Takeaways from Our New Report: How 2020 Changed the Way We Use the Cloud

5 Min Read

2020 was a year like no other. The COVID-19 pandemic and subsequent government-imposed restrictions introduced new realities for everyone.

For some businesses, the economic pressure of these restrictions would make cost-cutting measures the top priority. For others, the implications of the pandemic led to a fundamental shift in priorities, whether that meant a surge in demand for core products or the need to respond to unexpected behavior in the market.

Public cloud usage trends from 2020 illustrate this impact. For our new report, How 2020 Changed the Way We Use the Cloud, we analyzed public cloud usage trends among nearly 500 CloudHealth customers globally from January through September 2020.

Below are a few high-level insights from the analysis that shed light on how businesses used the public cloud in response to the disruptions of 2020.

1. Compute spending decreased across the board, driven by a confluence of trends

In terms of percentage of total cloud costs, compute services—which attracted the largest amount of investment—showed a significant decrease for the organizations evaluated in the data.

To understand how investment in specific cloud services fluctuated, we tracked the median percentage of total cloud bill on a monthly basis. So, while cloud-based compute services remained the most significant area of investment among these organizations, we can see that their contribution to total monthly cloud costs is decreasing.

One simple explanation is the need to cut costs in response to the pandemic. Facing pressure to reduce operational expense, it’s likely that many organizations embraced cloud cost optimization measures, such as rightsizing resources to align with workloads or eliminating unnecessary cost drivers, that may not have received attention previously. As the largest line item on the cloud bill, compute costs were likely a focus of these efforts.

This is supported by another trend we identified in the data—enterprise organizations showed a 186% increase in purchases via committed use programs, such as Reserved Instances or AWS Savings Plans, in May. These programs offer substantial discounts to on-demand prices in exchange for long-term commitments (this article highlights the differences in discount options by each major cloud service provider). At a time when it became clear that the pandemic would be a long-term reality, many organizations embraced options to reduce compute costs.

However, this isn’t the whole story. At the same time that compute spending levels decreased, investment in containers and serverless technologies increased, by 38.7% and 13.5%, respectively. This indicates that businesses are increasingly choosing modern approaches when deploying new workloads in the cloud, and will be an interesting trend to monitor in the years ahead.

2. Cloud services proved valuable for organizations that needed to adapt to the pandemic on short notice

Accelerated timelines for digital transformation projects were a theme for many organizations in 2020, and our cloud spending data reflected that.

Many retail and consumer goods organizations, for example, were confronted with the unthinkable—100% e-commerce sales fulfillment—essentially overnight. The same was true for public sector institutions forced to support fully remote operations for day-to-day educational and government functions. Those in the financial services industry needed to account for the challenges of a struggling economy while competing for business amid a rise in online payment and government subsidy programs. Media and entertainment businesses faced similar competition for the attention of a public that increased time spent streaming media while largely confined to their homes.

In each of these sectors, the value of the cloud and the need to embrace digital business models have been clear for years. But the realities of the pandemic made the extended timelines for this transformation irrelevant. And in the data, you can see how each sector reacted.

Unfortunately, the opposite was also true for the organizations that felt the most negative effects of the pandemic. As we’ve highlighted previously, restaurant technology provider Toast was forced to take cloud cost optimization to new levels as pandemic-related restrictions disrupted operations for its customer base. In the data, we see a reduction in total cloud investment among small businesses generally, and steep cuts coming from those in the travel and hospitality industry.

The cloud enables businesses to fund strategic IT projects with operational expense. While the flexibility this affords depends on each individual organization’s approach to cloud financial management, the data from 2020 shows how important it was for many of the organizations.

3. Secure cloud usage will be just as important as cost management in 2021

One of the most common side effects of increased public cloud usage is a lack of standardization for configuration. The distributed nature of the cloud can make these organizations move faster, enabling anyone to access the resources they need on demand. However, this also prevents the security organization from understanding how these resources are configured, whether these configurations expose cloud accounts or sensitive data to the public, or how these implications may affect compliance with industry regulations.

As noted in the report, IBM Security’s 2020 Cost of a Data Breach report found that misconfigured cloud resources tied for the most common causes of malicious data breaches. Growing cloud usage increases the risk of these configuration errors, and some of the most common are extremely difficult to detect without the right tools or processes. This article highlights an example that has led to many high-profile data breaches.

The financial implications stemming from increased cloud usage in 2020 will be the center of attention for many reasons, and for good reason—runaway cloud costs are among the most common challenges as a cloud strategy matures. Security needs to be treated just as seriously.

To see all the insights and data from our report, download your copy here: How 2020 Changed the Way We Use the Cloud

Headshot Rachel Dines
Rachel Dines, Sr. Director of Product Marketing

Rachel Dines leads product marketing for CloudHealth by VMware. Previously, Rachel held positions leading cloud storage product marketing at NetApp and Riverbed. Prior to that, Rachel was an industry analyst at Forrester Research covering cloud resiliency, DRaaS and backup as a service.

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