As new technologies go mainstream, they continue to evolve as their creators and consumers find ways to leverage increased capabilities for greater value. This is what we see happening with cloud computing. Cloud has morphed from an “excess compute and storage capacity for lease” service model from a few hyperscale providers to a ubiquitous anything-as-a-service solution from thousands of new Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS) cloud service providers (CSPs).
Private interconnection between enterprises and Cloud and IT Providers will increase at a 112% CAGR worldwide by 2022.
According to a recent Gartner press release[i]on the public cloud revenue forecast:
“At this point, cloud adoption is mainstream,” according to Sid Nag, research vice president at Gartner. “The expectations of the outcomes associated with cloud investments therefore are also higher. Adoption of next-generation solutions are almost always ‘cloud-enhanced’ solutions, meaning they build on the strengths of a cloud platform to deliver digital business capabilities.”
We see this trend with our global customers as well. Because of the time, resources and complexity required to transition current IT services and applications to the cloud, cloud-first strategies tend to be focused on new solution deployments. But as edge computing becomes the new normal, we believe greater cloud migration will help companies accelerate their transformation into digital businesses. But no matter what a business’ cloud adoption strategy or timeline is, one thing holds true to its success: direct and secure interconnection to the cloud.
Trend #1: Businesses are moving to hybrid IT
The industry buzz seems to indicate that businesses can do anything in the cloud, but we’re not there yet. Based on IDG’s 2018 Cloud Computing research survey[ii], 73% of IT decision-makers had least one application, or a portion of their computing infrastructure in the cloud. However, more than one third (38%) of the respondents felt pressure to migrate 100% to the cloud. IDG also reported the following breakout of what IT organizations are doing with their cloud purchases:
- 41% for additions
- 26% for upgrades
- 34% for replacing existing technology
This aligns with the staged migration to the cloud that we see our customers at Equinix making. It is less risky to move to hybrid IT environments, with some combination of on-premises, private cloud and public cloud infrastructures, than going all in at once.
Fast forward to 2021: IDC predicts[iii] that over 90% of enterprise IT infrastructures worldwide will be a mix of on-premises/dedicated private clouds, multiple public clouds, and legacy platforms. And as CSPs increase their offerings and reinforce security and data protection capabilities, the door to cloud migration opens wider for even the most hesitant and conservative businesses because, without it, they won’t be able to compete.
At this point, cloud adoption is mainstream.
Of enterprise IT infrastructures worldwide will be a mix of on-premises/dedicated private clouds, multiple public clouds, and legacy platforms.
Trend #2: The cloud is expanding at the edge
IDC also predictsiii that by 2023, 10% of enterprise on-premises workloads will be in public clouds outside of the public cloud provider’s data centers and will reside in customer data centers and edge locations. From our perspective, we’re a bit more bullish about the edge market as a real driver of cloud adoption.
And as more companies create and consume data and IT services at the edge, they require greater compute, storage and application resources on-demand from the cloud to transform into a more competitive digital business. So, we agree with Gartner analyst Thomas Bittman, where he writes in the report Exploring the Edge: 12 Frontiers of Edge Computing,[iv]“Edge computing complements cloud computing for digital use cases, solving latency, bandwidth, autonomy and privacy requirements.”
Trend #3: Private interconnection to cloud services is accelerating
The public internet may have been the first avenue to the cloud for many companies, but for many businesses and their customers, it is not the most expedient or safest path due to inherent performance and security issues. High latency that causes delays between users and remote cloud services and a greater attack surface can slow a company’s cloud migration strategy, particularly when moving high volume, latency-sensitive workloads (unified communications, online gaming, artificial intelligence, real-time analytics, etc.) or private data traffic.
In the Gartner report, Market Trends: CSPs Must Accelerate Direct Connections to Cloud,[v]analysts To Chee Eng and Gaspar Valdivia write: “Enterprises have been deploying dedicated network connections to cloud providers for several years, typically on an ad hoc or tactical basis. Consequently, deployment has been low and patchy. However, adoption is expected to pick up significantly over the next two years and then accelerate during the next three to five years.”
As[JS3] a leading provider of private interconnection to cloud services, we see firsthand more companies selecting direct connection to the cloud for greater performance and security. The Global Interconnection Index (GXI) Volume 3, an annual market study published by Equinix, estimates that private interconnection between enterprises and Cloud and IT Providers will increase at a 112% compound annual growth rate (CAGR) worldwide between 2018 and 2022.
By leveraging on-demand PaaS, IaaS or SaaS offerings from CSPs and IT service providers, companies can accelerate their digital business transformation to open new markets and grow their revenue through new sources. As more cloud activity accumulates at the edge, private interconnection will be the fastest and safest way to access the necessary resources and services to make any cloud strategy a success.
Learn how you can accelerate your company’s digital transformation via greater cloud interconnection at the edge by reading the Global Interconnection Index Volume 3.
[i] Gartner Press Release, “Gartner Forecasts Worldwide Public Cloud Revenue to Grow 17% in 2020”, November 13, 2019.
[iv] Gartner report, “Exploring the Edge: 12 Frontiers of Edge Computing,” authored by Thomas Bittman, 6 May 2019 – ID G00388219.
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