Cloud analysis: Multicloud is up, niche providers are down and availability is the big draw

Cloud enabled the world to avoid the worst economic effects of the coronavirus pandemic, and nearly every company has some sort of cloud presence. But despite its size and success, cloud remains a market where competition is difficult.

Three massive companies dominate the global cloud infrastructure- and platform-as-a-service (IaaS and PaaS, respectively) spaces: Amazon Web Services, Microsoft Azure and Google Cloud Platform. Practically every firm above a certain size has dealings with these giants, although there is some competition - mainly from other American multinationals like Oracle, Salesforce and IBM. European (SAP and OVHCloud) and even Chinese providers (Alibaba) have some niche market share - for example, Alibaba is dominant in East Asia - but really, it is AWS, Azure and GCP that rule the world stage.

This article deals with cloud vendors' IaaS and PaaS offerings, which many companies adopt as they grow. IaaS is a way for companies to access scalable compute, storage, and networking resources on demand, while PaaS is a cloud-based development and deployment environment; together, they form the backbone of modern business.

Use the graph below to compare the vendors above - the major UK market players - against each other, in areas that IT leaders consider to be of particular importance.

Nearly two-thirds (63 per cent) of the 180 IT leaders in our survey had adopted Microsoft Azure as an IaaS or PaaS service, far above any other company: even global market leader AWS had just a 28 per cent adoption rate among our UK-based respondents. Google Cloud Platform was even lower, at 10 per cent, but still comfortably among the top three; no other firm broke double digits.

These results reflect Microsoft's strong UK presence, continued global cloud growth (its market share is up 60 per cent in the last four years according to research by Synergy, at the expense of comparatively smaller firms like HPE and Fujitsu), and a tendency for our respondents to work at large organisations that favour Microsoft: more than half (52 per cent) were from companies with more than 1,000 employees.

What is also notable is the dramatic differences in the change from trial to adoption. Azure users fell 13 per cent (100 per cent to 87 per cent), while AWS and Google Cloud users were down 46 and 48 per cent, respectively: from 72 per cent to 39 per cent of respondents, and 27 per cent to 14 per cent.

Vendors trialled versus adopted

In terms of functionality, all cloud IaaS/PaaS providers offer similar elements: scalable, elastic compute, storage and networking, along with other more specialised services like DevOps, AI and analytics. AWS has the largest selection of additional services - users can even try out quantum computing - but the choice can be overwhelming for new customers. Azure, Google and the smaller providers have their own individual draws, as well.

Choosing the right cloud provider - or a selection of them - is key for your business, as the technology is key to supporting growth. Our research into the space provides an up-to-date snapshot of the market to help you to make the right decisions. By talking to hundreds of end users about their likes and dislikes concerning the major providers and their services, and the reasons for their opinions, we have built a comprehensive view of the UK market for cloud IaaS and PaaS.

The cloud IaaS and PaaS marketplace

Using cloud services can make sound business sense, although every company adopts it at different rates. However, the point of adoption is coming earlier since the coronavirus pandemic. Most respondents to our survey - more than half - had been using cloud IaaS and PaaS for at least three years.

The importance of a cloud strategy has never been higher, and only three per cent of respondents had no defined approach to cloud. The majority (59 per cent) were using a hybrid implementation, integrating public and private clouds; 36 per cent described themselves as cloud first (using the cloud for any new services, unless there is a reason not to); and 12 per cent as cloud only (deploying little or none of their own physical infrastructure).

Meanwhile, most IT leaders (37 per cent) said they tried to stick to a single IaaS/PaaS vendor for the majority of their activities; only 23 per cent were actively pursuing a multicloud approach, where they choose vendors based on best-of-breed service or pricing: an effective strategy, although more complex than using a single vendor. However, nearly a third of respondents expected to be using more cloud providers within the next two years.

Why do you use multiple cloud providers?

Cost and complexity are just two elements that can influence a cloud strategy, but there are many more at play. The most important topic today is availability, which should be no surprise with the acceleration of digital business seen in the last two years; half of respondents named it as a factor in their cloud decision-making. Both the GDPR (and other regulations) and the Covid-19 pandemic, while less important, were also key concerns.

The influence of the GDPR and other data protection legislation is also affecting preferences for cloud providers. While AWS, Azure and Google dominate the global IaaS/PaaS market, UK customers are increasingly looking at local and European firms like OVHCloud to get around data protection issues. Three-quarters of respondents said they were more likely to consider UK and European companies in the future.

The future appears to be one of multicloud, continuing a years-long trend as companies seek to expand service offerings and lower costs. The big change is in the stated preference for local providers, but whether that means anything remains to be seen: European firms are growing in revenue terms but the Big Three continue to eat into their market share.

The last two years have shaken up countless industries, but when talking about cloud services the big changes are mostly in the speed of growth and adoption - the ongoing effects of the coronavirus pandemic presenting more opportunity than challenge.