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The cloud has been a core part of almost every organization’s strategy for the better part of two decades. Its adoption has been steady in almost every aspect of business and has significantly accelerated since the start of the pandemic. In fact, 71% of respondents to the ZK Research 2021 IT Priorities Study stated they increased spending for public cloud services in response to the pandemic, while 62% did so for hybrid cloud and 57% for private cloud (Exhibit 1). The main reason for this boost in adoption is that the cloud plays a key role in digital transformation initiatives. Digital businesses must be agile, but they can only be as agile as their IT infrastructure allows. The cloud provides the ultimate in infrastructure agility because companies can scale up and down as desired. New services can also be turned on without procuring hardware.
The definition of “cloud” is changing, and the first wave of cloud technology was akin to hosted services, as businesses simply offloaded operations (Exhibit 2). This provided some cost benefits but did not change the way IT operated or how network equipment manufacturers (NEMs) delivered their products to enterprise IT. The second wave of cloud, which is where the industry is today, is based on a centralized compute model where businesses choose a cloud provider and run applications on that cloud. However, we are also seeing many cases where businesses choose multiple cloud providers, as the various types of clouds each have unique strengths, and some applications are better suited for one cloud over another. More companies today are also moving to distributed clouds, which is a new approach to cloud computing. Gartner named distributed cloud one of the top ten technology trends of 2021.
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