Partners helping enterprises take advantage of the new “next normal” brought on by the coronavirus pandemic should remember that accelerating customers’ transitions to the cloud is key to the shifted business climate, and “most interesting things will be taking place at the edge.”
For many companies, the global pandemic has reinforced the importance of transforming their businesses to be more agile and better respond to customer needs, according to Rick Villars, group vice president of worldwide research at IDC, a Framingham, Mass.-based market research company.
“The experience that those companies’ own customers are demanding is a great new opportunity,” Villars said during the keynote address for The Channel Company’s NexGen+ 2020 conference this week.
IDC research and surveys conducted biweekly since March indicate it’s time for partners and their customers to accelerate their digital transformations to address business needs and operational efficiency on an ongoing basis -- not just in crisis mode.
“Depending on (the) industry, you‘re going to have some who recognize that this was a major impact on their supply chains, and they’re going to need to diversify that,” Villars said. “Many have realized in this new world that contactless is a part of your business model, not just for restaurants and grocery stores, but for hospitals, manufacturers of products – for basically anybody delivering capabilities into a customer location and to a customer need.”
And many companies that thought they had a grip on their data and were using it effectively realized it wasn’t in the right place and rank form, and they couldn’t react to it quickly enough.
“These are all great new opportunities…that your customers are going to want to talk more about and look for you to help them address in the coming year,” Villars said. “As you sit down in the next month, three months, six months, you‘re going to see a whole new enterprise emerge that’s going to be your main and most important customers going forward.”
IDC forecasts that 65 percent of the global gross domestic product will be digitalized by 2022, driving US$6.8 trillion in IT spending between now and 2023. And 41 percent of that spending will be tied to cloud computing -- whether that‘s leveraging cloud infrastructure services, deploying hardware in a cloud model or hiring a service provider to help take greater advantage of the cloud and better-manage cloud assets.
“This is really what the future of digital infrastructure is going to be all about,” Villars said.
Customers recognize an optimal cloud experience is where they get the best access to new technology -- whether that‘s infrastructure, applications or data -- and that cloud should be part of their business resiliency strategy, according to Villars.
“They want their cloud partners to help them make their cloud investments more resilient…wherever they‘re deployed -- public cloud, private cloud, at the edge,” Villars said. “By 2023, every company out there is saying our goal is to transform our business to become more automated. Cloud is going to be at the heart of that.”
IDC, which has been tracking cloud and non-cloud IT infrastructure spending for the last decade, is finding 2020 to be a pivotal year, with more money being spent on infrastructure to support cloud operations and services than to support traditional workloads in traditional environments. Almost 55 percent of an estimated US$134.8 billion spent worldwide on infrastructure hardware this year will be for cloud environments, according to IDC, up from 49.5 percent of the US$134.5 billion in spending last year. Almost 64 percent of an estimated US$171.9 billion in infrastructure hardware spending in 2024 is projected be devoted to cloud.
“That‘s just for the actual physical hardware,” Villars said. “Layer in software, layer in the services to support the use and adoption of all these clouds, and the percentages are even greater.”
Infrastructure-as-a-service spending is expected to climb from US$49 billion last year to US$66 billion this year and US$173 billion in 2024.
“By 2024, enterprises are spending more on infrastructure as a service than they‘re spending on hardware to run their own businesses, plus what they’re getting out of SaaS and other applications,” Villars said. “It’s cloud everywhere for everything, and I want to do it faster. I need to modernize all my applications, I need to make sure that all my cloud resources are connected and that I’m able to manage them effectively.”
And that’s where IDC sees the biggest problem in the next year. For most companies, hybrid and multi-cloud is a great description of their circumstances, but not of their strategies, according to Villars.
“It needs to become part of the strategy for delivering a better business practice,” he said. “One other key thing you should pay attention to: More and more of your customers are going to be coming to you with cloud requests that are tied into their specific industry. So, make sure that you have been investing more in understanding industry-specific needs and requirements, because that‘s where they are going to get the maximum value out of their cloud investments.”
All that innovation in the cloud space will start to translate into an explosion of new processor, compute and memory options and other new technologies.
