The wait is over. Big players are shifting more rapidly to the Cloud

There has always been great interest in knowing the state of the Cloud and how enterprises are handling the migration of their IT capabilities. This buzz about technological transformation has been around for years, and it was typically midsize enterprises that were ahead in terms of Cloud adoption.

Today, there seems to be a new trend. One of the latest studies from the consulting firm McKinsey shows a significant change in the intent and actual progress of Cloud consumption for the big players. Something is brewing in the IT industry.

According to the survey IT as a service: From build to consume, published in September 2016 by McKinsey, it shows that companies are shifting more rapidly than ever from building their IT resources to consuming IT on the Cloud. In fact, they forecast that most companies, especially the bigger ones, will make a considerable shift to the Cloud in the next two years.

The findings are quite indicative, given the relevant sample of the study in which they interviewed 800 CIOs and IT executives from small to Fortune-100-size businesses facing the challenge to adopt digital capabilities. Most respondents were from regulated industries, such as banking, insurance, and healthcare across different countries worldwide, providing an all-around overview of how enterprises are adopting the Cloud today.

In regards to what was measured, they enquired into the pace of migration to the Cloud at a workload level, the resulting impact on the enterprise IT industry, and the key decision criteria for enterprises in selecting providers of Cloud infrastructure services.

Here is a summary of the survey data collected in 2015/16 and predictions for 2018. It reveals interesting findings, drivers and trends for adoption:

• An overall shift from build to consume IT
  

  Enterprises plan to reduce the number of workloads housed in on-premise traditional and virtualized environments and move toward ‘consume’ models for IT. In particular, it appears that off-premise environments will grow considerably by 2018. Looking at the chart below, there will be a significant drop from 77% to 43% of enterprises who will be building IT infrastructure as the primary environment for at least one workload type. The direction is changing: dedicated private Cloud, virtual private Cloud and public IaaS will have higher adoption rates in the coming years.

  
  



• Large enterprises are catching up with the Cloud
  

  When taking a closer look at Cloud migration numbers by size of enterprise, it appears that larger companies are accelerating their transition to the Cloud and may overtake smaller ones in a couple of years. They are shifting to off-premises IT at a pace that is expected to be far quicker than in previous years, and while the rising trend applies for businesses of all sizes, bigger players are growing their investments more significantly in Cloud environments such as the dedicated and virtual private Cloud.

  
  



• Greater openness to adopting public Cloud services
  

  Despite the positive tendency outlined above, the reality is that the average adoption rate remains less than 20% to-date, as measured by the number of x86 workloads in the Cloud among those companies from the study (data from 2015/16). However, larger organizations surveyed expressed greater interest in breaking the statistic by doubling their IT Cloud workloads in the near future.

  
  



• Top considerations when choosing a solution provider
  

  The survey also went into what the key reasons businesses have to transition to new technologies for their organizations and the drivers when selecting a cloud provider.

  They recognize that reducing costs is an important benefit from the Cloud, but savings are behind ‘time to market’ and ‘quality’ in the list of top considerations. Regarding the barriers for public Cloud adoption, security and compliance are the number one concern for enterprises.

  This research also provides insights as to how businesses decide on service providers. Ranked from the most to the least important, security and compliance are the primary considerations, followed by cost, interoperability with on-premise private Cloud solutions, and the capabilities of the brand itself.

  Additionally, companies are more likely to choose “hyperscale” providers since they have the largest capacity. In fact, 48% of large enterprises with off-premise workloads have handed off at least one workload to a hyperscale provider, and that number is expected to rise to roughly 80% by 2018.



• A major impact across the enterprise IT vendor landscape
  

  The shift from build to consume is reshaping the IT vendor landscape, in favour of Cloud vendors. Data collected revealed that compute and storage is shifting massively to Cloud-service providers, with on-premise shipped server instances and storage capacity facing compound annual growth rates of –5% and –3%, respectively, from 2015 to 2018. According to the study, this significant growth of shipped server instances and storage capacity for off-premise environments is expected to be led by hyperscale Cloud-service providers.

  
  

As is concluded in the research, the big takeaway is that¬ the largest enterprises are planning to transition IT workloads at a significant rate and pace to a hybrid Cloud infrastructure, with off-premise environments seeing the greatest growth in adoption. This will result in the important growth of vendors focused on selling to Cloud-service providers, and very likely seeing their business change from traditional IT offerings to Cloud-related and migration services.

If you are ready to offer Cloud services, make sure you have the best training specialization to sell your solutions and seize the Cloud adoption movement!