both user experience and advertiser expectations. "The cloud provides ample opportunities for dispersed and redundant architectures that support high availability and high-performance SLAs, such as multi-region, multicloud, and hybrid deployments."
Supporting Technological Shift in Times of Need
  • While there are many potential unforeseen circumstances that may require a technological shift, COVID-19 is an example of such instance. “Cloud computing represents the catalyst and the enabler of the important technological shift that was already well underway before COVID-19,” said Doreen Bogdan-Martin, Director of ITU’s Telecommunication Development Bureau (BDT).
  • Cloud technologies have helped in COVID-19 responses in a number of cases, including supporting governments’ and schools’ response to COVID-19, enabling healthcare systems to deliver better information and care, and helping retailers manage increased demand and shifting expectations.
  • Thanks to cloud technologies, cloud-based data platforms and automated software-delivery pipelines can be deployed quickly and at a relatively low cost. In general, the cloud allows for faster speed in responding to unforeseen events.
Space Saving
  • The key advantage of the cloud its storage capacity. Consumers use cloud services "can, for example, store and/or access virtual libraries of music, videos, photos, etc. without ever filling up their device’s hard drive." Consumers will be able to accumulate media data without risking exhausted space on their devices.
  • Some examples of this include iCloud, Dropbox, and Google Drive, which are file-hosting platforms. "Facebook and Instagram use cloud computing to let users upload photos, videos, music files etc. to remote servers for the purpose of sharing with friends, family and other connections via the social platform."

