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What are the top Cloud Computing trends for AWS and Azure in 2022/23?

This article is a look at the trends in the cloud market for AWS & Azure over the next 18 months. 

How is the cloud doing? 

What are the biggest headwinds? 

How will this affect you and your business?

 

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Index

The cloud market so far...

There is absolutely no doubt that the cloud market is still on the rise, with recent reports indicating that the global cloud computing market size is set to grow at a Compound Annual Growth Rate (CAGR) of over 16% by 2026. User spending on cloud services is also expected to increase by around 21.7% in 2022.

The two biggest cloud computing providers, Amazon Web Services (AWS) and Microsoft Azure are reporting record performances year on year, with no indication that this is going to slow down any time soon. AWS recently published a record fourth-quarter performance update, with 40% growth that has put them in good stead to reach a $71bn annualised revenue run rate, up from $64.4bn in the previous quarter.

Similarly, Microsoft saw a 20% increase in their revenue from the previous fiscal year, with revenue from Intelligent Cloud sitting at $18.3bn, an increase of 26%.

While each company may place responsibility for this at the door of a number of different internal strategies designed to increase their users and revenue, there are many external factors that have also contributed, over which they have had little control. One of the biggest influences on this rapid growth is the increase in businesses adopting a work from home strategy over the past few years, bringing with it increasing reliability on web-based public cloud infrastructure.

Satya Nadella, chairman and chief executive officer at Microsoft, stated that, “Digital technology is the most malleable resource at the world’s disposal to overcome constraints and reimagine everyday work and life.”

We are almost lucky to have been hit with a pandemic at a time when our digital capabilities are such that the effects for many businesses were minimal, certainly far more so than they may have been even five years previously.

When it comes to moving forward in 2022, there are a number of trends making their way to the forefront. One of these is the increase in preference for multi-cloud environments that can take advantage of all three cloud models, on-site and off-site. Many corporations have a variety of different cloud vendor subscriptions, hinting that cloud is seen as more of a commodity that they purchase rather than having loyalties to any particular provider.

Similarly, hybrid cloud and multi-cloud infrastructures are looking to be more popular this year, with public and private servers being used in tandem with each other to give businesses the flexibility and balance they need for a successful cloud solution. Although this isn’t a new concept, in 2022 we are likely to see more business leaders understanding the advantages of hybrid models and using them to gain additional agility in the cloud.

In this article, we’re going to be taking a look at what’s going on in the world of cloud technology at the moment, what risks and other factors are affecting it and some of the key trends that we’re expecting throughout the next year.

UK headwinds for the Cloud

In addition to the points above, there are also some risks specific to the UK that are likely to affect the cloud in 2022 and beyond. The first is the increase in interest rate charges, going from 0.25% to 0.50% in February 2022 and again up to 1% by the start of May. The aim of this is to bring the rate of inflation down, however when it comes to the cloud, this rate increase is likely to lead more people to the cloud rather than spending money on their own servers and infrastructure, which they may have had to take a loan out for. With the cloud, there is just one monthly expenditure with no loans required.

The rate increase will also cause additional expenses for any business that has company credit cards and existing loans due to the higher repayments, giving them bigger overheads and less cash flow. The ability to reduce any expenditure in their IT infrastructure should provide some welcome relief to an otherwise expensive time.

The UK’s amended IR35 law came into effect on April 6th 2021. IR35 determines how independent contractors are taxed, and this change was introduced to stop individuals from being able to pay less income tax than they owe. The key change introduced is that private sector companies are now responsible for determining an individual’s IR35 status, rather than the individual themselves.

This change represents quite a burden for those hiring contractors, as the onus is on them to ensure taxes are logged correctly. There may be disagreements from the contractor as to what IR35 status they’re under, and end clients could be left open to financial risk if their contractors are found to be incorrectly determined. This means that hiring this kind of worker is now much riskier than it was previously.

Within the IT and tech sector, there tends to be a greater number of contracted workers than in other sectors, meaning that the impact of the IR35 changes are likely to hit them a bit harder. We have looked in detail at the position of consultants for AWS and consultants for Azure and how a cost-effective partner can be more cost / time effective. 

One of the key challenges in cloud computing is sensitivity around keeping data safe - whether that be business data or consumer data. With the ability to store data in data centres across the world, it can also be complex for a business to understand which privacy policy rules apply to the information they’re storing.

