Cloud Adoption Trends Rise As More SMBs Implement Digital Transformation Strategies
Cloud adoption amongst SMBs has been increasing at a rapid rate in recent years.
Last year the worldwide public cloud service market was $182 billion, by 2022 it will be worth $331 billion.
This is mostly being driven by businesses seeking to increase their competitiveness by moving everyday processes to the cloud.
“Increasing competitiveness” in this sense effectively means improving on efficiencies within an organization.
The objective is typically to implement new technologies to streamline and lower expenses on, for example, physical servers run by the company, or migrating an email server to Office 365.
Why Do Businesses Adopt Cloud Solutions?
Principle reasons for adopting cloud solutions are:
- Flexibility: Businesses are able to implement desired cloud solutions at their own pace, depending on their needs and their roadmap for digital transformation. This means SMBs are able to start adopting solutions and quickly or slowly as they want.
- Scalability: Small and midsize businesses often have to be able to change direction on a dime. Cloud services give organizations more business agility by enabling them to upgrade or downgrade at will. No more funds wasted on unneeded servers.
- Capability: Cloud software—namely Software-as-a-Solution services (SaaS)—cover virtually every aspect of modern business that an organization needs to succeed. Advanced automation and RPA, for example, are great examples of high-tech solutions being offered in a SaaS model.
10 Cloud Adoption Stats That Will Raise Your Eyebrows
Without further ado, let’s get right into it: here’s 10 reasons why you should be keeping a close eye on your cloud strategy!
1. 94% of Enterprises Use Cloud Services
Yes, you read that correctly. It shouldn’t come as too much of a surprise to learn that the vast majority of businesses use at least one cloud service for their organization.
If you’re in the 6% of enterprises who are yet to adopt a solution of some kind, this stat should serve as a helpful reminder that cloud solutions are not a fad.
For many, being able to utilize the cloud—even if it’s just one service—can provide instant ROI to a very specific work process.
An example of this would be using an automation solution to quicken the returns process, instead of staff spending inordinate amounts of time sifting through emails.
This can then be built on and the amount of services used can expand further down the line once initial success has been achieved.
2. Hybrid Cloud Is the Standout Preference for Businesses
Within cloud hosting, there are three choices decision makers have to decide on:
- Public cloud: Services like Microsoft Azure which host data from many companies.
- Private cloud: Services like Steadfast, which dedicate hosted clouds to a specific client for sole use.
- Hybrid cloud: A mixture of private cloud use and public cloud use.
Public clouds are typically more popular among smaller businesses for this cost-effectiveness.
Private clouds are popular among larger enterprises which like to have their own dedicated servers, which offer more customization but cost more.
Hybrid options are good for businesses which feel more comfortable storing important data (like employee or client records) on a private server, but are happy to use the public cloud for their operational solutions.
Among businesses, 22% use only the public cloud and just 3% use only the private cloud.
Hybrid use however, is 69%—a testament to the flexibility of using both within your business.
3. 30% of IT Budgets Are Allocated to Cloud Computing
With increased adoption of cloud services comes an increase in expenditure.
Investment in cloud solutions—SaaS solutions being the main beneficiary (48% of cloud spending)—means nearly a third of all IT spending goes towards cloud products of one kind or another.
The average total spent on cloud apps and platforms by businesses last year was $2.2 million, up from $1.6 million in 2016. This trend will continue upwards next year, too.
4. Microsoft Azure and Amazon Web Services (AWS) Take Top Spots
As far as providers go, there’s no doubt which companies are the top dogs as cloud providers.
Azure and AWS make around $20 billion each in annual revenue, twice as much as the nearest competitor in third, IBM ($10 billion).
Though Azure generates more revenue than AWS, public cloud adoption among enterprises favors Amazon’s offering.
67% of businesses run AWS applications compared to 60% for Azure.
It’s worth noting that Azure has experienced stronger growth than AWS among early-stage cloud adopters.
Azure adoption has reached 85% of AWS adoption in 2019, up from 70% in 2018.
