Ashley O'Connor
Marketing Executive
April 5, 2023
Global public cloud revenue is projected to reach over £425 billion in 2023, with the market projected to continue growing at a rate of 13% year on year. Although, this vast market is dominated by only a handful of providers. Amazon, Microsoft and Google currently account for nearly 66% of the market share.
Today, almost all organisations have adopted some form of public cloud use, whether its data storage, SaaS or cloud computing, the public cloud is everywhere. The Flexra ‘State of the Cloud Report’ predicts that in 2023, 63% of SMB workloads and 62% of SMB data will be hosted in a public cloud.
There are many benefits to the public cloud, but what are the implications of the majority of the world’s enterprise data and computing infrastructure being hosted and managed by only three American tech companies?
HOW DID WE GET TO THE CURRENT LEVEL OF CLOUD ADOPTION?
Amazon Web Services (AWS) were the first company to launch public cloud services in 2006. Amazon began to build massive data centres that hosted storage and compute resources, offering access to these resources as a billed service.
Cloud services presented an enticing solution to businesses by providing scalability and agility, while removing the burden of server management and maintenance, and removing the huge upfront hardware investments.
The proposition of no large upfront costs or maintenance burdens created a hype, particularly amongst new businesses, and the “cloud first approach” began to emerge. In the rush to the cloud, companies expected to reduce costs, but many overlooked the true cost of these services on a large scale.
The issues with the shift to a cloud first approach
Spiralling Costs
In the beginning, the costs weren’t clear, but now some organisations are waking up to the true scale of the fees. Flexra’s report found that in 2022, 53% of SMBs spent more than $1.2 million annually on the cloud, up from 38% in 2021. On average, respondents stated that their cloud spend was 13% over budget, and they expect a further increase of 29% in 2023.
While the public cloud is “only pay for what you use”, cloud economics has become a growing discipline, and cloud cost saving is a growing industry. With usage-based billing, every user can now incur monthly costs to the business. Today, AWS provides over 200 cloud services, each potentially a new line on your monthly bill.
Migration Failures
The most common challenge facing organisations is migration, with many overlooking the difficulty of migrating high-performance workloads. A report from Cloud Security Alliance indicates that up to 90% of Chief Information Officers have experienced failed or disrupted data migration projects, often due to the complexity of migration.
Applications that are architected to be non-cloud native need to be re-engineered, which soon becomes expensive and drains resources. For critical applications it makes sense, but for other legacy applications, the costs often outweigh the benefits, meaning they stay on-premise and migration is left incomplete.
Digital Transformation
It’s no secret that data is the new oil of the digital age, it drives innovation and provides previously unattainable insights, which has resulted in the world now creating and storing data at unprecedented levels.
The IDC’s Global DataSphere Forecast, illustrates the scale of the current data explosion. Back in 2010, only 2 zettabytes of data were created worldwide, in 2022 this was 97 zettabytes, and in 2025 this is set to reach 181 zettabytes, nearly a 9000% increase from 2010.
Digital transformation is fuelled by data, machine learning, artificial intelligence and the Internet of Things. But if organisations continue to completely shift their infrastructure to the cloud, where will all this data be housed and how expensive will it become to store and utilise it?
The underlying threats facing public cloud customers
Global Cloud Outages
As mentioned, only three American technology companies account for 2/3rd of the global public cloud infrastructure. Before the cloud, most compute and storage infrastructure was distributed across the globe and managed locally, now if one major provider goes down it could cause a blackout that brings down most of the internet.
In December 2021, a major cloud outage resulted in some of the world’s most popular websites and apps going down simultaneously. The list included: Amazon, PayPal, Spotify, Reddit, The New York Times, and the UK Government website. These events aren’t uncommon, with multiple serious outages occurring each year, impacting the major providers Google, AWS, and Microsoft (Azure).
If organisations continue to move their applications, data and workloads to the cloud, there will be a situation where “all the eggs are in one basket”. If a major provider goes down, essential services such as banking, education and healthcare could be impacted.
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PRICE INCREASES
Over the past year, all three major cloud providers increased their prices. First, Google announced significant price increases, then Microsoft Azure announced it will increase cloud prices by 9% in the UK. According to Yahoo Finance over the past year, AWS has also increased its on-demand compute services by an average of 23%.
If an organisation has migrated vast amounts of its data and systems to the cloud, even a small price adjustment could have a huge impact. And with the current rate of inflation and the impacts of the energy crisis on data centres, prices could continue to climb.
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IS THE PUBLIC CLOUD A SAFE AND COMPLIANT SPACE FOR SENSITIVE DATA?
When data is stored in the cloud, organisations lose their full control, security, and sovereignty over their data, increasing the risk of a breach. As of 2018, if UK organisations are not GDPR compliant, they risk fines of up to £17.5 million or 4% of their annual turnover.
A Thales Study of 2800 cloud professionals found that 66% of organisations store their sensitive data in the cloud, and half of the respondents have experienced a data breach involving data and applications in the cloud.
THE FUTURE: HYBRID CLOUD
Throughout the 2010s, organisations received undeniable benefits by switching from legacy solutions to the cloud. Although in 2023, factors such as compliance, increasing costs, and migration issues have resulted in the need for a new model.
Through a Hybrid Cloud approach, organisations can regain control over their data and security. Sensitive data and critical workloads can remain on-premise, while other workloads can still take advantage of the public cloud.
HPE Greenlake is a solution that simplifies managing a mixed computing environment, creating a new layer on top of every service, and providing customers with control and transparency across on-prem, public and private clouds.
Speak to one of our experts to learn how your organisation can adopt a hybrid approach with HPE Greenlake
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