Cloud Pulse Identifies Post-COVID Shifts in Cloud Vendor Selection

Vendors must focus on issues of 'trust' and 'choice' and foster partnerships to offer best-of-breed applications and services to meet post-pandemic cloud demands.
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Many enterprises were on a cloud transformation journey long before COVID-19 interrupted, fast-tracked, and altered the way they would consume IT services. While the focus did shift for some companies to ‘keeping the lights on’ during the height of the pandemic, it appears many organizations are now getting pre-pandemic cloud initiatives back on track, albeit with some very different requirements of vendors, technologies, and architectures.

Q3 has set the scene for post-pandemic recovery initiatives that, for the first time since the pandemic began, take on a much more strategic, longer-term focus. This is highlighted in IDC’s Q3 Cloud Pulse BuyerView survey, released this quarter. Almost 70% of more than 1,300 respondents in Q3 said they expect to return to pre-pandemic levels, in terms of business operations and functions, within a year. There is, however, a twist. Over the last two years many of these companies have not only been impacted by COVID-19, but they have been influenced by discussions around climate change, diversity and data protection and sovereignty.

So now, as workforces move back into the office and companies look for new ways to approach their own diversified and changing business markets, vendors are starting to see huge shifts in cloud provider selection criteria. There are clear technology directives – from availability of a choice of applications and best-in-breed vendors, to more flexible delivery models, contracts and solutions. There are also more ‘softer’, but equally important, attributes such as ‘trust’ that are influencing cloud buyer decisions, removing some of the emphasis on qualities such as ‘market leadership’ and ‘management vision’ that cloud vendors once tag-lined and measured excellence upon.

Industry Opportunities

The trends identified in IDC’s Q3 BuyerView Cloud Pulse survey are equally relevant to technology developers as they are to cloud vendors. IDC predicts that by 2025, the cloud industry will be valued at around $1.3 trillion with growth across the PaaS, SaaS and IaaS segments. Increasingly, much of this value chain will be driven by a channel of partners and suppliers offering best-in-breed products and services for end users. Instead of focusing on a single vendor’s cloud application stack and delivery models, vendor perception is increasingly being linked to the whole ecosystem of providers that bring value to the customer.

IDC’s Cloud Pulse survey respondents in Q3 told us that the leading attribute for any single cloud platform (containing this ecosystem) is ‘trust’. Trust has historically been linked to service satisfaction levels, but in 2021 it also includes elements such as reputational risk, environmental, social, and corporate governance (ESCG) profiles. This does not come as a huge surprise when you consider the shift in emphasis on cloud services in the organization. In IDC’s FutureScape: Worldwide IT Industry review, it was stated that over the next three years the primary role of the IT organization will be to govern the effective use of cloud resources by their companies. As cloud continues to dominate companies’ IT mix (today only 16% of the total IT mix of our respondents is non-cloud) its whole service supply chain will gain attention for environmental footprint and other factors including risk.

Products: Easy to manage, highly secure and easy to migrate

Customers in Q3 are focusing on vendor choice and are showing a preference towards cloud solutions that offer access to best-in-breed applications and services that can be delivered through the channel and through partnerships. Customers want flexibility in the way these applications are deployed and consumed, with access to public and private clouds as well as on-premises and hosted private cloud. In terms of new applications, AI is increasingly in demand as part of the cloud solution set, with more than 60% of data analytics being used for real-time processing and response to business challenges. IDC’s Futurescape research highlights this trend, predicting that by 2023, 40% of the G2000 will focus their cloud selection process on business outcomes rather than IT requirements, placing even more emphasis on the ecosystem of best-in-breed solutions providers. To put a slightly different take on this, one of the main reasons cloud consumers in our Q3 Cloud Pulse chose to leave a vendor was due to a limited mix of products and services.

Data sovereignty

A lack of data sovereignty options was another reason cloud consumers chose to leave cloud providers. From GDPR in Europe to a raft of new in-country requirements globally that direct that data reside in country, data sovereignty is an increasing concern. This is especially the case where companies are expanding global operations and technology reach.  IDC predicts that by 2025, regional divergences in data privacy, security and government mandates will force 80% of enterprises to restructure their data governance processes.

An issue of trust

Trust was the ‘number one’ attribute customers valued, more so than any other vendor requirement, when choosing a cloud provider in Q3. Trust encompasses the above areas, from data governance and protection to contractual arrangements and service delivery and choice. The issue of ‘trust’ is addressed across other IDC research disciplines such as the IDC Market Glance Q3, 2021, where the explosion of vertical industry clouds is approached. These are clouds molded to industry-specific regulations and requirements. The cloud market saw 30 new industry clouds launched in the last year.

Trust is also seen in the growing interest in predictable pricing, security solutions and performance/ resiliency, as well as the ability to be clear and open about business and service shifts and compliance with ESCG goals. Trust is even more closely linked with ‘satisfaction’ and will vary depending upon the customer. At the close of 2021, being a ‘trusted partner’ is looking to also be a leading attribute cloud customers are going in search of when selecting preferred supplier/s of cloud services (above the ability to provide technical expertise, experience and innovation even – though these are still important characteristics).

The biggest challenge is, in IDC’s Cloud Pulse cloud buyer scores, many cloud vendors performed below customer expectations when it came to trust. IDC’s Cloud Pulse provides much more insight into these shifting trends, from customer experience to vendor perception. To find out more, visit the IDC BuyerView website. BuyerView also covers areas such as Edge, AI and Service Providers with a series of quarterly or annual surveys.

Senior Research Director, IDC BuyerView Product