The General Data Protection Regulation (GDPR) became enforceable in May 2018 and determines how data is used and stored within the European Union (EU). The UK is currently continuing to abide by GDPR rules, despite having left the EU, although we do have the independence to keep this framework under review.

With many businesses choosing to move their data to UK based cloud data centres, there needs to be additional focus on ensuring the data stored is compliant with GDPR rules, such as implementing an effective retention policy, notification of data breaches and the way in which any data is processed outside of the European Economic Area (EEA). To find out more about securing your cloud infrastructure read our article here.

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Case study:
IMI Plc

Planning, architecting and delivering a global cloud infrastructure for IMI Plc.

A global business split into three divisions.

Read the full case study

 

What does this mean for Azure in 2022 & 2023?

There is every possibility that Microsoft will introduce a price rise in countries that are affected by an increase in interest rate charges, meaning that people may choose to move their data to different data centre locations if it is more cost effective for them to do so.

In the past, Azure implemented a core cap to individual accounts, meaning that if you wanted to use more storage, you’d have to apply to have it added to your account. This was to ensure that they could keep up with the demand, and it did cause a slightly slower service for some clients who had to wait for the additional storage limits to be added on. Although this method hasn’t been used for a while, this could be something Microsoft look at reintroducing if they’re unable to get hold of the chips and servers that they need to keep up with customer demands.

A Cloud Solution Provider, or CSP, is the company that provides businesses with cloud-based infrastructure, networks, and software applications. There have been previous issues with the Azure CSP model in that it can lead to overspending on the cloud and a lack of control over what you have access to. Microsoft has now started to make changes to their model to make it much easier for customers to move between Microsoft partners, meaning that there will probably be a lot more movement in this area than there has been in the past. You can find out more about this change in our recent article, about the challenges of being on a CSP and how to manage the risk and find out if you are. 

Microsoft has spent a lot of time listening to their customers to understand what is important for them in 2022, and is putting a particular focus on hybrid and multi-cloud functionality. Issues that exist within their managed services and products such as Azure ARC and Azure Stack HCI/Edge are uniquely resolved with Azure hybrid capabilities, enabling them to run anywhere.

They are also putting an increased focus on their AI. Edge computing is now able to build intelligent applications that span the cloud and network, bringing together a set of connected systems and devices that can gather and analyse data. Azure AI services such as Azure Cognitive Services bring a trained AI model to the edge, integrating it into their customer’s applications for low-latency intelligence. This allows for real-time insights, analysing data close to the system where it is stored.

Circular cloud data has been a discussion point for a few years, and this is another area that Microsoft is putting the focus on over the next year. With an aim to drive overall cloud sustainability, they believe it is important to understand and measure an organisation’s environmental impact based on their various data centres. Microsoft has committed to enabling their customers to build more sustainable solutions for their data solutions, introducing Microsoft Cloud for Sustainability as a service to help track, record, report and lower an organisation’s impact. The insights this service gathers can then help to produce actionable insights to lower carbon emissions.

What are the key insights for AWS in 2022 & 2023?

When it comes to Amazon Web Services (AWS), the risks facing them are very similar to those facing many other businesses, such as issues with chip shortages, increases in energy costs and ways of maintaining the safety of their client’s data.

There have been a number of events recently highlighting the vulnerabilities associated with cloud-based storage, two in particular which were closed by AWS’s core services. One of these vulnerabilities had the potential to allow any user to access and take control of a company’s infrastructure, and while this issue has now been resolved, it has highlighted just how serious one of these problems could be.

With regards to the chip shortage, Amazon has been taking the issue into their own hands by announcing that they will be releasing their own semiconductors in the future, helping to keep costs down for their customers while also helping them avoid supply chain issues. Although they have been working on their own chips for many years, the worldwide shortage has acted as an accelerator for them to bring these into production much quicker, with hopes to provide their customers with a range of different options, including a data processor chip (the Graviton2) and a networking chip which allows data to be moved around networks for hardware switches.

Amazon opened their UK data centre in 2016, allowing for a whole new scope of collaboration and cost efficiency than was previously possible before it was introduced. This was especially useful for those within the public sector, such as the local governments and healthcare, as it meant they could stay within UK guidelines for data storage. You can find out more about the UK AWS data centre and take a virtual tour in our recent blog post.

