The COVID-19 outbreak has impacted the lives of people all over the world and has forced organizations to make numerous changes to business operations. We’re living in a time where the phrase ‘business as usual’ no longer applies, but the phrases ‘modernize IT’ and ‘accelerate business transformation’ are more important now than ever before.
The pandemic has added pressure on IT teams who need to accommodate remote workforces and enable scalable infrastructure for their products and service offerings. Many industries are adapting to an increased demand for digital services, such as telehealth services, e-learning, online and mobile shopping, food delivery services, online banking, and more. Organizations have to adapt to what is happening now while also preparing their business for the future.
To better understand the impact of COVID-19 as it relates to public cloud spend, we’ve analyzed our customer base—more than 10,000 companies worldwide—to identify potential trends and draw insights based on their average cloud spend. This is the first within a series of blogs that we will publish related to this topic.
Trends in cloud spend by company revenue segment
At a global level, we saw a notable decrease in the average cloud spend per customer in February at 10%. Although February is a month that we traditionally see a decrease in cloud spend due to fewer days, it's also worth noting that as of January 31st, the coronavirus had spread to 18 countries, which would make February the first month where many countries faced significant business impacts.
Despite the fact that the dip from January to February was greater than usual, the months of March-May did have a net increase in cloud spend.
Looking at the global customer data segmented by company size for the month of February, we saw enterprises with an average increase of 1%, mid-market with a decrease of 12%, and small businesses with a decrease of 24%.
Looking at average cloud spend per month from January to May, we see that enterprises have increased spending 21%, whereas mid-market companies and small businesses are down 8% and 23% respectively.
The 21% increase in enterprise cloud spending makes sense as these large, global companies are forced to scale their infrastructure to meet new demands brought on by a growing remote workforce, as well as maintain infrastructure support for their products and services that are still in demand. It’s also not surprising that small-mid size businesses are lowering their cloud spend, as they’re more likely to be financially impacted by the pandemic due to decreased demand for products and services, budget inflexibility, and a lack of financial resources on reserve compared to their enterprise counterparts.
Trends in cloud spend by region
Analyzing geographic impacts, we saw that the Americas and EMEA stayed true to the global decline in February with an 8% and 7% average decrease respectively. APAC however, did not have a decline from January to February, and instead had a 2% increase in average customer spend.
Despite the declines and minimal growth in the aforementioned regions, the average cloud spend per customer for the year is up 7% in the Americas, 4% in the Asia-Pacific (APAC) region, and 3% in Europe, Middle East, and Africa (EMEA). The growth in each of these areas could potentially be attributed to increased cloud spend in select industries such as IT, Healthcare, and Retail for the Americas, Healthcare and Energy for APAC, and Healthcare and Telecommunications for EMEA. More of this analysis to come in future blogs!
Timeline of change in monthly cloud spend
The reason that these geographic regions are not following the same trend per se is because the pandemic has impacted these regions at different times and at different severities, and many countries have had different responses to remote working and quarantine policies. The month-to-month change in cloud spend by region below potentially correlates visually with global waves of impact. It’s likely we will be able to derive deeper insights as the year progresses.
Overall, our geographic analysis showed that despite the challenges that people and businesses are facing worldwide, there’s still an increased investment in average cloud spend per customer. Based on conversations with our customers, we can confirm that businesses worldwide are more closely monitoring cloud spend, identifying savings opportunities, and optimizing existing investments.