With enterprises opting for Azure in greater numbers, all the indications at this stage point to Microsoft closing in on Amazon’s share of the market. Expect the gap to narrow further in 2020.
5. 87% of Enterprises Experience Business Acceleration by Using the Cloud
Improving efficiencies within an organization is one of main driving forces behind decision makers implementing cloud services.
Of businesses that adopt the cloud, a whopping 87% of them report business growth from their cloud use.
41% of businesses are able to directly attribute business growth to their use of cloud services.
Adopting simple cloud services, like solutions which aid communication and help eliminate silos, can provide a huge boost employee productivity and ultimately your bottom line.
6. 18% of Files Uploaded to Cloud-Based File-Sharing Contain Sensitive Data
Nearly one-fifth of all files shared through the cloud have sensitive information in them. The majority (31%) lives with Office 365.
While this may have concerned decision makers before, this is more of an indication of how far cloud security has come than it is an indication of how people treat sensitive material.
Providers like Azure, for example, utilize Tier IV data centers, which are more secure than physical, on-site servers.
Tier IV data centers offer 99.995% uptime annually.
In layman’s, this means that information stored in these types of data centers is as secure as any on-premise equivalent, and the chances of losing that information is exceptionally low.
7. 83% of Enterprise Workloads Will Be in the Cloud by 2020
Digital transformation is the leading driver (63%) of public cloud adoption among businesses.
Organizations are pooling their resources into the cloud in huge numbers.
So great is cloud adoption that by next year, 4 out of every 5 businesses will host their workloads on cloud servers.
By contrast, on-premise workloads are predictably shrinking—from 37% last year to 27% in 2020.
A plurality (27%) of decision makers and executives believe that workloads in the cloud will hit 95% by 2023.
If these trends continue, it’s only a matter of time before on-premise servers represent just a small fraction of the servers used by SMBs.
8. Public Clouds Experience 60% Fewer Security Breaches Than On-Premise Data Centers
As we just saw in no. 6, cloud security is an extremely important consideration for small and midsize businesses to make when adopting cloud services.
With more people sharing sensitive data on public cloud servers, it’s important that security measures are taken to ensure the integrity of this information.
Fortunately, all the indications are that migrating to the cloud is significantly reducing the amount of security incidents experienced with regards to data.
With automation, you’re removing the human element that can cost businesses substantially.
Cloud vendors are now offering cybersecurity provisions that give businesses enterprise-level protections as a built-in part of the service.
9. Professional Services Is the Top-Spending Industry on Cloud Services
Cloud spending is increasing across all industries, with professional services having the largest market share with 12.2%.
Other industries that are also investing heavily into cloud services are:
- Discrete manufacturing – 8%
- Banking – 6%
- Process manufacturing – 6%
- Retail – 2%
These numbers are relatively consistent, with all industries spending more alongside the general increase of the cloud services global market.
The top three spent more than $20 billion each on public cloud services in 2019, while process manufacturing and retail each spent roughly $15 billion.
Professional services, retail, and personal and consumer services are the fastest-growing spenders, each with compound annual growth rates of over 24%.
10. 60% of End Users Prefer Cloud Over On-Premise
Nearly two-thirds of end users prefer cloud adoption over on-premise solution.
The top five cloud-based SaaS solutions and processes by end user preference are:
- Manufacturing execution systems (MES) – 12%
- Logistics – 11%
- Enterprise asset management – 10%
- Demand planning and forecasting – 8%
- Supply chain planning – 8%
These figures may seem relatively low—that’s because this documents systems which have solely adopted SaaS solutions for their workflows.
When you combine businesses which have implemented lift-and-shift approaches, these numbers rise dramatically.
Only a minority of end users prefer to have on-premise solutions.
As SaaS solutions become the norm, we can expect to see the number of organizations moving to SaaS increase in the future.
Impact Networking helps companies embrace cloud services for increased efficiency, workflow speed, and innovation. Check out our managed IT & cloud solutions, specifically designed for growing SMBs. http://bit.ly/2W5mNgD