Eights Ways in Which Cloud Computing Will Affect Businesses

Digital Infrastructure and Transformation
  • Similar to its impact on consumers, the cloud will also transform businesses through digital infrastructure. While business operations increasingly require digital transformation, the cloud will change information and communications technology (ICT) from a support system to a production system.
  • As building digital infrastructure becomes increasingly important for businesses, the cloud is adopted to fuel the digital transformation through four key benefits: agility, cost and labor effectiveness, security, and faster prototyping.
  • According to McKinsey & Company, with a complete standardization and automation strategy combined with cloud capabilities, the full value of cloud can be achieved and will provide "scalability, agility, flexibility, efficiency, and cost savings" for companies.
Product Design
  • With advancement of cloud technology, companies will be able to "create products and services within the cloud, or model new products or marketing campaigns as cloud-based software prototypes."
  • According to a survey sponsored by Oracle, respondents said that 10 out of 11 benefits of product lifecycle management in the cloud "will have a moderate or greater impact on their business." See the figure below for details on how each cloud-based PLM benefit is scored on a range of 1 to 5.
Enhancing Remote Work Experience
  • As Forbes puts it, "the cloud is the backbone of remote work." With cloud-based applications and services, organizations are able to support remote workforces in all locations as long as there is internet connection.
  • Examples of these include platforms such as Slack and Microsoft Teams, which enable "real-time communications throughout an entire organization."
  • According Gartner's analysis, those who work remotely because of COVID-19 "will demand greater capacity from networks, storage and services during the crisis." Cloud-based service providers such as Cisco Webex, Google, Microsoft, Slack and Zoom are offering a number of free software capacities to assist organizations meeting this demand.
  • As remote work will likely become the norm, even after the pandemic, cloud technology will need to be prioritized to enhance the experience.
Enhancing Collaboration
  • With remote work becoming increasingly long-term, companies will be dealing geographic boundaries. Cloud collaboration will assist companies in bringing together team from all locations.
  • Cloud-based collaboration is a tool that "enables people to work simultaneously on documents that live ‘in the cloud’ — so you can access files from anywhere with an internet connection." Unlike in-person conversations, where some employees may be left out, cloud collaboration allows equal opportunities to share input.
  • Thus, a potential advantage of cloud collaboration is higher levels of participation as employees are more likely to participate when they have access to projects. "With cloud collaboration, all team members have an equal opportunity to provide input, and it can be done from wherever they are, at any time."
  • As there is no on-premise software required, there is also no need for IT department employees for management of install, maintenance, or upgrade processes.
Supporting Artificial Intelligence/Machine Learning
  • According to Google Cloud, "[m]achine learning (ML), which allows software to improve its performance of certain tasks without explicit programming, can integrate with all kinds of applications as a modern cloud service — allowing you to build new apps that pass benefits onto customers or users (such as the ability to predict traffic, climate, health, or other conditions)." Nearly one-third of ML implementers have reportedly already obtained competitive advantage in this manner.
  • The cloud will also support the deployment of artificial intelligence (AI) to adapt to new platforms such as mobile, which is the largest computing platform.
  • Without cloud services, most AI work would be "isolated and expensive due to huge data, software and hardware requirements of the algorithms." As the cloud emerges, machine learning capabilities have become accessible.
Cost Saving
  • Cloud computing will also help business become more cost-efficient through lower operational, maintenance, marketing and management costs. As it does not require hardware maintenance, cloud computing reduces the costs compared to traditional methods. Cloud-based marketing is also "far less expensive than conventional data management tools, product development, storage methods, customer support approaches, and marketing methods."
  • As for small businesses, cloud computing will require lower operational costs as it "allows for a metered or pay-per-use structure of payment, meaning the business will only pay for the actual workload and resources that they use, despite the fact that they have access to resources that can only be described as 'unlimited'." While previously the common practice was third-party service providers charging a fixed amount for its periodic subscription fees, there is currently a rising number of service providers utilizing the pay-per-use payment structure.
  • Furthermore, as mentioned earlier in the disaster recovery use case section, the cloud offers the most cost-efficient solutions. It "delivers faster recovery times and multi-site availability at a fraction of the cost of conventional disaster recovery."
Data Security
  • Similar to its impact on consumers in terms of data security mentioned previously, cloud computing has advanced security features that guarantee that data is securely stored and handled.
  • Cloud cybersecurity risks, however, are reportedly on the rise. According to a report by security company Skybox Security, vulnerabilities in container software increased by 46% in the first half of 2019 from the same period in 2018, and by 240% from the two years ago.
  • Skybox Director of Threat Intelligence Marina Kidron suggested that "[c]loud technology and adoption has obviously skyrocketed, so it’s no surprise that vulnerabilities within cloud technology will increase." This means that despite its advantages in security, there will also be potential security threats for businesses.
Specialized Solutions for Industry Needs
  • As cloud computing matures, cloud providers are beginning to offer specialized cloud solutions for specific industries, as known as industry cloud. An industry cloud provides "tailored solutions to meet the needs of organizations with business operations in industries that are subject to data protection or retention regulations, operations with mission-critical applications, and industries that experience regulatory restrictions on software use that disallow the rapid changes endemic to software development."
  • According to IDC's Zachary Rabel, Senior Research Analyst, “[t]he industry cloud market is developing and growing fast, with dozens of new industry clouds emerging each year across many industries, including financial services, healthcare, life sciences, manufacturing, retail, energy, and even government. Within these industries, more than 500 industry clouds have already been created, generating over $8 billion in revenue. Professional services firms have the capabilities to help industry players in this market and some have built long-term strategies to do so as well.”

Additional Information

  • IBM has published dozens of cloud case studies with examples of use cases by real companies. They are accessible here.
  • Flexera 2020 State of the Cloud Report provides detailed findings of a survey of 750 global cloud decision-makers and users. It is accessible here.
  • A summary of Gartner's forecast of the global market public cloud services may be found here.
  • A report on key trends in machine learning, AI and cloud by Zenoss may be found here.
  • Forrester's predictions for cloud computing 2020 may be found here.
  • Gartner Top 10 Trends Impacting Infrastructure & Operations for 2020 may be found here.

Research Strategy

To carry out this research, we gathered information from a number of sources, including surveys and reports. Although it was unavoidable to cite a source multiple times (particularly for maintaining consistency), we made sure that each section contain multiple sources and the whole final research use a variety of sources, with over 50 sources provided. Where the main source is behind a paywall, we ensured that only publicly available data extracted from the source was used in our findings, guaranteeing that any data cited in the research is accessible. And finally, we added to the end of this report a section for additional information with links to a number of sources where additional data useful to your research may be found.
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