“They‘re going to need help from you to…understand what value they can get out of those resources,” Villars said. “Cloud isn’t just about the central core. It’s about doing more and more with resources and data at the edge, but using the cloud consumption models to make that happen. This, for us, is where we think the big long-term bets are going to be made.”
As enterprises adopt a digital strategy, they’re looking at three key performance indicators: resource optimization, continual enhancement with no accumulation of technical debt going forward, and consistent resilience based on rapid adaptation in a crisis. That future is built on three pillars -- technology, deployment and operations -- and all three are going to change dramatically in this “new world,” according to Villars.
Resource optimization will be centered on cloud-centric technology: software-defined everything, memory-driven infrastructure, heterogeneous computing, cloud-based orchestration platforms and local cloud-as-a-service options such as AWS Outposts, Microsoft‘s dedicated private cloud, Oracle Cloud@Customer or VMware Cloud on Dell EMC.
“They‘re not delivering the customer a product, a box that needs to be upgraded,” Villars said. “They’re delivering you a cloud at your business to deliver those same services. They get out of their large public cloud environments, and they consume it the same way. This is an important new delivery mechanism that’s going to be a big part of the future.”
Consistent resilience will be built on ubiquitous deployment.
“When people think about deployment today, the obvious thing (they) think about is consumption,” he said. “Is it CapEx, is it subscription? Increasingly, I need to have an as-a-service option. But…what the public cloud really proved to companies is that you have multiple usage models. There are some workloads where a dedicated model gives you the right latency, the right performance. A shared environment gives you access to huge amounts of capacity on demand or new technologies much quicker. Customers need to be able to leverage and use both, and they want you to help them do that.”
In the next few years, IDC sees location as the most critical new factor.
“Bringing infrastructure, bringing resources not just in the core, but to the network--- increasingly, in 5G locations, as well as to the edge – is a critical part of what customers want,” Villars said. “This is where they most are going to look to all of you as service providers to help them navigate this metric and identify for any given workload and application, what‘s the best combination.”
More than half of new IT infrastructure will need to be local by 2023, according to IDC. While there are approximately 39,000 core data centers globally, but the huge need will be the 7 million-plus edge locations such as factories, hospitals, airports, stores, hotels and construction sites where business want to be able to deliver great new services and capabilities.
“By 2023, we think 50 percent of those new resources being deployed are in these edge locations not in data centers,” Villars said. “People want to have resiliency anywhere, and they want to deliver innovation anywhere. We see them wanting to introduce new technologies like 3D printing and augmented reality, leveraging vision sensors to do site safety.”
Continual enhancement will be built on autonomous operations, according to Villars.
“More and more of the resources customers consume are going to be autonomous -- they‘re going to be self-regulating, self-managing,” he said. “That doesn’t mean that the management team or the IT team or your job goes away, but it means what you do has to change. The value you’re selling is less about managing assets, configuring assets, it’s more about governing resources and looking for the platforms and solutions that address issues like how do I provision resources from a cloud basis, how do I ensure that I’m getting cross-cloud data management for all those assets? For many companies, the thing they’re really going to ask for is, show me how the advice you’re giving me is being improved because you’re leveraging AI (artificial intelligence) and machine learning in your own recommendations, in your own processes, and help us manage the transition of our staff and our teams to take full advantage of that.”
In addition to taking advantage of customers’ accelerated moves to the cloud, partners should recognize key opportunities around helping companies deal with and remediate problems exposed by the pandemic, Villars said.
“The current VPN infrastructure was a major impediment that companies had to deal with as they moved to remote work from home for all their employees,” he said. “In the short term, they may have thrown hardware at the solutions, and you all had good business selling DDI systems that are helping people expand their footprint for security gateways and other pieces. In the long term, they‘re going to look for a more scalable, sustainable solution, a more resilient solution.”
Villars suggested five target opportunities for partners: Ensuring standard but flexible local security/connectivity; enabling frictionless infrastructure and application design/deployment; supporting local data collection, aggregation and transformation; delivering centralized infrastructure and data control; and aiding the shift to autonomous IT operations and governance.
“Remember, the goal of your customers increasingly is to provide services to their customers,” he said. “And the more you can be part of their equation for making that happen, the more successful they‘re going to be, the more successful you’re going to be.”