Lights and Technology
03 January 2022

Cloud XaaS - The Perfect Alignment of Supply and Demand

The global XaaS market is expected to grow 25.5%! But what is the reason for the high rate of cloud adoption?

According to some estimates, the global XaaS market is expected to show a CAGR of 25.5% between 2021 and 2026. Being an impressive number, it is essential to understand this phenomenon so that companies that have not yet taken advantage of "as a Service" models can do so, with all the benefits. 
By José Gomes, IT Operations, Cloud & Security Associate Director at Noesis
As we know, in 2020, we saw a hyper-acceleration of digitization across the economy: in all segments, industries, and dimensions. The cloud, in its various configurations, played a central role in this process. Two IDC figures show us this: IT spending on enterprise cloud, both public and private, increased by 35% over 2019, while non-cloud expenditure decreased by 8%. 
In 2021, organizations are in the midst of a digital acceleration process (if they're not, they should be). They are taking the opportunity to get their house in order, make their operational processes more efficient, and find in sophisticated technology the missing piece to incorporate innovation and business models more adapted to this new normal, to prevail and gain sustainable competitive advantage in the market. 
The future of the cloud is looking bright. A slow but sustained economic recovery curve is expected, and the same principles will likely continue to apply until at least the end of 2022. We will likely continue to see the adoption of cloud services that are increasingly innovative and in line with the needs of IT in its growing role and relevance to business.
But what is the reason for the high rate of cloud adoption? In the first instance, it results from the fact that the value proposition of the cloud is based on models as a Service, which is perhaps the great virtue of the cloud. 
Let's see: 
• During the pandemic, as Service models were the ones that best responded to market needs: business reinvention, new business models adapted to new demand requirements, namely a focus on serving customers through digital channels, rapid incorporation of innovation, speed-to-market, acceleration of the transition to remote working, resilience, agility, scalability, flexibility (and other words ending in "ade"). 
• All this, while at the same time seeking to rationalize the scarcity of financial, human, and material resources (via the sharp reduction in top line and erosion of margins) through optimized investment strategies and increased operational efficiency. 
In terms of barriers, I don't think it makes much sense today for there to be barriers to adopting these models beyond the traditional security, lock-in, regulatory, intellectual property, or transnational policy-related ones. 
Additionally, resistance to change may still exist due to the growing adoption of hybrid and multi-cloud environments. This phenomenon, especially in organizations with large IT departments, may amplify almost philosophical issues in the sense of the re-foundation of the role of the 1T as an agent that ensures the governance of increasingly extended, heterogeneous and complex ecosystems. 
In summary, I would say that the cloud as a Service is well and here to stay. The cloud, in its different compositions and models, is unavoidable today. All studies point to the sustainable growth of the penetration of cloud models, with great emphasis on hybrid and multi-cloud models, not forgetting the 100% digital companies that are born with everything in the cloud (all-in-cloud). 
The growing trend of migration of applications to the cloud and their exposure as services over the internet will continue, simply because it is a trend that is aligned with the needs of the market: the channeling of scarce resources to more productive activities and higher value projects, the preference for models with no initial investment (OpEx vs. CapEx), the optimization of operating costs (by reducing skilled labor and obsolete licensing models, for example), rapid access to innovation, speed-to-market, etc. 
Crossing this with the cloud value proposition: agility, flexibility, scalability, pay-as-you-go, etc., one can understand why the IT market has intensified this trend of massification of application workloads to the cloud and democratized the subscription models (as a Service). 
Therefore, Cloud XaaS supply has aligned with demand.
Published (in Portuguese) in IT Insight