Channel Futures' 2023 Cloud Outlook: Inflation Won't Slow Adoption
If you think inflation and other macroeconomic pressures will slow cloud adoption next year, think again.
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Even as organizations become more attentive to their cloud spending, they won’t cut their outlay significantly.
“The public cloud computing sector will continue to grow over 20% in 2023 (and IaaS and PaaS in particular will grow over 30%) as companies realize they lack the in-house resources to support infrastructure, rapidly evaluate a variety of low-level computing services, and deal with security and governance concerns. This means that fully managed service offerings will become more attractive as customers seek functionality and value while dealing with the uncertainties of layoffs, office closings and moves, mergers and acquisitions, and the need to demonstrate a rapid payback period for any new service.” —Hyoun Park, CEO and Chief Analyst, Amalgam Insights
“Cloud will be the great innovation driver in an economic downturn. Companies that had adopted cloud prior to the COVID-19 pandemic fared better than those who hadn’t in terms of their ability to quickly pivot their business models and capitalize on new opportunities and revenue streams. The same will hold true in an economic downturn. Cloud adoption provides the quickest path to innovation and gives companies much more flexibility to run their businesses in hard times.” —Harish Grama, global cloud practice leader, Kyndryl
Concerned about a slowdown in “cloudification,” spurred by inflation and other microeconomic pressures? These experts say not to worry.
“Despite growing ‘cloudflation,’ channel partners will see an increase in cloud-related business opportunities in 2023. The cloud migration trend will slow somewhat in 2023 due to increased costs, driven by inflation and rising energy bills. However, the undeniable benefits of the cloud, including better uptime, scalability, and wider access to information, still makes it an attractive option for large enterprises. The cloud management segment will continue to provide system integrators and service providers new business opportunities as companies struggle to find IT talent in 2023.” —Christina Walker, global director of channel, Blancco
“I expect to see continued slow economic growth in 2023 combined with elevated inflation, which will result in higher interest rates. These higher borrowing costs will make cloud migrations relatively more attractive than refreshing or expanding data center workloads. This dynamic is due to the ‘operational expense’ model of the cloud (‘pay as you go’), as compared to the ‘capital expense’ data center cost model (large, infrequent purchases of equipment that must be funded upfront). Offsetting these pro-cloud-growth dynamics will be an increased focus on optimization of incumbent cloud workloads and potentially even some shrinkage of workloads in stressed sectors of the economy. Netting the two against one another, I still expect healthy growth in overall cloud consumption in 2023.” — Richard Hoyer, director of FinOps, SADA
“Widespread cloud adoption has triggered a rapid pace of innovation across the IT industry, setting the stage for GSIs to extend their capabilities and have a major seat at the table in the new year. Cloud providers are continuing to innovate at a breakneck pace and as a result, organizations are struggling to keep up with the latest developments. To keep pace with competitors on their cloud transformation journeys, businesses will look to outside influencers with the experience, knowledge and connections to help implement transformational IT strategies across their organizations in a timely manner. With solid reputations in the industry and with the experience to back it up, GSIs will play a larger role in providing strategic counsel and services capabilities to empower their customers to choose the right cost-optimized solutions and design successful modern architectures. In 2023, GSIs are well-positioned to step up and help organizations capitalize on their cloud initiatives.” —Mike Walkey, channels and alliances chief, Veritas Technologies
Cloud computing represents one of the most disruptive technologies of the 21st century. And even though organizations have adopted cloud en masse, channel observers say there’s more opportunity for expansion — and 2023 looks like the year for that to take off.
“Cloud has clearly succeeded, but it still has a long way to go. Cloud makes up for roughly 7-8% of total infrastructure consumption worldwide, and it is markedly more efficient than its alternatives. But its potential vastly outweighs its current status. Cloud has plenty of room to grow, and can reach 10 times or greater than where it’s sitting now. Look for continued expansion and for that 7-8% number to increase.” —Miles Ward, CTO, SADA
“The big cloud migration will accelerate, especially in the private cloud realm, as cloud service providers look for ways to balance competing priorities.” — Oracle Communications
Using cloud platforms from different vendors makes sense when organizations need to take advantage of capabilities unique to specific brands. But that also creates more chaos. Find out what two experts have to say about multicloud and the channel for 2023.
“The rapid rise in multicloud adoption is both an opportunity and a threat. If organizations are adopting a multicloud strategy, then they will need cross-cloud observability. MSPs, if they provide this as a service, can use the insights to improve their offerings and become the strategic cloud adviser.” — Roy Illsley, chief analyst, Omdia (Informa Tech is the parent company of both Omdia and Channel Futures.)
“Enterprises are increasingly adopting multicloud architectures out of necessity for added agility and flexibility to support innovation across the business. … And although businesses can now track, manage and provision cloud data in once place with cloud data management tools, they are still having to manage relationships with multiple cloud providers, which can be time consuming and complex. In 2023, organizations will be looking to offload this responsibility to channel partners to help simplify the process and have one person to turn to for all things multicloud. Partners are poised to play a critical role as trusted advisers, helping their customers successfully evolve and adapt on their multicloud journeys by enabling them to modernize workloads while minimizing costs.” —Mike Walkey, channels and alliances chief, Veritas Technologies
Hybrid cloud differs a little from multicloud — it mixes public and private environments, not just various public clouds. In the coming year, organizations will make better use of hybrid cloud’s advantages.
