Posted: 16 Dec. 2020 6 min.

Will the acceleration of Cloud initiatives continue in 2021?

Topic: Cloud

COVID-19 has driven a fundamental shift in business-architecture assumptions. Overnight, many organisations have had to shift their cloud infrastructure strategies. In a recent Logic Monitor survey, 87% of global IT decision-makers agree the pandemic will cause organisations to accelerate their migration to the cloud, anticipating a decline in on-premise workloads by 2025 . That accelerated adoption has started already. Companies worldwide spent 34.6 billion USD on cloud services in Q2 this year, up roughly 11% from the previous quarter . As Satya Nadella, CEO of Microsoft, states: ‘We’ve seen two years’ worth of digital transformation in two months .’

To give you an idea of how massive this shift is, just look at these numbers:

  • 81% of the global workforce (2.7 billion workers!) were impacted by stay-at-home orders before summer.
  • Queries for senior cloud executive in the digital realm have increased by 224%.
  • Microsoft Azure VPN connections have grown 94%.
  • WAN peak traffic grew 40x since lockdowns were imposed – VPN connections have grown 72% from pre-pandemic levels.
  • And major public cloud providers are right now posting double-digit growth rates, including 43% revenue growth for Google Cloud Platform in Q2, 29% growth for Amazon Web Services in the same period and 27% growth in Microsoft Intelligent Cloud revenue in Q3. 

These numbers all point in a clear direction towards increased use of cloud solutions. However, as organisations respond to COVID-19 with a renewed cloud focus, they face IT complexity, security risks and operational efficiency challenges. While some organisations are deprioritising or delaying nonessential cloud migration plans, resilient leaders and organisations have an opportunity to modernise their technology backbones with scalable cloud infrastructure. For many organisations, this means reigniting cloud programmes and employing new strategies across development and operations (DevOps), federated security and multicloud solutions for heterogeneous infrastructures to optimise processes, mitigate risk and manage complexity. 

Moving towards the next frontier
As such, it is great to see that many organisations have moved beyond the initial challenge of selecting one or more cloud providers, determining what data to store in public or private cloud services and managing interoperability across their multiple cloud infrastructures. The next frontier in managing cloud complexity will likely be about building on that foundation by configuring tools, software and technology to deliver a full-stack, multicloud solution – whether that includes identity and access management, network monitoring, metadata management or artificial intelligence for IT operations to manage workforce systems and platforms used to perform work.

In a COVID-19 context, what can be especially challenging for multicloud solutions is finding a good application fit for those technologies, quickly. The temptation is often to leverage whatever platform or service is in a hype cycle – and many companies unfortunately have tried this. However, moving to an application that is not a good fit for any new platform is typically going to fail. Instead, you should first understand the application itself, understand the connected data and the underlying architecture and then assess if any of these new technologies is a fit.

Overall, I see three ways in which Danish and Nordic companies are exploiting cloud technology in an intelligent way:

  • Firstly, for large companies running SAP, a whole new cloud landscape is slowly emerging, dramatically changing how business is done. Since the advent of SAP S/4HANA®, SAP has taken dramatic steps to move away from the old monolithic ERP image. Today, SAP has opened its platform to bi-directional communication via APIs with cloud-native applications, also those outside of its own suite. SAP has also launched its own platform as a service, which has been specifically architected to facilitate flexible, fast functionality development across multiple digital applications.
  • Secondly, even for companies not necessarily running wall-to-wall solutions such as SAP, there are many new opportunities for exploiting cloud technology in order to lower the cost of ownership, scale infrastructure and access the latest cloud applications on demand. Deloitte’s Alpha Platform developed in the UK is just one example. Here, financial services companies can access an infrastructure of pre-integrated cloud-native technology components covering core capabilities like integration, security, operability, scalability and engineering. Loosely coupled functional modules and FinTechs then allows the companies to switch quickly with minimal reintegration to assemble their unique and individual proposition based on standard components and solutions in the marketplace, e.g. Temenos and Mambu for core banking, Kafka for real time data exchange and many more tools comprising a comprehensive platform. This allows for a transformation from legacy to modern solutions in a way where risk is relatively speaking lower than the wall-to-wall initiatives and the transformation can be done step by step in the sequence that makes most sense in your company.
  • Thirdly, my prediction is that we will definitely also be seeing a large residual batch of traditional applications, which are actually working pretty well, but still should be moved or as a minimum investigated in terms of moving to the cloud from a viewpoint of scalability or simply the need to close down old and outdated data centres. Even if it is not a broad strategic decision, it is still a sound and viable way to exploit the possibilities of cloud. Many companies will surely take this approach in the coming months and years and many will find new, improved solutions.

Federated security for the future of work
Lastly, there is of course a security aspect to consider. While COVID-19’s impact on work, workforce and workplace has forced IT to manage increasingly heterogeneous infrastructures with new tools and techniques, many infrastructures themselves are facing new security challenges, given that the where, what and how of work have changed. As IT focus shifts to accommodate the new ways in which work is being done across altered locations, the very context for security monitoring with an entirely new infrastructure composition has changed. 

This has reinforced a need to focus on federated security strategies known for their success in managing distributed, heterogeneous infrastructure security across tiers and driving situational awareness.

Conclusion: The next frontier is upon us
COVID-19 has affected work, workforce and workplace in dramatic ways and forced organisations to think about their future infrastructure needs and accelerate their movement to the cloud that can better handle constantly shifting business and workforce needs. Multicloud solutions and hybrid cloud technology strategies are the norm for those already in the cloud and will likely continue to see increased adoption as they enable business flexibility.

The next frontier of managing cloud complexity will likely be developing multicloud solutions that use the right combination of tools, software and technology to manage cloud services and enable business applications – everything from orchestrating data from virtual data centres to implementing AIOps. These heterogeneous IT infrastructures are seeing shifts in consumption that make cloud – given its flexibility – a favourable solution. At the same time, it creates new access points and a large surface area for cyberattacks. Changes to location have made the perimeter-in-perimeter security obsolete, necessitating a shift to federated security models that can better manage security across infrastructure tiers and devices.

Finally, as we have already seen in so many Danish and Nordic companies, ways of working have been altered in profound ways, prompting organisations to double down on DevOps best practices that increase collaboration and introduce new approaches for a distributed world. Companies increasingly look for agile development, embrace ChatOps for virtual collaboration, automate DevOps processes that continue to shift left and step into new roles to support an IT-as-a-service operating model. It’s exactly this combination of multicloud solutions, federated security and distributed DevOps that can help create a future of cloud-enabled work infrastructure needed to make the virtual business work.

More about the author

Klaus Koefoed Eriksen

Klaus Koefoed Eriksen

Partner

Experienced leader with 20+ years track record delivering significant results focused on creating lasting, tangible client impact within areas such as: Payments Agile Transformation Digital Transformation Application outsourcing and transformation including global delivery models Sales leadership incl. Nordic top-line responsibility for Financial Services Building high performing teams across countries Passionate about helping clients transform and embrace "the new" to compete successfully in the new digital landscape. Klaus is part of Deloitte EMEA and Global Payments Group and focuses among others on new payment methods, advising on new ways of working and helping client improve their agility to deliver business value faster and more frequently.