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The dynamic socio-economic environment of the last few years has had a lasting impact on cloud adoption. A global pandemic and stay-at-home mandates drove companies to accelerate their digital transformation, including shifting to cloud-based applications to support remote workers and quickly rolling out new cloud services to retain customers.
As we close 2022, digital transformation initiatives remain in the fast lane, and — if 2023 cloud computing trends are any indication — there’s no slowing down.
Gartner, Inc. forecasts that in 2023, worldwide public cloud spending will grow 20.7% to total $591.8 billion, up from $490.3 billion in 2022.
Moving to the cloud is no longer optional, as its benefits and new capabilities prove vital for moving forward, especially in an uncertain economy.
7 cloud computing trends for 2023
Businesses can’t afford to pump the breaks on digital transformation initiatives despite a looming recession. Thanks to the cloud, they don’t have to. The public cloud’s elasticity and scalability reduce the financial risk of innovation while enabling business agility when companies need it most.
In fact, by 2025, enterprises will spend more on public cloud services than traditional IT solutions, according to Gartner.
Here are some of the top cloud computing trends we can expect in 2023:
- Powering hybrid workers
- Cloud sustainability
- AI adoption boosts cloud growth
- Enterprises embrace sovereign clouds
- XaaS matures
- FinOps on the rise
- Cloud-native strategies gain ground
1. Leaning on the cloud to power hybrid work
Despite offices reopening, workers aren’t flocking back. The remote and hybrid work models that organizations developed during the pandemic are here to stay, and they’re using the cloud to support these flexible work environments.
Gartner estimates that global spending on desktop-as-a-service will reach $3.2 billion in 2023 as companies shift away from traditional client computing solutions to subscription-based virtual desktop services.
Cloud-based tools for communication, project management, videoconferencing, file sharing, knowledge management and more will remain a priority for companies as they look to support employee collaboration and productivity, anywhere and anytime.
The long-term hybrid work model is driving demand for cloud-based productivity technologies, along with collaboration tools, according to Gartner.
2. 2023 cloud computing trend: Sustainability goals depend on the cloud
In 2023, expect to see more companies leveraging the efficiency of the cloud to meet their sustainability goals.
According to an IDC survey, 83% of respondents agree sustainability is the most important criteria in IT buying decisions. By 2025, IDC expects 85% of organizations will see a 35% increase in sustainable efficiencies by using software and cloud-based infrastructures.
Because cloud service providers aggregate resources across their customers, CSPs can achieve economies of scale that smaller companies simply cannot.
Not only is it more efficient to run an application or workload in the cloud versus on-prem, but running an entire data center in the cloud produces less carbon than the equivalent of that data center running on-prem.
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3. In 2023, AI adoption isn’t a cloud trend, it’s a must-have
Enterprise adoption of artificial intelligence has been steadily growing as organizations look to increase operational efficiency and drive innovation. And the cloud is helping them get the most out of their AI investments.
A McKinsey & Company 2021 survey on AI found that 64% of “high performers” – those seeing the biggest bottom-line impact from AI adoption – run their AI workloads on public or hybrid cloud compared to 44% at other organizations.
The high performers also use public cloud to access more AI capabilities, including natural-language speech and facial-recognition.
According to the study, nearly two-thirds of companies planned to invest more in AI through 2023.
Compared to private data centers, public cloud infrastructure has the ample data storage and computing capability that are needed for AI and machine learning applications.
4. Enterprises embrace sovereign and industry clouds
The need to meet a growing list of data privacy requirements will drive the development – and adoption – of sovereign cloud solutions and industry-specific clouds in 2023.
The sovereign cloud concept isn’t new, but is gaining more traction with changes in the geopolitical environment. A sovereign cloud is designed to operate in a certain country or region; it’s a trusted cloud that upholds the data protection standards of local governing bodies.
A Capgemini study found that 71% of enterprise leaders from 10 countries including the US, UK, and Germany believe their organizations will look to adopt sovereign cloud services to ensure compliance.
This is both a market opportunity for cloud service providers as well as a benefit for regulated organizations that were previously restricted by what they could put in the cloud. According to Forrester, the move to sovereign cloud solutions is being led by German financial services providers and other European countries.
Demand for industry clouds tailored to meet an industry’s specific requirements and needs also will grow. Examples include specialized applications designed for retail, telecommunications, and utilities.
More than half of enterprises will use industry cloud solutions by 2027, according to Gartner.
5. XaaS cloud offerings mature in 2023
The growing maturity of “everything-as-a-service,” or XaaS, will also help drive cloud investments in 2023. Also sometimes called anything as a service, XaaS refers to the broad range of products and services provided to customers over the internet.
The global XaaS market reached $ 198.6 billion (USD) in 2021, according to research firm IMARC Group, which expects the market to reach $624.1 billion by 2027.
IMARC’s estimate includes storage-as-a-service, security-as-a-service, and network-as-a-service.
For end users, XaaS benefits include flexibility, scalability, speed, and costs savings through flexible payment models. They only pay for what they use instead of upfront licensing costs and on-site equipment.
The XaaS model is growing in the professional services industry, where firms are packaging digital capabilities, data, or assets with people-based services. The model allows professional service providers to scale their offerings while enabling organizations to pay for outcomes rather than time spent.
Transitioning a professional services firm to the XaaS business model isn’t easy, but we’ll see more newcomers as well as legacy firms developing and improving their offerings in 2023.
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6. FinOps becomes a top cloud computing trend
While organizations will spend more on cloud next year, they’ll also be closely monitoring that spending in an effort to get a handle on costs, especially as inflation continues to increase the cost of doing business.
This will drive investments in FinOps. According to IDC, 80% of organizations using cloud services will have established by 2023.
FinOps is a practice that’s developed within enterprises to manage cloud computing costs. Since costs with the on-demand cloud model fluctuate, it’s a way to gain visibility into cloud consumption across an organization.
Forrester expects organizations will turn to third-party cloud cost management and optimization platforms for an unbiased view of their cloud spending across multi-cloud deployments.
FinOps is a long-term, collaborative process that must be integrated at the start of a cloud initiative, according to Thomas Sarrazin, a senior enterprise architect at Capgemini.
“The vocation of the FinOps approach is to ensure “better” consumption of the cloud environments, and thereby offer IT customers true added value,” he wrote.
7. Cloud-native strategies trend up
A cloud-native strategy involves a modern approach to software development including microservices, containers, declarative APIs, and service meshes.
According to Forrester’s 2022 Infrastructure Cloud Survey, 40% of firms will take a cloud-native-first strategy in 2023 as they look to increase agility and efficiency while reducing costs.
Forrester expects more enterprises to adopt cloud-native strategies as they increasingly opt to run workloads in containers rather than legacy virtual machines because containers run more efficiently when leveraging technologies like AI/ML, the internet of things, and 5G. The growing adoption of containers will also drive organizations to modernize their application development processes.
Forrester’s survey found that containerized applications account for half of the total number of applications running in enterprises today, with Kubernetes orchestrating them at scale.
Cloud computing 2023 and beyond
Organizations are past the point of debating the value of moving to the cloud. Whether it’s to leverage advanced technologies like AI and ML, gain competitive edge, or to simply take advantage of a safe harbor during times of economic turbulence, organizations can’t afford not to move to the cloud.
The coming year will certainly bring about great change as cloud service providers evolve their offerings and enterprises make strategic moves to remain competitive, but one thing is clear: once in the cloud, there’s no turning back.