“While we’ve made incremental steps towards true hybrid cloud over the years, hybrid cloud deployment patterns are still in their infancy. This is primarily because the tooling is all relatively new to consumers. However, I expect this to change [in 2023].” —Peter-Mark Verwoerd, associate CTO, SADA
Sovereign cloud — a fancy way of defining a cloud environment that lives within a specific region, bound by that geography’s data and privacy regulations — is growing more popular. Organizations in 2023, particularly, will deploy sovereign clouds for reasons noted below. (Note that sovereign cloud is germane to the channel and Oracle Cloud still stands out as the first provider to specifically enable this capability through large managed service providers and other partners.)
“Through 2024, jointly owned sovereignty partnerships sanctioned by regulators will increase stakeholder trust in global cloud brands and facilitate continued IT globalization. Increased awareness among governments and regulators leads to tighter privacy and data protection policies, higher requirements for data sovereignty and data control, and more demand for digital sovereignty, such as through technological control and long-term autonomy. The expectations regarding sovereign cloud solutions are evolving from data sovereignty and privacy concerns to concerns regarding continued, long-term access to and availability of cloud solutions. Regulators and cloud providers will need to work together to clarify the appropriate potential approaches and measures. A jointly owned cloud provider approach between governments and regulators can (re)establish trust among cloud users in global cloud brands and facilitate continued technical globalization.” —Daryl Plummer, vice president, distinguished analyst and Gartner Fellow
Cloud environments that target specific organizational needs — think retail, manufacturing, health care, etc. — will find their place in 2023. And MSPs will be vital to deploying and managing them.
“Industry clouds will proliferate. Industry cloud, which has already taken off in some sectors like retail, will expand into other sectors. While telco and health care are slow adopters, industry cloud adoption is heating up in the manufacturing sector.” —Harish Grama, global cloud practice leader, Kyndryl
“MSPs should develop more vertical industry partnerships so that they can develop a specialization that will differentiate from the rest of the public cloud market. The choice of verticals must be both required by the market and sufficiently differentiated to warrant being called an industry cloud.” — Roy Illsley, chief analyst, Omdia
Cloud breaches often occur due to manual, human error. In 2023, organizations will get their heads around the reality that they need to take people out of those processes to better protect their information and that of their customers.
“2023 will be the year the C-suite at a growing number of organizations will increasingly heed the advice of security professionals working in the trenches and understand the risks and vulnerabilities they are seeing. They will eliminate manual processes in configuring workloads and support the smart automation of cloud security practices for existing and new resources. Their IT teams will move from reactive to proactive security, including standardization on security-approved, automated workload deployments.” —Bernard Sanders, co-founder, CloudBolt
“Teams are going to look to implement automation across the cloud security portfolio. We should see a push in teams adopting Infrastructure as Code and Policy as Code methodologies in their cloud environments to help prevent misconfigurations from the start. I believe we’ll also see greater adoption of Security Orchestration Automation and Response as no-code/low-code platforms … make these capabilities easier for teams to implement.” —Mike Laramie, associate CTO – Security, SADA
Cloud breaches often occur due to manual, human error. In 2023, organizations will get their heads around the reality that they need to take people out of those processes to better protect their information and that of their customers.
“2023 will be the year the C-suite at a growing number of organizations will increasingly heed the advice of security professionals working in the trenches and understand the risks and vulnerabilities they are seeing. They will eliminate manual processes in configuring workloads and support the smart automation of cloud security practices for existing and new resources. Their IT teams will move from reactive to proactive security, including standardization on security-approved, automated workload deployments.” —Bernard Sanders, co-founder, CloudBolt
“Teams are going to look to implement automation across the cloud security portfolio. We should see a push in teams adopting Infrastructure as Code and Policy as Code methodologies in their cloud environments to help prevent misconfigurations from the start. I believe we’ll also see greater adoption of Security Orchestration Automation and Response as no-code/low-code platforms … make these capabilities easier for teams to implement.” —Mike Laramie, associate CTO – Security, SADA
It’s that time of year again, the time to prognosticate about the future of various technologies. For this edition, we bring you 2023 cloud predictions. Of course, it’s hard to say exactly what will transpire over the next 12 months, but the cloud computing experts we’ve included here all have feet-on-the-ground expertise. They’ve long been part of a market that Gartner projects will exceed $600 billion this coming year alone.
Channel partners, then, will be interested to know where they should be focusing. As one hint, even though inflation is pressuring customers to really scrutinize their technology spending, cloud computing adoption shouldn’t suffer. Our 2023 cloud predictions go into more depth on that point.
Perhaps the most intriguing aspect of our 2023 cloud predictions is the lack of forecasting about new products. As evidenced by 2022’s AWS re:Invent, cloud computing is reaching a point of maturity. Vendors aren’t so much developing new platforms as they are honing and expanding their existing ones (again, we present the absence of significant new news at re:Invent, the industry’s largest gathering, as evidence). There are, certainly, some exceptions to that but for the most part, cloud continues to come into its own.
With all that in mind, we invite you to mull over Channel Futures’ 2023 cloud predictions. See the slideshow above to get started.
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