Trend Alert: Why Demand for Cloud & IT Services is Rising
By: Alan Seal on February 24, 2021
Pet rocks. Leg warmers. Cabbage Patch Kids. Troll dolls. Furbies. Tamagotchis. Razr flip phones. My Space (and Tom). Hoverboards. Smartphones. Hero franchise films. In pop culture, trends come and go, some quickly, some not as quickly as we’d like. In the tech world, consumer trends tend to come and go, but, because of the CapEx investment, business tech trends tend to have a much slower growth rate, unless some catalyst speeds that up. Cloud computing and IT services are no different. In fact, there’s no shortage of articles from 2013-2019 on why businesses were reluctant to switch to cloud computing and cloud services. For some it was a lack of understanding and expertise, for others it was reliance on legacy systems, and yet others were concerned about security. However, cloud service providers and data centers recognized those issues and met them head-on. In part that helped drive a slow adoption of cloud services, but not anything like the anticipated growth of the next few years.
What is the Current Demand for IT and Cloud Services?
2020 found just the kind of catalyst referred to above in the Coronavirus pandemic. In 2020, estimates predicted global growth of the cloud computing industry to be 17.5%. However, in 2021 growth is expected to be 18.4%. As a point of comparison, in 2015, cloud service spending was expected to reach $204 billion and in 2021 it is expected to reach nearly $305 billion and $927 billion by 2027. In short, data centers and cloud services are poised for significant growth over the next few years.
Factors Impacting The Rapid Growth of Data Centers and Cloud Services
While several factors were already sending businesses in search for the IT and cloud services provided by data centers, Covid-19 accelerated that shift. However, even before the pandemic, businesses were beginning to realize that data centers and colocation partners had significant value for their organization.
The first issue data centers addressed was the shortage of IT professionals, particularly security. Many businesses were struggling to find qualified individuals to manage their networks and, in turn, provide the security oversight required to protect their data. In 2017, when growth charts start to turn drastically upward, reports were being released warning of the widening gap between jobs and qualified IT professionals. Businesses eyeing this trend started to make the necessary moves.
The other business factor impacting growth is the cost-savings. As more businesses look to improve their bottom line, deliver a greater return to stockholders, and find ways to shift capital investments into product or application development, saving on hardware, licensing, and IT costs, cloud services and data centers are a great option. Similarly, cloud and IT services can fix the budget rather than dealing with the cost variables of maintaining one’s own hardware and server storage space.
In addition to meeting business needs, cloud and IT services help businesses meet the demands of consumers and the booming end-user tech market. More specifically, the IoT, digital media, smart phones and their applications, and more are driving a need for both businesses and end users to store more data. Further, the demand for access to this data is significant as well. Not only do users want access, but they want reliability and speed. Often those two factors require investments in up-to-date infrastructure that can be cost-prohibitive, but more and more it requires edge data centers.
The Impact of Remote Work on the Demand for Cloud Services
One of the biggest factors driving demand for cloud services in the last year has been remote work. For example, SaaS tools, like Slack and Zoom, which enable communication and collaboration for remote workers who need to stay connected, have created a demand for networks that can deliver reliability, speed, and security.
With entire workforces shifting online and needing access to applications, data, and business resources, security became a major issue. While businesses typically have security infrastructure in place, including anti-virus software, many end-users don’t. Further, proficient IT teams, including those with an eye for security, ensure that all software and applications are updated to avoid any vulnerabilities or weaknesses that have been patched or addressed. End users may not do this as often.
Similarly, an in-house IT team should be monitoring connections and traffic, passwords, and more. End users may not do this. Cloud and IT services provided by a data center, on the other hand, ensure that these security measures are in place, often offering tighter security than businesses employ on their own. Businesses understanding that vulnerabilities are created by remote work and that the remote work situation is not ending anytime soon, are in large part shifting to cloud services that can help mitigate this risk.
Finally, having an entire workforce remotely accessing a network puts a lot of stress on its resources. Responding to that kind of explosive demand requires an infrastructure that’s scalable. Scalable networks often require a significant capital expenditure not just for the hardware itself, but businesses must also be able to manage power and cooling needs as they expand their networks. For many businesses these added costs, as well as space limitations, mean that finding a colocation partner or migrating to the cloud are better, and more financially responsible, options.
The Impact of Edge Computing on Data Centers
While 2006 brought the realization of cloud computing in 2006, the men who coined the term may not have foreseen where their concept would be in 2021. In fact, the nature of the relationship between cloud computing/edge computing and the devices it supports may be symbiotic. More specifically, the existence of edge computing helped to enable IoT devices, but the demand for IoT devices and smart homes and electronics is also driving the expansion and demand for edge data centers.
In short, IoT devices rely on edge computing because while they require fast data transfers, they don’t need to store as much data. Edge infrastructure puts the servers closer to the device decreasing latency and increasing the speed of data transfers enabling IoT devices to quickly respond to environmental stimulus and evolving information.
IoT devices themselves are becoming more common and more popular. From smart home appliances and electronics to those employed by major online retailers, consumer adoption of IoT devices, particularly among younger consumers, is fairly high with 80% owning at least one IoT device. Further, the IoT market is expected to have a value of $1256 billion by 2025.
It’s worth noting that the growth isn’t just expected due to consumer demand, but the application of AI, robotics, and cobotics in the manufacturing sector is a huge driver for edge computing as well. Essentially, any industry (and that is most of them) moving into automation requires a reliable and responsive network with low latency and impressive speeds. Edge computing provides that.
How Your Business Can Leverage Data Center and Cloud Services
There are a wide variety of business challenges and needs that are addressed by partnering with a data center and utilizing cloud services. Consider a data center and cloud services if your business is looking for ways to:
System redundancies and data backup in case of disaster
How vXchnge is Prepared to Help Business Meet Rising Demands for IT and Cloud Services
Choosing a data center is among the most important business decisions you’ll make. You want one that ensures and provides all the services and benefits listed above, but it’s more than that. You want a partner who is on the cutting edge of technology and who is thinking about your needs first.
Not only does vXchnge hit those benchmarks, but with data centers located all over the U.S., outside major metropolitan areas, we’ve been positioned to handle edge computing for years. In addition to our being an industry leader in that regard, we also think it’s important to give our partners transparency and control with our intelligent monitoring tool in\site. This tool enables you to get a real time look at your entire system whenever you want or need, empowering you to make the business decisions that will foster your growth. Further, if you notice an issue, launch your trouble ticket right from the in\site app and our remote hands team is there to help.
With a combination of unparalleled customer service and cutting edge technology, vXchnge is an ideal partner for businesses looking to migrate. Get in touch with our team today and let us know how we can help you.
About Alan Seal
Alan Seal is the VP of Engineering at vXchnge. Alan is responsible for managing teams in IT support and infrastructure, app development, QA, and ERP business systems.