How the as-a-Service trend will change business in the future

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The Covid-19 pandemic has caused increased demand for as-a-Service solutions, primarily in infrastructure (IaaS) and software (SaaS). The market for such services is not only growing, it is also going to change over time. IDC predicts that new services will be created around hybrid cloud platforms and that providers will form collaborative partnerships in various ecosystems in order to ensure delivery, security and integration.

According to IDC, growth in public clouds has been between 20 and 30 percent per year. Social changes caused by the Covid-19 pandemic is driving demand for aaS even higher. This applies especially to Infrastructure-as-a-Service (IaaS), which is expected to grow by 34 percent in Belgium during 2020. A similar trend is to be expected for software – Software-as-a-Service (SaaS).

There are several reasons for this development. These days, companies and organisations are unwilling to have capital tied up in IT infrastructure. They want to consume platforms and services in order to improve their bottom line and improve lead times towards the business. The general uncertainty in the market also plays a part: companies having become more cautious and not daring to make investments.

And remote working, which has increased due to the pandemic, has made it both easier and more secure to go to the cloud. IaaS simply is much better suited for remote working and for a distributed mode of work than traditional solutions.

Digital transformation, strengthened by the rapid development of the as-a-Service model, has changed the way we do business. All companies need to be flexible, fast and responsive to the demands of both customers and the market – if they’re not, the competition will leave them in the dust.

Digitalisation has happened so rapidly that now it’s difficult to imagine a different mode of consumption – as if a private person would go back to buying CDs instead of listening to music from streaming services, or as if all companies in the world would operate their in-house server centers with their own staff.

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Infrastructure for everybody – part of the trend

According to Martin Sundblad, an analyst at IDC, two things drive the development of as-a-Service. One is the strong link between digital and physical services, which make it easier to create package offerings that are servicified. The other one is the stock market, the reason being that companies tend to get a higher valuation if they have steady, subscription-like revenues.

Martin Sundblad, Analyst, IDC
Martin Sundblad, Analyst, IDC

Servicification has many advantages. Cost savings is an obvious one, but capacity is also important. It is much easier to scale production up or down, depending on customer demand, with the flexibility offered by as-a-Service.

HPE states that they can see that an increasing number of companies have begun to work in a more data-driven way, which also means that there is an increasing need for taking advantage of the possibility of consuming one’s infrastructure as a service, scaling up and down as needed.

Further more, HPE sees that workloads require a different kind of flexibility. They need to be managed in a dynamic and efficient way in order for IT to be able to rapidly meet unpredictable levels of demand. As data has become the major asset of the company, the infrastructure that handles this information has to be able to meet these needs in a secure and easily accessible way, which we ensure that our as-a-Service model will do, on-prem as well as off-prem.

aaS has ”democratised infrastructure”, because today neither huge investments nor comprehensive skills are needed.

It is well known that developing your own infrastructure is not an easy undertaking. It requires a lot of knowledge and resources. Also, security is critical.

The as-a-Service trend has provided us with widely available access to high-quality infrastructure. Only ten years ago, hardware would often be a stumbling block in projects. Companies needed to order hardware months in advance, and the goods were often shipped from the other side of the globe. In other words, we have gone from a shortage of hardware to hardware being available by the pressing of a button.

So it could be said that aaS has ”democratised infrastructure”, because today neither huge investments nor comprehensive skills are needed for having access to modern, secure and updated IT.

When IT departments are consuming infrastructure instead of buying hardware, managing instead of administering and controlling instead of supporting the supply of IT, both time and manpower are freed up. That time and manpower is now available instead for developing the business activities of the company.

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IaaS is not fully developed

IaaS has given companies access to capacity that they didn’t use to have. But at the same time, complexity has increased when it comes to managing data that exists, both at internal servers and in public and private clouds. When a company can buy the complete solution as a service, it can forget all about complexity and, instead, focus on its core business.

HPE means that the main advantages of consuming IT as a service has nothing to do with places – on-prem or off-prem – but the experience you get from buying IT as a service. Criteria such as IT security, performance and compliance are driving most companies and organisations to build hybrid IT platforms. That is, consuming IT in a combination of a public cloud with an IT partner or in an internal data center.

One challenge HPE points out is then to get an overview of all IT. A good solution should therefore allow for consuming IT in these different scenarios while at the same time being able to manage various workloads with a good overview of consumption, performance, compliance, etc.

Simple and predictable services will be the key, both for small and medium-size companies.

Martin Sundblad, analyst IDC.

Will this development continue at the same pace even in the future? The IDC analysts believe that the trend towards the public cloud is beginning to mature.

“Companies are now better at determining what kind of data to store where, depending on what solution provides the most benefit. This means that some data will be moved back from the cloud to company servers. Also, factors such as IT security and GDPR will affect this development,” says Martin Sundblad.

As the market for IT grows, it will change. Companies that provide cloud services in the future will differentiate themselves from one another more and more. Also, IDC analysts predict that more partnerships will be formed, and also ecosystems of collaborating cloud service providers. This will be backed up by the major providers of platforms, services and applications that contribute to the securing of delivery, security and integration.

As for IaaS, the technology is not yet fully developed, says Martin Sundblad.

“We will see more supporting services being developed for public clouds in order to simplify them for users. Simple and predictable services will be the key, both for small and medium-size companies.”

Expected growth of data volumes is also a factor.

“Edge technology will increase, which means that companies can process greater volumes of data closer to their origin. Cloud suppliers will adapt, and they will offer different hybrid models that use edge technology in order to reduce the volumes of data being sent to the cloud,” concludes Martin Sundblad.

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