• Chesapeake Group

COVID-19 is accelerating growth in cloud services


Overview:

While the cloud services industry has been seeing increasing traction in the past few years, social distancing norms and restrictions on travel arising from the COVID-19 pandemic have certainly accelerated cloud adoption by enterprises and positioned cloud strategy as a priority amongst CIOs and COOs.


People staying at home virtually all the time has changed the way we communicate, conduct business, learn, shop and consume entertainment.


In this article, we discuss some of the trends that have arisen due to the pandemic and how they are bolstering growth of the cloud services industry.


Trends arising due to COVID-19:

The surge in demand for digital communication and collaboration tools is attributable to the fact that a majority of the white-collar workforce continues to work from home to comply with social distancing norms.


Restaurants have almost been forced to list themselves on food delivery platforms and small businesses have moved to selling via e-commerce marketplaces. According to Digital Commerce 360, Amazon’s sales on Prime Day this year hit $10.40bn, up from $7.16bn during the 48-hour event in July 2019.


Online education platforms and tools have witnessed strong traction in the last few months as schools and colleges resort to imparting education via the internet.


While the entertainment industry is one of the worst hit as movie theatres cannot operate in the current circumstances, online streaming services like Amazon Prime Video, Netflix and Disney / Hotstar among others have seen unprecedented growth in traffic.


Impact on cloud services:

The worldwide public cloud services market is forecast to grow 6.3% in 2020 to total $257.9bn, up from $242.7bn in 2019. This comes at a time when the worldwide IT spending in 2020 is expected to total $3.6 trillion, down 5.4% from 2019.


Desktop as a service (DaaS) is expected to grow the fastest of all cloud services in 2020, increasing 95.4% to $1.2bn. DaaS offers an inexpensive solution for enterprises that are supporting the surge of remote workers and their need to securely access enterprise applications from multiple devices and locations.


Software as a service (SaaS) remains the largest market segment and is expected to grow by 2.6% to $104.7bn in 2020. The increased need for software collaboration and communication tools during COVID-19 along with the continued shift from on-premises license software to subscription-based SaaS models, as companies with on-premise data centers not only incur higher costs but also face challenges in maintaining uptime, is driving growth here.


Infrastructure as a Service (IaaS) is forecast to grow 13.4% to $50.4bn in 2020 driven by the effects of growth in e-commerce, online education and content streaming services coupled with organizations urgently moving off of legacy infrastructure operating models to build a more agile workforce.


Cloud management and security services is forecast to grow at 14.2% to $14.7bn driven by the surge in cyber crime and security incidents as a result of increased use of cloud-based infrastructure and software.

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