The rise of the cloud
Various points in history have marked the evolution of the cloud. The first mainframe computers with shared access for users introduced the concept of collective computing resources, which gave way to virtualization mechanisms for providing access to distinct computing environments. Then came the age of the first enterprise applications delivered over the internet, facilitating the beginning of infrastructure-as-a-service technology and the subsequent creation of hyper-scaler models.
Around 60 years ago, John McCarthy, who conceptualized the provision of computing resources as a utility like water or electricity, delivered a seminal speech at the MIT centennial celebration that planted the seeds of the inspiration behind the cloud. However, it took over 50 years to realize the vision.
The last decade has been a defining period for the cloud, and it has finally evolved past its beginnings as a technology model to become a business enabler. The forerunners of transforming the cloud into a thriving business ecosystem have been the big tech firms like Amazon, Google, and Microsoft. Similarly, a growing breed of SaaS solution providers has extended this interpretation to the delivery of business applications. The next step in this evolution has been the advent of cloud-native or “born-in-the-cloud” businesses that have embraced the concept and disrupted large incumbents and, in the process, created their own pecking order. In India, cloud adoption has gone vertical with the explosive success of innumerable digital disruptors across every business sector, leading to massive value creation. These start-ups collectively stack up to $320 billion in valuation across 94 unicorns and are expected to top $600 B in 2024.
The hallmarks of cloud-first businesses
According to Gartner, 94% of enterprises already use a cloud service, and the global public cloud adoption service market may reach $623 billion by 2023. Given that the cloud is taking the business landscape worldwide by storm, it is worth exploring the reasons for its exponential growth. Cloud-first businesses are, by design, built for the digital age with the ability to rapidly innovate and adapt to demand from millennial / Gen-Z customers while re-imagining the experience for all. Being cloud-first translates into several perks, like fostering a culture that promotes customer and human-centric product and service experiences and not having to deal with the drag of legacy monolithic environments, traditional workforce models, and antiquated policy playbooks. Unlike conventional companies with large, siloed IT departments, cloud-first organizations have strategic business-aligned technology pods. IT is no longer a remote island, disconnected from the reality of business. It is an integral part of business and continuously fuels its success through the power of the cloud.
A company cannot achieve being cloud-first in a silo. It needs the synergy of an entire ecosystem – CSPs, system integrators/ consultants, regulators, infrastructure/utility providers, capital markets, and business innovators. Also, cloud-first does not automatically mean cloud-only or public cloud. Companies can migrate phase by phase on varying cloud consumption models or choose to create their own digital businesses on the cloud where the opportunity exists. There is a clear trend to move to the cloud urgently, but companies should calibrate the migration according to the industry and pace of disruption.
From good-to-have to must-have – the changing trend of cloud adoption
Until recently, a move to the cloud has been a technology option. However, it is no longer just that – the choice now is to shift to a future-forward business model on the cloud or remain cloistered in the comfort of the present. The latter may appear to be the easy way out while taking incremental steps without making the fundamental shift. Still, time may be running out for these organizations. Statistics show that enterprises are steadily achieving more expertise in cloud technology, with 68% already declaring themselves as ‘intermediate’ or ‘advanced’. Research predicts that the amount of data stored on the cloud will surpass 100 zettabytes by 2025. Companies compete to fortify their cloud competencies to take advantage of this boom. Today's disruptive business landscape mandates stepping away from outdated and increasingly inefficient legacy systems and embracing more innovative technology, business models, and culture- a journey led by the cloud.
Are we on our way to the cloud?
India and its technology titans have played a catalytic role in many major transformations over the last two decades, from the shift to global sourcing, co-innovation, digital transformation, and even being a part of the cloud evolution. Indian end-user organizations are no longer just restricted to the local markets, with firms across different sectors vying for global market share in developed and other emerging market economies. Many of these firms are setting global benchmarks in metrics like market capitalization, net-zero, diversity, and increasingly using technology, including the cloud, as a competitive advantage.
According to IDC, the revenue of India’s public cloud services market totaled $2.2 billion in 2021 and can reach $10.8 billion by 2025, growing at a CAGR of 24.1% from 2020 to 25. Gartner declares that India’s end-user spending on public cloud services can reach $7.3 billion in 2022. Digital penetration in India has expanded rapidly, aided by favorable government policies, technology innovation from next-gen startups, and rapid growth in connectivity and mobile users. Government investment and the success of large programs like the Aadhaar digital identity implementation, digitization of citizen services, and UPI are among the many reasons for the change in digital maturity. The digital economy is expected to reach $1 Trillion by 2025 as per MeitY’s Digital Vision for India. Cloud will be the very essence of this trillion-dollar vision. The technology industry has taken cue with large investments planned to expand the cloud and next gen DC footprint in India. The large global CSPs have made significant efforts in expanding their presence in India through an infrastructure push – additional cloud regions, renewable energy projects, and partnerships with telecom providers to improve and upgrade connectivity. In addition, there are other facets such as CSP funding for cloud migration initiatives, extensive programs to drive education, and VC investments for cloud-first businesses high on the innovation quotient.
Gazing into the crystal ball
The movement to cloud in India is at an inflection point. While it is among the fastest-growing regions globally, cloud penetration in the country remains low. The worldwide public cloud spending is expected to cross 50% of enterprise IT spending by 2025, signaling a marked shift. With their global ambition, Indian companies across the spectrum need to look beyond their region and draw inferences from the market.
While startups have the inherent advantage of belonging to the cloud generation and are therefore imbibing this as a business model, larger companies with an extensive legacy technology sprawl will need to act more decisively. These incumbent businesses need to create a detailed blueprint that envisions their future on the cloud, whether public, private, or hybrid. In doing so, they need to be prepared to measure the value from cloud adoption across cost optimization, agility, and innovation. Even start-ups will need to evolve the model as they move up the league tables with decacorn valuations, $100 M + ARR (Annual Recurring Revenue), and 1 Million+ B2C customers. The Indian regulators across industries have a pivotal role to play in creating a cogent and usable framework for ensuring data security on the cloud. There is a need for a consultative approach in governance, taking all stakeholders into confidence on the way forward. Ultimately, businesses should work to shed their inhibitions and get on to the road to a future paved with the cloud.
About the Author -
Gopi Krish is the Strategy & Sales Excellence Head for India Geo within APMEA Strategic Market Unit in Wipro. He has close to 24 years of experience in the IT industry, working with clients globally in banking, capital markets, and insurance sectors and helping with outsourcing solution development across areas like cloud, digital, core transformation, data & insights, and cybersecurity. He has extensive experience working in product management, mergers and acquisitions, post-merger integration, client relationship management, and marketing.
