Market Report

Silver linings

8 min read Cloud
The cloud is now mainstream, but many opportunities remain. Comms Business examines the cloud trends and market movements that resellers, MSPs and vendors should pay attention to.

The cloud is reshaping how businesses operate, breaking down physical barriers,’ and helping meet employee and customer expectations. It is now big business, with recent Canalys data showing that worldwide cloud infrastructure services expenditure topped US$50 billion in a quarter for the first time in Q4 2021.

Canalys also provided insight into the key players in the infrastructure services market, with Amazon Web Services (AWS) accounting for 33 per cent of total spend in Q4 2021 and Microsoft Azure the second largest provider at a 22 per cent market share. Google Cloud is now the third largest provider and grew 63 per cent on an annual basis to account for 9 per cent of the market.

So, how is cloud adoption progressing? Phil Bindley, managing director of cloud and security division at Intercity, explained, “Cloud adoption is progressing at pace with many organisations now embracing a true multi-cloud delivery model whether intended or otherwise. Microsoft 365 is now a mainstay of many organisations for email and collaboration, especially the widespread adoption of Microsoft Teams that proved invaluable during the work from home days of the last two years.

“It is also fair to observe that many SME businesses are well versed in a number of cloud-based software-as-a-service platforms for services such as HR and finance.”

Bindley added that cloud adoption has not yet spread to the heart of every business. He said, “The adoption of cloud services for core business applications is perhaps less mature. Many IT teams are still delivering services from in-house platforms, mostly virtualised, but nonetheless not yet progressing to the consumption of private or public cloud infrastructure.

“This is gaining momentum with many businesses now looking for a way forward from owning and managing the infrastructure, and a desire to procure this as a service either on private or public platforms.”

Adam Gaca, cloud operations business line manager at Future Processing, agreed that progress is picking up speed. He said, “The cloud adoption rate has been steady throughout the last decade but what we see now is a major acceleration. What pushed us forward are, sadly, big crises. The business requirements to work from anywhere, to enhance the speed of digital transformation while strengthening security could only be answered by using cloud resources. Therefore, we have witnessed an increasing number of cloud-enabled businesses which walk the path to becoming cloud-enhanced.

“The three main barriers to adopting the cloud are security, data modernisation and overall optimisation of costs, but there is one common factor that recently has taken the top spot as the biggest barrier - scarcity of qualified staff. It is getting harder and harder to find people with the required skills, plus the costs are also increasing.”

Similarly, Mark Shraga, chief sales and marketing officer, Southern Communications, said that he is seeing “a strong shift to cloud-based technologies”. He explained how Southern Communications has reshaped its business to adapt to this broader shift in the market. He said, “Over the last four years we have acquired two different cloud telephony platforms to enable us to tackle the full spectrum of change in business user needs, across many different verticals. The needs we see arising in the marketplace [include] the demand for flexibility, deeper capability, and therefore the expectations of increased opportunity.”

In terms of the cloud-based technologies that are in demand right now, Tony Martino, CEO of Tollring, pointed to the importance of choice. He said, “Customers demand choice and flexibility when it comes to the deployment of technology. They care about where their data resides, its regional location, and security is forefront of mind. This means the channel needs to take time to understand business drivers and needs, and be able to offer a range of options. This usually comes down to three choices: a provider’s cloud, shared cloud, or managed cloud.”

Gaca, from Future Processing, said, “I believe that any cloud-based technologies are in demand. Cloud enables us to do what we want, how we want and at the exact moment we want. We can be flexible with the whole infrastructure depending on the demand. Those are the requirements on which the physical world failed to deliver in the last few years due to problems with supply chains or the state of the global economy. Choosing cloud means that you can choose any service models and technologies that are best fit for you depending on any criteria – whether that’s cost or staff experience.”

Bindley, from Intercity, said, “Rather than focusing on specific technologies, organisations are increasing employee and customer engagement, improving business agility and the ability to work from anywhere – and ensuring that security is front and centre of their thinking during this planning.

“With that mindset, the route to a true multi cloud approach can be achieved. Selecting the correct services and platforms to operate from is paramount to execute the plan and achieve the benefits.

“Certainly, one of the biggest challenges aside from security is the use of data and analytics. Creating a single source of truth is a massive challenge for many organisations. This means you can ensure that sound decisions can be made on the back of having total confidence that the data is accurate.”

Sound security

Tollring’s Martino emphasised the importance of security credentials. He said, “Regardless of cloud platform, we know that customers are looking for solutions that adhere to ISO27001, the information security standard. This gives them confidence that their data is safe and sound. This goes hand in hand with ISO22301, giving customers assurance that there are business continuity management plans in place should a disruptive incident occur.”

Bindley, from Intercity, discussed the security risks that are posed by changing work habits. He said, “The working patterns and location of employees will continue to dominate how organisations shape their adoption of cloud services. Enabling that true hybrid working mantra, allowing people to work from anywhere and from any device in a productive and secure manner, whilst making sure that the user experience is consistent.

“With that in mind, the security of that hybrid workforce and protecting the crown jewels of the business becomes a very different landscape from the traditional corporate perimeter that many security strategies have been based upon.

