Article posted by Tanner Luxner on March 15, 2021 to Flexera.com

The 2021 trend of cloud computing results show that enterprises continue to embrace multi-cloud and hybrid cloud strategies and are increasing spend with vendors across the board, citing a higher-than-expected cloud usage due to the COVID-19 pandemic restrictions throughout 2020.

Respondents have a higher cloud spend than ever this year, but they continue to struggle to forecast spend accurately as they significantly exceed their cloud budgets. As a result, optimizing existing cloud use remains at the top of companies' 2021 priority list for the fifth year in a row, followed by migrating more workloads to the cloud. With cloud computing usage growing at its fastest rate yet, respondents' adoption of Azure continues to draw closer and closer to leader AWS. Google Cloud adoption grew as well, beginning to reach numbers near Azure and AWS. The data in the report comes from the largest and longest-running survey on the use of cloud infrastructure that is focused on cloud buyers and decision makers. Their answers provide a comprehensive perspective on cloud computing trends in 2021. Data in the Flexera 2021 State of the Cloud Report-formerly known as the RightScale State of the Cloud Report-is based on a survey of 750 vetted IT professionals conducted in October and November 2020.  

Selected highlights of 2021 cloud computing usage trends:

Enterprises embrace multi-cloud 

• 92 percent of enterprises have a multi-cloud strategy; 82 percent have a hybrid cloud strategy
• On average, respondents use 2.6 public and 2.7 private clouds

Public cloud adoption continues to accelerate

• 36 percent of enterprises spend more than $12 million per year on public clouds
• 90 percent of enterprises expect cloud usage to exceed prior plans due to COVID-19

Organizations struggle to get a handle on growing cloud spend 

• Respondents estimate organizations waste 30 percent of cloud spend
• 61 percent of organizations plan to optimize existing use of cloud (cost savings), making it the top initiative for the fifth year in a row

Public cloud adoption is evolving 

• The top three public cloud providers for enterprises remain AWS, Azure and Google
• Azure is rapidly continuing to narrow the gap with AWS

Enterprises embrace multi-cloud

Enterprises have almost entirely embraced multi-cloud; 92 percent of respondents reported having a multi-cloud strategy. Eighty-two percent are taking a hybrid approach, combining the use of both public and private clouds.  

Organizations currently use multiple clouds

Organizations currently are using 2.6 public and 2.7 private clouds on average. Also, they're experimenting with an additional 1.1 public clouds and 2.2 private clouds. 

Enterprise cloud spend is growing

Thirty-six percent of enterprises said their annual spend exceeded $12 million, and 83 percent reported that cloud spend exceeds $1.2 million per year. These figures represent a large increase over last year in which 20 percent of enterprises reported an annual spend of more than $12 million, and 74 percent reported yearly spend of more than $1.2 million. 

Most believe COVID-19 will increase their cloud usage

The emergence of COVID-19 during last year's 2020 State of the Cloud survey prompted Flexera to add a question gauging how the pandemic might affect cloud plans. Virtually all countries implemented stay-at-home policies for consumers, work-from-home policies for employees and shutdowns of nonessential businesses throughout the majority of 2020, continuing into 2021. Some industries experienced massive economic impacts as a result of the pandemic. Ninety percent said cloud usage is higher than initially planned. Some of the increase is a result of the extra capacity needed for current cloud-based applications to meet increased demand as online usage grows. Other organizations may accelerate migration from data centers to cloud in response to reduced headcount, difficulties in accessing data center facilities and delays in hardware supply chains. As the pandemic runs its course, some organizations may also find that public cloud providers offer a more reliable option for business continuity.

Organizations struggle to get a handle on growing cloud spend

Organizations are continuing to increase their cloud spend rapidly. In doing so, they struggle to forecast their fast-growing cloud costs accurately. Respondents reported their public cloud spend was over budget by an average of 24 percent. Moreover, respondents expect their cloud spend to further increase by 39 percent in the next twelve months. This cloud computing trend means it's more critical than ever to get a handle on forecasting and cost optimization.  

Organizations waste significant cloud spend

Wasted cloud spend is a significant issue, becoming more critical as cloud costs continue to rise. Respondents estimate their organizations waste 30 percent of cloud spend. However, spend is likely less efficient as many organizations tend to underestimate the amount of waste. In working with customers to identify waste, Flexera has found that actual waste is 35 percent or even higher on average.

Optimizing spend is top cloud initiative for the fifth year running

For the fifth year in a row, optimizing the existing use of cloud (cost savings) is the top initiative for the year ahead, followed by migrating more workloads to cloud and better financial reporting on cloud costs.

Major public cloud provider use shifting among enterprises

Among enterprises, Azure is tied with AWS for breadth of adoption. Google Cloud, Oracle and VMware Cloud on AWS round out the top five. Among the top three, Google (49 percent running workloads) exhibited the most growth over 2020. The highest percentages for experimentation are with VMware Cloud on AWS and Oracle, which could drive more adoption in the future.

AWS and Azure adoption rates rose somewhat among enterprises over the previous year. Azure is now at 96 percent of AWS adoption among enterprises. Google adoption rates rose by 44 percent.

Enterprises are growing their public cloud footprint

Cloud-first policies and cloud migration are top of mind for senior IT leaders, particularly in enterprise environments. As a result, enterprises are rapidly increasing public cloud spend and workload volumes.

Cloud spend is a good indicator of how much an enterprise is using a public cloud provider. Fifty-three percent of enterprises spend $1.2 million or more annually on AWS. By comparison, 48 percent spend $1.2 million or more annually on Azure, indicating Azure's footprint is approaching that of AWS. Thirty-two percent of enterprises reported spending $1.2 million or more annually on Google.

Most heavily used PaaS services have shifted

Organizations are increasingly leveraging the many PaaS services offered by cloud providers. The top three are data warehouse, relational database as a service (DBaaS) and container-as-a-service. Organizations are driving this shift due to their growing interest in leveraging containers to speed deployment, scale operations and increase the efficiency of workloads running in the cloud.

Summary

The Flexera 2021 State of the Cloud Report reveals COVID-19 had a significant impact on cloud adoption in 2020. Multi-cloud continues to be the dominant strategy, adopted by nearly all surveyed enterprises. The most common multi-cloud approach among enterprises is a mix of multiple public and multiple private clouds. The report also indicates that organizations are becoming increasingly comfortable putting even sensitive data in the cloud.

Due to its complexity and dynamic nature, the multi-cloud environment brings many challenges, such as assessing the suitability of on-premises apps for migrating to the cloud.

The use of public clouds continues to grow dramatically in all organizations. This growth has driven a significant increase in public cloud spend, and the COVID-19 outbreak may have driven that spend even higher. As a result of continually increasing cloud spend, optimizing the existing use of cloud (cost savings) continues to be the top cloud initiative for all organizations for the fifth year in a row. Organizations are leveraging automated policies to continually scan and optimize their cloud costs.

Organizations are moving to the cloud because of its scalability, economy and reach, and are using a variety of metrics to measure the resulting business value of cloud. The many advantages delivered by the cloud have proven to be especially valuable as organizations adapted over the past year to meet the rapidly evolving needs presented by the COVID-19 pandemic's impact on business.