UK Enterprises plan big investments in Cloud as the technology landscape shifts

Recent data from PAC’s latest CxO Survey in the UK paints a picture of both significant cloud adoption alongside a fundamental shift in the way enterprises use the technology.

It won’t come as a surprise to many that the COVID-19 pandemic created a feeding frenzy for cloud technologies, as enterprises raced to restore IT accessibility and productivity in new decentralized and remote working models. Forcing many to dismiss security concerns and change aversion and start working with the technology. Simply put, even the most conservative enterprises have re-evaluated their cloud risk thresholds given the relative success of deployments.

The renewed zeal for the cloud in the UK is manifesting in new and exciting ways. First, we see a more mature approach across industries – instead of blindly migrating to the public cloud, more enterprises are pushing for more nuanced approaches that bring best-in-breed solutions. Adopting hybrid cloud strategies leads the charge, with 38% of enterprises expecting to deploy within two years. The fundamental building blocks have changed, too, with more enterprises examining the value of hosted and on-premise private cloud in their business.

To this end, 41% of enterprises expect to spend more on cloud over the next 24 months, despite the pandemic’s economic impact. Most will use this investment to modernize and rationalize their core IT – to enable the new working models adopted by many. Indeed, 58% anticipate enhancing core business applications by migrating them to the cloud. But there are spikes in adoption geared to newer use cases too. Data-centric projects – that will see enterprises use cloud to support machine learning, artificial intelligence, and analytics initiatives – will see investment from 41% of UK-based enterprises.

We can expect new investments to continue to spread outside of core IT, too, with innovation in other business units strategically essential due to the pandemic. Human Resources, now grappling with managing disparate workforces in uniquely challenging circumstances, and the increasingly critical Supply Chain Management can expect a bump in cloud spending from 35% of UK enterprises.

Crucially, while enterprises overcome old challenges to cloud aversion – particularly risk and change aversion – new ones present themselves. In many respects, 2020 was a year of rapid cloud deployment. But as enterprises raced to restore access to critical IT systems, they did so in an often neither sustainable nor transformative way. Understandably, stabilizing the business sat higher on the CIO’s priority list than long-term iterative improvements. And so there is still much work to be done – to ensure existing and new deployments offer real business value. We already see a concerted push to slim down sprawling application estates – next will come the burning need to build management and orchestration layers across enterprise infrastructure to tackle new challenges around economics and security.

For the provider community, this new set of enterprise challenges arrives with the tacit understanding that they will need external help to build solutions – a fact not lost on several firms who have ramped up cloud capabilities significantly over the last 12 months. Accenture’s Cloud First and Atos’ OneCloud initiatives will see multi-billion-euro investments in cloud talent and capability. Similarly, Cognizant has invested considerable sums acquiring a variety of cloud consultancies and, according to recent announcements, has set aside another billion dollars to continue acquiring through 2021. Infosys’ Cobalt initiative will see the firm pull significant cloud resources and assets together from across the enterprise. Meanwhile, IBM’s transformation journey continues as the firm looks to accelerate its cloud business, boosted by recent acquisitions, including Nordcloud.

The cloud giants have not sat idly by either, Google, AWS, Microsoft, and Oracle continue to invest in their technology, with many investing considerably in building out delivery capability in Europe. Many are working to tackle regional challenges directly, such as the partnership of Google with OVHCloud to tackle sovereignty concerns. And Oracle building government data centers in the UK to service the public sector and regulated industries.

Innovation in hyperscale firms is stretching well beyond public cloud capabilities. For example, Oracle’s Cloud@Customer solutions provide public cloud levels of service and consumption to on-premise private cloud environments. Tapping into a growing demand for in-house private cloud solutions, which will see investment from 25% of business in the UK over the next two years.

These factors combined mean 2021 is likely to be one of the most exciting years for cloud – as enterprises evolve their strategies and providers bolster their arsenals to meet the growing demand for the technology.