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Enterprises Turn to the Public Cloud to Enable Online Services During the Pandemic

ISG Provider Lens report finds public cloud adoption rising quickly as companies continue to allow employees to work from home

Enterprises worldwide are embracing the public cloud during the COVID-19 pandemic, with demand shifting toward an  infrastructure-as-a-service IT model, according to a new report published by Information Services Group (ISG), a leading global technology research and advisory firm.

The ISG Provider Lens Public Cloud – Solutions & Services Archetype Report also finds enterprises looking to cloud providers to help them run major workloads in the cloud and enable employees to work from home as the pandemic continues. As a result, traditional software vendors, including enterprise resource planning vendors, are revamping their legacy products to work in the cloud.

“The pandemic has had a major impact on the way everyone works,” said Jan Erik Aase, director and global leader, ISG Provider Lens Research. “Running workloads in the cloud gives enterprises the agility and scalability they need to enable a work-from-home model and continue to serve customers during pandemic lockdowns.”

The pandemic has created a huge demand for online shopping and other online services, and public cloud providers are helping customers adjust to this new normal, the report says. Cloud-based services also have enabled companies to host virtual business meetings and maintain customer support services.

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Many cloud service providers, especially infrastructure-as-a-service (IaaS) and platform-as-a-service providers, have seen record-setting growth in recent months, the report says. According to the latest ISG Index, global spending on IaaS is up nearly 20 percent through the first nine months of 2020, to $17.8 billion. Many enterprises are migrating applications to the cloud to leverage artificial intelligence and cognitive capabilities for data analysis available through providers.

The report also sees a change in the way enterprises are transitioning to the cloud. Instead of a lift-and-shift approach to moving applications, many enterprises are now looking for cloud-native tools to help with the transition. In many cases, a lift-and-shift approach later requires enterprises to refactor or re-architect the workload to drive better performance, which leads to increased costs.

The report, however, still finds strong demand for transforming legacy applications, which involves completely re-architecting and recoding workloads and moving from COBOL to a Java-based application that works seamlessly on public cloud infrastructure.

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In addition, several large service providers have developed industry-specific offerings based on expertise they have gained over the years, including deep knowledge about the governance and compliance regulations required for particular industries, the report says. Many service providers are rapidly acquiring competency certifications from hyperscalers as a way to show their expertise.

Providers also are leveraging artificial intelligence-based cognitive capabilities and machine learning tools to offer high-quality public cloud migration, speed up service delivery, increase IT efficiency, automate operations, offer predictive incident management and deliver a superior user experience, the report adds. Providers have developed tools that take data from various sources to predict downtime and implement self-healing measures.

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The ISG Provider Lens Public Cloud – Solutions & Services Archetype Report examines five different types of customers, or archetypes, that are looking for public cloud services. The report evaluates the capabilities of 38 public cloud providers to deliver services to the five archetypes:

Traditional Archetype: These buyers are slow to accept the relevance of cloud technologies for their computing needs. Their IT environments consist mainly of mainframe and legacy applications. They have not embraced cloud computing due to regulations, security issues or discomfort with the new technology. However, these companies are open to learning about cloud computing benefits and are seeking assistance to assess their computing environments and IT strategies.

Pragmatic Archetype: Most of these buyers are second- or third-generation outsourcers that have matured in terms of people, processes and practices. They are looking to engage with multiple service providers in a managed services mode. In these relationships, service providers are required to comply with service-level agreements or business-level agreements and with agreed-upon deadlines. These clients no longer micro-manage operational aspects of the cloud and enable their key providers to ensure proper monitoring and measurement of productivity.

Transformational Archetype: This buyer takes a strategic view of the entire IT ecosystem. Plans are in place to transform the current IT setup to a cloud environment. However, transformational clients will not force-fit legacy infrastructure and applications into the cloud if strategic value will not be realized. They are willing to take risks to achieve strategic value. Their goals are to have quicker, more closely integrated and user-friendly applications, platforms, and systems in place.

Highly Regulated Archetype: For these buyers, security is the top priority. They strictly adhere to the regulations and compliance guidelines for their industries. These buyers are primarily from industries such as healthcare, pharmaceuticals, energy, manufacturing, the public sector, banking, financial services and insurance — all of which require confidential data be protected at all costs. They are open to new, secure ways to run applications, including DevSecOps and zero-trust security.

Pioneering Archetype: This buyer is an early adopter of cloud technologies and follows a “cloud-first” approach. The focus is on using “born-in-the-cloud” applications to leverage cloud-native capabilities that are used to develop applications that are packaged in containers, deployed as microservices, and managed on elastic infrastructure through Agile DevOps processes and continuous delivery workflows. These clients are not encumbered by the requirements of legacy operations. They consider IT as a change agent and an enabler of revenue and profit growth.

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