“Zero Trust Network Access [ZTNA] and Secure Access Service Edge [SASE] will become the de facto strategy for securing access to and from the cloud. Whilst ZTNA works by allowing organisations to restrict employee access controls without sacrificing performance and user experience, the SASE frameworks enables secure access in a single cloud-delivered platform. Both technologies work to minimise exposure to cybersecurity risks.”

Opening up networks

Julien Bertheuil, managing director for EMEA at Spectralink, discussed the impact cloud adoption is having on networking possibilities. He said, “SD-WAN has driven cloud adoption further by supporting organisations’ needs for increased data volumes available in more places, with less latency than a traditional WAN architecture, underpinning some of the more popular cloud-based services like UC.

“The past two years have seen a massive adoption acceleration for cloud delivered services like UCaaS. The initial focus was to provide the, largely office based, hybrid workforce more flexibility in how and where they could work safely and securely. The trend that will drive UCaaS and other cloud delivered services through 2022 and beyond is to deliver common unified communications and collaboration access to all employees with direct integration to those cloud delivered services.”

Bertheuil added that “it is critical frontline worker needs are not overlooked” and Spectralink is helping to ensure that critical workers can fully benefit from the same functionality as the rest of their team. He explained, “We have developed a new, direct integration with the Microsoft Teams SIP Gateway enabling businesses that rely on Microsoft Teams, by far the most popular choice of collaboration platform on the market, to keep their mobile workforce truly connected while progressing with their digital transformation plans.”

Breaking down barriers

Whilst it is clear that cloud adoption is progressing, some barriers remain. Phil Bindley, managing director of cloud and security division at Intercity, said, “Typically, SMEs have a limited amount of both resource and knowledge about what the best direction for them is and how to complete a successful migration. This leads to SMEs engaging with service providers to map out a sensible technical and commercially viable way to move away from the reliance on internal expertise.

“There are huge benefits in getting this right from the get-go. In instances where the perceived benefits of cloud adoption have not been achieved, we are seeing numerous cases of repatriation, in particular, from the public cloud.

“Undoubtedly, security remains a major priority for businesses when making these transformations. The simple up-front understanding of the demarcation of responsibility for security, both of and in the cloud, is a fundamental that businesses must have total clarity of, ideally before they make the shift, so that both costs and risks are addressed as part of the business case to transform.”

Martino, from Tollring, said, “From a channel partners’ perspective, there are still some partners that perceive the cloud brings increased risk. With so much choice in the market, customer retention can be a challenge and some partners are reluctant to push cloud-based technologies as a result.

“The partners that are succeeding in the market, however, are those that have embraced the benefits of cloud, choosing solutions that are unique, easy to use, and – most importantly – directly alleviate their customers’ pain points. The benefits of the cloud far outweigh the negatives, such as the ability to bring solutions together using single sign on, the use of APIs to present relevant data to relevant people, recurring revenue models and robust security with redundancy.

“Partners can add value by taking a consultative approach, and ensuring that their customers truly understand the benefits of the services they offer, equipping them to self-serve with online help and product information, but still offer excellent customer experience post sale.

Shraga, from Southern Communications, argued that the most significant barriers are human reluctance to move to the unfamiliar. He said, “The barriers to change are largely down to the need to support the learning journey so that [end users] can embrace change whilst also reducing the pain incumbent in making that change.”

The road ahead

When asked what cloud trends he expects to dominate in 2022 and beyond, Tollring’s Martino explained that channel businesses will need to help their customers connect the dots across their technology estates. He said, “We are likely to see deeper integration of products and services to meet the needs of customers and to deliver a more joined-up user experience in terms of data and analytics. APIs continue to be key to enable greater integration into existing propositions. AI and machine learning also continually evolve to power increasingly relevant and timely intelligence through automation, in line with customer need.

“The big focus this year is reducing churn, as businesses re-evaluate their tools and technology after two years of disruption. This means taking a close look at ease of use, ease of sale, and delivering the right tools for the right people. As always, vendors need to deliver on strong roadmaps that are in-tune with the changing needs both of partners and end customers.”

Martino added that channel companies will need to use their experience in adding value to be successful. He said, “The channel needs to focus on their value-added services by understanding the needs of their customers and how their cloud tools will be used. Seamless provisioning and easy adoption are critical and then new integrations need to be strong with applications or add-ons being useful and relevant.”

Southern Communications’ Shraga said, “Supporting the vendor marketplace to educate end users about the benefits of moving to the cloud will be great for us all and, in the long run, will assist us in evolving the market to the next level. We are certainly focused on doing this within our own wholesale and partner channels. The promise of the cloud is clear, it’s now down to all of us to deliver on it.”

Gaca, from Future Processing, said, “My general feeling is that cloud will grow much quicker than it has in previous years. The continuous evolution of artificial intelligence and blockchain will impact the services which will directly affect various businesses. Hybrid cloud environments will also increase in popularity due to prioritising the solutions that are right for the job at hand. What’s more, the sheer amount of data and services in the cloud will require deep analysis to optimise the performance and costs.”