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Why Companies are Increasingly Looking at Cloud Based Services

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Raj Darji, Founder & CEO, Aarav Solutions

Covid-19 has transformed the business dynamics of every sector and has created a fresh approach to their business strategies. It has accelerated the speed at which industries and organizations moved on their digital trajectories. Digitization has stopped the education sector from coming to a halt by introducing virtual classrooms, helped the health sector by introducing online consultations for patients and the benefits in the retail and e-commerce sector are ever expanding. A recent survey by McKinsey found out that the pandemic has significantly expedited the adoption of digital transformation technologies. Cloud is one such technology which has seen rising adoption among enterprises due to its cost effectiveness, risk reduction and scalability.

Cloud migration led by multitude of factors:
The rising adoption of cloud is driven by many factors. The emergence of digital technologies such as artificial intelligence (AI), machine learning (ML), big data, and the internet of things (IoT) among others have led to more cloud-based digital offerings, supplementing this trend. Traditionally, data was maintained within the confines of office premises and behind a firewall taking into account safety and security. However, this was a costly affair and an unviable proposition for many small businesses. Through the adoption of cloud-based services, many of the problems faced by traditional practices have been overcome. The global research firm ‘MarketsandMarkets’ forecasts that the global cloud computing market size is expected to grow from $371.4 billion in 2020 to $832.1 billion by 2025, at a CAGR of 17.5 percent during this period.

Distinct cost advantage pushes up return on investment (RoI)
Industries such as banking, healthcare, government corporations, manufacturing, retail, automobile, and travel & hospitality among others generate tons of data. With rising complexities of operations, on premise storage of such data requires a heavy upfront investment, which keeps rising. In this perspective, the adoption of cloud technology is seen as a panacea. Every enterprise generates both client-specific sensitive data as well a lot of non-sensitive information. While storing all these data on premise can be expensive, moving to the cloud can be done at a much lesser cost. An enterprise can move its client-specific private information to the private cloud, while non-sensitive data can move on to the public cloud. According to a KPMG study, most IT organizations spend over 30 percent of their budget on infrastructure that includes primarily data centers and networks. Shifting some or all of this work to the cloud can save organizations anywhere from 10-20 percent of their annual IT budget, the study said. Such cost savings directly adds to the bottom line and gives an enterprise the opportunity to reinvest in other areas.

Agility & scalability:
While cost is the dominant factor for businesses to migrate to the cloud, it is not the only factor. Cloud computing also helps businesses to improve their operational agility and efficiency. This helps them to perform their tasks better, saving both time and money. Apart from agility, scalability is another area where cloud technology has a distinct advantage. If an enterprise witnesses a sudden spurt in its growth curve, it has to prepare its IT system for accommodating the vast amount of new information. This involves investment in IT hardware like servers, which is time-consuming and financially draining. However, if a business is on cloud, it can easily migrate these new data to the cloud by taking more space on a subscription basis. This is not only faster but also is less expensive. Apart from flexibility, even these enterprises provide the flexibility to their employees to work from anywhere through logging into their network. In the post-COVID world, in which ‘work from remote’ locations is likely to be part of modern work culture, enterprises are opting to migrate to the cloud. This trend is getting reflected in the usage numbers of major service providers. For instance, Microsoft Teams’ daily active users (DAU) reached 115 million in October from 44 million in mid-March. While Zoom reportedly has 300 million active users, Google Meet has around 235 daily active users as of now.

‘Pay as you use’ model:
Cloud-based service offerings give flexibility in payment without any upfront investment. Various cloud computing services such as SaaS (software as a service), IaaS (infrastructure as a service), and PaaS (platform as a service) are available on a subscription-based payment model. It means the user will only pay for those services which it uses. Such flexibility prompts businesses to migrate to cloud-based service offerings. Especially, small businesses and start-ups, which normally shun high fixed costs, are the major beneficiaries of this flexible payment model. Apart from these factors, even the enterprises get a wide range of choices to deploy as multiple players provide cloud computing-based services. This helps businesses to choose the service providers with the best features and rates. Also, as the digital world becomes more productized with app-based services rule the roost; organizations which have migrated to cloud have a significant advantage over others as cloud providers update the app in frequent intervals. This enables businesses to attract more customers with customer-friendly digital interfaces.

Sound security features with no need for a backup plan:
Businesses usually fear data breach in case the storage is not done on premise. However, advanced security features provided by cloud vendors and even SaaS providers keep such fears in abeyance. Data centers are devised with modern cybersecurity applications that prevent any kind of data breach.

Given the benefits, enterprises derive from cloud migration, more and more enterprises are migrating some or all of their data to cloud platforms

Cloud-based services also enable businesses not to devise any backup storage plan in case of any exigency. As data centers have a strong backup plan with mirror data being saved in more than one location, businesses are free from such worries.

The way ahead:
Given the benefits, enterprises derive from cloud migration, more and more enterprises are migrating some or all of their data to cloud platforms. As ‘Edge computing’ emerges as a new solution with Edge data centers becoming popular, cloud-based services are now available to enterprises with minimal latency. Apart from Edge computing, 5G rollout is expected to be a game changer for the cloud-based offerings going ahead. With low latency, the efficiency of enterprises is likely to be way better in the coming days. The enterprises which had already invested in Cloud are now utilizing it to focus towards better business outcomes, high revenue and innovation. This trend is going to be extremely beneficial for service providers as more businesses drift towards adopting cloud services and generate more opportunities.

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