4 minute read 25 Nov 2022
Key trends in cloud

EY Tech Trends chapter IV: how cloud adoption lets untethered enterprises soar

By Abhinav Johri

EY India Technology Consulting Partner

Technology enthusiast, Passionate about teaching, Digital DNA

4 minute read 25 Nov 2022

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Larger organizations are opting for industry cloud and multi-cloud-based solutions as part of their transformative initiatives.

This is part of the EY Tech Trends series wherein each chapter will focus on the rising shifts in key technology areas and the impact of these technologies across sectors.

In brief

  • Reasons for cloud adoption include growth, transformation, security, and innovation.
  • Industries such as retail, banking and financial services, healthcare, and manufacturing are adopting cloud to expedite growth and improve security.
  • Cloud-first or cloud-only models have led to increased agility in high-customer interaction industries such as retail, metaverse, and digital lending.

The last two years of the pandemic have not only accelerated cloud adoption but also reshaped the perspective toward the technology itself. From operations enablement to cost optimization, cloud has taken the center stage of business strategy and developed new aspects such as platforms and on-demand environments. Unlike the earlier days of cloud, organizations today are adopting it not just for cost saving or business continuity, but also for business growth, transformation, security, and innovations. Many organizations are seeing cloud as the catalyst for their transformation initiatives in business and internal technology functions.

While startups and new-age companies are cloud-first or cloud-native, larger organizations are adopting multi-cloud (use of two or more cloud computing services that enable migrating between cloud providers or operating concurrently across the cloud providers) as well as more specialized industry-specific cloud solutions. 

Not just organizations, but consumers too, have started accessing anything and everything from the cloud. Coupled with that, remote working has spurred cloud adoption across industries. In a recent survey conducted by EY, respondents across industries and organizational sizes said they consider remote working, change in organizational processes and product/services delivery, connecting with customers and getting a competitive edge among the primary factors pushing cloud adoption. Companies, large or small, have migrated their data and applications to the cloud. 

Fit to size

As the technology matures, cloud providers are adding customized capabilities specific to the needs of customer segments and industries, from highly scalable offerings to pay-as-you-go models. 

The rise of industry clouds tailored for specific verticals instead of a one-size-fits-all approach, is gaining momentum, especially in retail, BFSI, and manufacturing sectors post-pandemic. Hyperscale Cloud Service Providers (CSPs) and large Global-System Integrators (GSI) are coming up with vertical cloud platforms that are hosted on public clouds and are a combination of software, platform, and Infrastructure as-a-Service (IaaS) to provide specific solutions. This approach allows companies more agility in managing workloads and being equipped to adapt their industrial processes and applications faster.  

Large business conglomerates are building their own sector-specific cloud solutions. Based on their deeply entrenched sectorial knowledge, these solutions are customized and address hard-to-tackle vertical challenges. However, companies are not only building these solutions for in-house usage but also aim to monetize them soon.

Organizations are also moving from a hybrid cloud structure to a distributed cloud architecture. A distributed cloud helps organizations connect applications and data from various geographical locations. It optimizes performance by taking advantage of public cloud, hybrid cloud, and edge computing. While a distributed cloud is managed centrally, it can compute locally, which reduces latency and network failure. This improves performance and compliance with regional regulations. 

For new-generation enterprises that are not weighed down by legacy or non-cloud tech debt, the ‘Cloud First’ or ‘Cloud Only’ approach has been easy to adopt. In multiple high-customer interaction industries such as retail, fintech, and logistics, this approach has allowed younger, nimbler firms to take a lead over older, bigger traditional rivals that are weighed down by legacy technology debt, though the latter are evolving to remain competitive.

To bridge the gap with legacy systems, some companies are rationalizing their application portfolio by modernizing and rehosting the applications wherever possible. To improve operations, they are building cloud-native products as bolt-ons to existing enterprise apps. Among the cloud service options, Software as-a-Service (SaaS) continues to be the most preferred deployment option among Indian organizations, thanks to the flexibility and affordability of subscription-based offerings and centrally located remote cloud networks. Organizations with legacy technologies are, therefore, adopting cloud native products to modernize business and technology functions as well as make processes and operations more agile. Similarly, with IaaS, they are exiting data centers and may go for wider infrastructure modernization, especially in compute and networks. With cloud-based data technologies such as data lakes and AI platforms, companies are tapping data strategically to get insights. 

Apart from SaaS, IaaS and Product as-a-Service (PaaS), companies are even moving toward Environment as a Service (EaaS) offerings. EaaS essentially extends IaaS, SaaS, codes, and configuration into the application and accelerates overall development and marketing.

While many firms are using vertical clouds with sector-specific platforms to avoid customizing legacy systems and applications, big enterprises with legacy technology debt are finding their own solutions with the help of OEMs and others to transition to cloud with the least pain. OEMs’ Plug-and-play and No-Code/Low-Code modules are helping big traditional enterprises add cloud-based functionalities rapidly. 

Technologies on the rise

Modern digital architecture, once a remote IT function, is now under the spotlight as enterprises, both big and small, remodel their business processes, keeping flexibility and future tech requirements in mind. Organizations are also using APIs to offer customer-facing services while maintaining the core operations within their own networks as they plan cloud migration. However, the coming year will see another trend accelerate — entire data operations and analyzes moving to the cloud. 

As the overall quantum and specifications of cloud demand increase, there are some cloud-related technologies that are gaining popularity among traditional companies.  

Data meshes: In-house data warehouses will increasingly be replaced by cloud data meshes and fabrics that are scalable, cost-effective and, above all, offer far great computing power than legacy systems. 

Cloud data analysis can access the computing power of AI/ML systems running on banks of powerful chips (Graphical Processing Units or GPUs), unlike legacy data warehouses that largely depend on the more mainstream and cheaper, but also less powerful CPUs.  

FinOps: Poorly managed cloud resources may result in the cloud budget shooting up, which could prevent cloud adoption. Cloud Financial Operations (FinOps) is a new trend that helps to control and govern cloud spending and assists businesses in better planning, budgeting, and forecasting. It provides insights into cloud allocation, monitoring, and optimizing cloud spend.  

Spatial Cloud: With the metaverse gaining momentum, AR, VR, and MR technologies are fast improving and driving spatial computing. More industries are exploring spatial computing that is now migrating to the cloud.  

The article was first published on ETCIO

Summary

Large-scale as well as customized solutions are evolving quickly as demand for cloud technology increases from enterprises and consumers. While organizations with legacy technologies are looking at ways to bridge the gap, cloud-native enterprises are molding the technology for specific industry-based solutions. Overall, cloud is now considered not just a technology aid but a transformation catalyst as well. 

About this article

By Abhinav Johri

EY India Technology Consulting Partner

Technology enthusiast, Passionate about teaching, Digital DNA