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Author's profile photo Rahul G Kargal

Industry Cloud: Early adoption and emerging trends

Ever since organizations the world over began embracing cloud computing, its benefits of scalability, business continuity and enhanced collaboration have been garnering attention. Add to this the overarching value of being able to achieve increased control on CapEx planning, and what you get is an irresistible business transformation proposition.

Gone are the days when businesses – both large and small – felt the need to maintain data centers on their premises. Gartner estimates a growth of 23.1% on the global public cloud spend in 2021 – a surge that will touch the $332.3 billion mark, up from $270 billion in 2020. Also, in the wake of the ‘work from home model’, organizations are expected to increasingly route their IT spending towards the cloud. By 2024, the cloud is set to take up 14.2% of the global enterprise IT spend.

While these trends are indeed encouraging, the adoption of cloud computing hasn’t been consistent across all industries. Data regulations in certain industries make adoption an arduous task. Cloud providers are, therefore, offering industry-specific applications and simplifying the migration of legacy and/ or on-premise systems to the cloud. Such initiatives that address the specialized needs of a given industry are called Industry Cloud.

The Industry Cloud trend

Public cloud providers such as Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform now offer custom solutions to organizations that operate in industries that experience regulatory restrictions on software development or data protection guidelines.

Similarly, specialized industry-focused cloud service providers such as SAP, Veeva Systems, NTT DATA, Medidata and NCR offer tailored industry-specific solutions. These range from customer relationship management (CRM) and enterprise resource planning (ERP) services offered in a Software-as-a-Service (SaaS) form, to platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) offerings.

Organizations in industries that can migrate to the cloud with ease have already done so while the others are on their way. For the healthcare and pharmaceutical industry, healthcare cloud services provide data-driven services that are compliant with HIPAA regulations. Similarly, cloud computing services enable organizations in the financial services industry to comply with Payment Card Industry (PCI) and Sarbanes-Oxley (SOX) regulations.

Per IDC, in 2018, the expenditure for Industry Cloud in healthcare was $12.1 billion. The expenditures in the finance industry were $7.4 billion, while those in the public sector stood at $8.4 billion.

Adoption scenario

Despite the benefits that Industry Cloud offers, a survey found 64% of respondents were either using Industry Cloud services or planning adoption over the next year. However, 18% of the respondents were uninterested in adopting Industry Cloud solutions.

What precisely are the factors that determine the adoption and the selection of an Industry Cloud provider thereafter?

Cost of implementation, speed, agility, regulatory compliance and the vendor’s experience are often cited as the most common factors. And when migration to Industry Cloud does take place, companies often find the outcomes to simplify management, administration and enhance data protection measures. Additionally, the adopters have found cloud migration to be simplified and the ensuing business processes to be agile.

On the other hand, the study did find select organizations (37%) to have experienced adoption and migration challenges. Similarly, other companies (41%) faced roadblocks in integrating Industry Cloud services with their existing business processes. Others have also cited costs and complexities in management and administration as negative factors of Industry Cloud.

Sectors embracing Industry Cloud

The annual budgets for Industry Cloud services vary from as little as $10,000 to upwards of $1 million. This, coupled with efficiency benefits, has given organizations the flexibility to adopt Industry Cloud solutions instead of on-premise or general-cloud options.

Per Forrester Research, a vast majority of North American manufacturing firms are now using the cloud. Similarly, retail organizations are migrating to the cloud as well. The key driver here is the large volume of data that needs collating.

The government sector has also taken a liking to Industry Cloud since its data can be maintained as classified and withheld in a given country. In the healthcare industry, cloud computing is helping healthcare professionals better manage patient information. For financial institutions such as banks and credit unions, Industry Cloud solutions that address their core banking operations while complying with regulations are highly encouraging.

In the energy sector, organizations are looking to change their billing systems and are finding new ways to improve customer experiences. Industry Cloud is now helping the sector track energy consumption by providing real-time data for analysis and maintenance.

And finally, the agriculture sector is slowly but surely innovating with Industry Cloud while leveraging the Internet of Things (IoT) to harness soil, manure, produce and other information to enhance crop production.

The future of Industry Cloud

As enterprises constantly seek disruptive capabilities to innovate in their businesses, for several, Industry Cloud could well be the tool to hand them an edge. Industry Cloud enables organizations to create industry-specific features and have them built-in as a part of their cloud platform service.

In doing so, organizations need not worry about regulatory compliance, platform modernization and infrastructure management. With all these responsibilities transferred to the cloud service provider, organizations can now focus on doing what they do best – create innovative offerings, but in a new cloud-native environment.

As the market disrupts, organizations will constantly have to re-evaluate their technology stand and adopt solutions that are best-in-class and appropriate for their business.

Soon, Industry Cloud will become ecosystems where partners, clients and third parties come together to serve customers on a single platform. Instead of building features themselves, enterprises in an industry will be able to take advantage of capabilities brought in from all the players in the Industry Cloud ecosystem.

For more on Industry Cloud, visit the SAP Industry Cloud Community.

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