UPDATED 09:00 EDT / JANUARY 21 2021

CLOUD

CloudHealth report shows public cloud adoption soared in 2020

Cloud management platform CloudHealth by VMware published a report today that looks at the impact of the COVID-19 pandemic on public cloud infrastructure spending as organizations across the globe raced to adapt to new restrictions on doing business face-to-face.

Not surprisingly, CloudHealth found that total overall spending on public cloud infrastructure jumped at the onset of the pandemic as businesses and their employees were forced to adapt to remote work. Total cloud spend remained higher than pre-COVID levels throughout the year, despite monthly fluctuations, and by September 2020 it was up 19.3% from April.

What is surprising, though, is that the amount of spending on cloud compute services, which is the most commonly used cloud service, actually declined during the pandemic. Cloud compute spending fell 4.5% in September from January. CloudHealth’s report found that overall use of compute services remained flat at the onset of the pandemic, only to fall by 3.5% in May and then continue to decline throughout the remainder of the year.

Factors included the impact of cost optimization measures to eliminate unnecessary expenses, increased use of committed use discount pricing programs and the growing adoption of containerized and serverless workloads, CloudHealth said.

Spending on committed use discount pricing programs, which includes things such as reserved instances and savings plans, rose by a massive 180%. The report found that more and more businesses embraced these programs throughout the year as they realized that COVID-related restrictions were here to stay, and committed to using the cloud on a long-term basis.

“These programs offer a reduced rate to on-demand prices for instances in exchange for long-term commitments on usage,” the report noted. “This indicates that, as the long-term uncertainty of the pandemic came into focus, the financial implications of cloud usage took on a new importance.”

The decline in cloud compute spending was made up for by increased investments in cloud database and storage services. For example storage spending was up 5.6% from January to September, CloudHealth said. Database spending also rose slightly, with big increases in spending from technology businesses and the healthcare and life sciences sector offset by a decline in use from the retail, consumer goods, telecommunications and utility sectors.

The report also found that public cloud infrastructure proved to be invaluable for certain types of businesses that needed to support new and large-scale workloads at extremely short notice. In the retail and consumer goods sectors, for instance, compute spending jumped by 19.3% in April from the previous month as millions of customers switched to shopping online.

Another noticeable trend was the growth of container and serverless technologies during the pandemic. Container adoption jumped by 38.7% from January to September, while serverless was up 13.5%.

CloudHealth says the growth in public cloud spending will have some big implications for businesses in 2021. The most notable one is that cloud financial management has suddenly become much more critical, as organizations look to maximize efficiency when scaling infrastructure, or cut costs due to financial pressure.

The rise in container adoption presents some unique financial management challenges too, CloudHealth said. Companies will need to establish new standards for consistent labeling, identify unnecessary cost drivers and allocate usage to the appropriate cost centers, for example.

“Even those with mature cloud financial management processes may need to account for the nuances of containerized workloads,” the report noted.

Organizations will also need to adapt their operational processes and governance policies to take into account their increased cloud usage.

“The decentralized nature and rapid scale of cloud-based infrastructure often render policies for on-premises workloads obsolete,” CloudHealth said. “Without visibility into how cloud resources are being used, many of these organizations will struggle to establish configuration standards, improve developer productivity, and maintain compliance with regulatory standards.”

Photo: stacyvitallo/Pixabay

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