Flexera State of the Cloud Report Highlights Early Impact of COVID-19

COVID-19 is pushing 43% of enterprises and SMBs worldwide to accelerate their cloud deployments significantly higher than planned. That’s according to new findings included in the Flexera 2020 State of the Cloud Report. Flexera develops IT asset management software.

Flexera asked the coronavirus-related question only of late respondents (187 out of 750) in March, as COVID-19 began to shut down the United States. Still, the results underscore what the channel has watched play out and been instrumental in supporting. The pandemic is pushing organizations to roll out, often unexpectedly, cloud technologies that let staff work from home.

Perhaps the larger takeaway, though, is this. Organizations already were turning to managed service providers more than ever prior to the virus’ spread. And they will continue to do so as they embrace hybrid and multicloud technologies. Just more than half (51%) of enterprises with more than 1,000 employees use MSPs. Another 13% plan to work with an MSP. Meantime, 20% of SMBs lean on MSPs now and another 7% intend to follow suit.

That positions the sales and marketing opportunity for cloud-centric channel partners as “immense,” Kim Weins, vice president of cloud strategy at Flexera, told Channel Partners.

Flexera’s Kim Weins

“We see that some of the most successful channel partners are focused on areas that map to enterprise needs,” she said. “For example, top initiatives this year are optimizing cloud costs, migrating workloads to the cloud and expanding use of containers. Top challenges include security, managing cloud spend, governance and lack of resources/expertise. Corporate initiatives, challenges and complexities are all driving great opportunities for the channel. We see that more than half of large enterprises are already using MSPs.”

That trend looks to prevail, in large part due to the complexity created by cloud deployments. Expanding on Weins’ comments, Flexera found more than three-quarters of respondents (81%) consider security their top cloud challenge. Managing cloud spend followed closely at 79%, with governance rounding out the top three at 77%.

Surely none of these issues will surprise partners. What may raise an eyebrow is that 79% of advanced cloud users and decision-makers Flexera surveyed have the most trouble managing and optimizing cloud expenses.

Crunching the Numbers

Overall, organizations, regardless of size, have exceeded their cloud budgets by an average of 23%, and expect spending to increase by 47% next year — again, before taking COVID-19-related implementations into account. Furthermore, respondents told Flexera their organizations waste 30% of cloud spend. On the plus side, more users (51%) are figuring out the need to shut down cloud workloads after hours and configure their instances correctly (49%), but they can and should do more with the help of MSPs and other channel partners — especially considering that 20% of enterprises say they expect to spend more than $12 million per year on public cloud.

Speaking of public cloud, Amazon Web Services, Microsoft Azure and Google Cloud remain, in that order, the top three go-to providers for Flexera respondents. And yet, according to the Flexera 2020 State of the Cloud Report, Azure is closing in on AWS. That’s both in terms of the percentage of enterprises using Azure and the number of virtual machines running in it.

That observation aligns with Flexera’s findings last year in its State of Tech Spend Report. It also meshes with general industry momentum that appears to indicate Microsoft is gaining traction over AWS, disputed JEDI contract notwithstanding.

Notably, Google Cloud experienced the fastest adoption growth compared to Flexera’s 2019 State of the Cloud Report, the company said. That conclusion also seems to mirror more macro industry activity.

When it comes to cloud strategy, almost all enterprises surveyed (93%) rely on more than one platform; 87% have a hybrid cloud approach. These figures likely highlight little new news to the channel; hybrid and multicloud deployments dominated 2019 and have shown no signs of letting up.

What all the cloud activity does emphasize is that channel partner expertise will prove indispensable over the coming years. To that point, enterprises, more so than SMBs, told Flexera they expect more than half of their workloads and data to live in the public cloud within 12 months. And 59% of enterprises expect their cloud usage to exceed what was forecast before COVID-19 hit. Given the cloud challenges organizations – enterprises and SMBs combined – are up against, it’s no wonder more IT teams are choosing to work with cloud MSPs and other partners.