As mentioned above, UK data centres can help to provide a solution for businesses that want to store their data locally, however it could create additional issues when it comes to ensuring this is being done compliantly. It’s worth noting that as with other providers, AWS will have different price sets for different data centres, so keeping your data within the UK may not always be the cheapest option.

Our predictions for cloud technology in 2022 & 2023 for AWS & Azure

Our key prediction for 2022 is that there will almost certainly be price rises across each cloud provider at some point in the year to help cover the increase in energy prices that these companies will be facing.

It’s always worth remembering that cloud providers are not intel, they’re being hit with the same issues as other industries when it comes to chip shortages and the effects of the rise in energy and fuel prices, so they do have to take some form of action - whether that be core caps or another reaction - to restrict and manage demand in their platforms and maintain a good level of service for their customers.

For this reason, we highly recommend working with a cloud management specialist such as igroup who can take the time now to sort out any pricing issues you have before these increases hit. Our CloudOps Active Management System (CAMS) software has been designed specifically to bring together performance and cost monitoring tools, support processes and general administration functions through a single portal to manage your cloud which includes:

  • Guaranteed cost savings
  • Always on support, fault find and fix
  • Management monitoring and reporting dashboards
  • Proactive infrastructure optimisation

Another trend that we’re expecting to see in 2022 is the cloud being used more as a commodity that you purchase, rather than businesses having any form of brand loyalty with any particular provider. This means that they will go with whoever offers them the best solution or price for their needs, likely bringing about a more competitive cloud market.

Boeing is a good example of a business who are taking the idea of cloud commoditisation and building it into their disaster recovery process. They have introduced a highly efficient safety management system, investing in ‘fundamental design practices’ to ensure their data is stored safely, becoming a far more resilient business in the process. Part of this system includes having multiple different options when it comes to their cloud storage, not basing their solution on any one provider.

One of the other changes that we may expect to see in 2022 is an improvement in the current skills shortage for higher-level IT professionals. As many people within the IT sector are generally quite risk averse, this has previously meant that people stayed within their roles for much longer than in other industries, creating a shortage of availability in more skilled roles within areas such as cloud management and cloud infrastructure. With the introduction of the IR35 amendment, many may decide that they want to move away from contracted roles and into full-time employment, meaning more people on the market to fill these spots within other organisations.

There is no doubt that activities and trends within the cloud sector change on a frequent basis, with a number of outside factors affecting a variety of areas, from the cost of delivering the cloud to clients to the solutions that are available to use.

At igroup, we like to keep our ears to the ground when it comes to every different factor that could have a negative impact on our clients and continuously develop our software and services to ensure we can always offer the very best solutions, helping to resolve pricing and management issues quickly.

Final Thoughts

Investing in a cloud platform should be cost-effective and add greatly to your business. Your cloud-based IT infrastructure should be driving increases in speed, efficiency, and performance. But many organisations are facing rising costs and failing to release the promised cloud advantages. 

You need an automated software solution sophisticated enough to match the complexity of the cloud, and a partner who will be there to ensure the ever-changing nature of the technology is being managed proactively, rather than just reactively.

With igroup and CAMS, you get all of that and more.

igroup is Here to Help

Further reading

Cloud technology has become a critical aspect of modern businesses. If you don’t have sufficient Azure support in place for your cloud deployments, you’re leaving it open to serious risk.

In this article, we explore the options available for cloud support, compare their pros and cons, and help you understand what the best choice is for your business.

 

How do I Gain a Clear View of Costs in AWS and Azure & Stop Getting Surprises?

The cloud has grown to become an integral part of modern business, facilitating greater agility, flexibility, speed, and innovation. But the subscription service model is something which causes many organisations significant problems with unpredictable costs and unnecessary over-spending.
 
 

Cloud technology has become a critical aspect of modern businesses. If you don’t have sufficient AWS support in place for your cloud deployments, you’re leaving it open to serious risk.

In this article, we explore the options available for cloud support, compare their pros and cons, and help you understand what the best choice is for your business.

Read the article now

The Perfect Solution for Managaing & Supporting Your Azure Cloud

CAMS is designed specifically to give you full transparency, control, and support, for your cloud infrastructure. Get in touch with a member of our team to learn more, and we’d be happy to help!

 Steve Rastall

Steve Rastall - Managing Director 

Get in touch: Steve.Rastall@igroupltd.co.uk

https://uk.linkedin.com/in/steverastall

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