The ninth annual Flexera 2020 State of the Cloud Report highlights the latest cloud computing trends, with a focus on infrastructure-as-a-service and platform-as-a-service.
The 2020 cloud computing results show that enterprises continue to embrace multi-cloud and hybrid cloud strategies and are already using more than two public and two private clouds on average.
Respondents expect to increase cloud spend by almost 50 percent this year, but they still 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’ 2020 priority list for the fourth year in a row, followed by migrating more workloads to the cloud. A majority of enterprises expect to increase cloud usage due to COVID-19.
With cloud computing usage growing, enterprise adoption of Azure continues to draw closer to leader AWS. Google Cloud adoption grew even more strongly to narrow the gap with Azure. Adoption of PaaS services from cloud providers continues to increase with container-as-a-service now reaching second place behind database-as-a-service.
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 2020. Data in the Flexera 2020 State of the Cloud Report—formerly known as the RightScale State of the Cloud Reports—is based on a survey of 750 vetted IT professionals that was conducted in February and March 2020.
Selected highlights of 2020 cloud computing usage trends:
Enterprises embrace multi-cloud
• 93 percent of enterprises have a multi-cloud strategy; 87 percent have a hybrid cloud strategy
• On average, respondents use 2.2 public and 2.2 private clouds
Public cloud adoption continues to accelerate
• 20 percent of enterprises spend more than $12 million per year on public clouds
• 59 percent of enterprises expect cloud usage to exceed prior plans due to COVID-19
Organizations struggle to get a handle on growing cloud spend
• Organizations are over budget for cloud spend by an average of 23 percent and expect cloud spend to increase by 47 percent next year
• Respondents estimate organizations waste 30 percent of cloud spend
• 73 percent of organizations plan to optimize existing use of cloud (cost savings), making it the top initiative for the fourth 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 narrowing the gap with AWS in both the percentage of enterprises using it and the number of virtual machines (VMs) enterprises are running in it
• Among the larger providers, Google experienced the fastest growth in enterprise adoption since last year’s survey
Use of public cloud PaaS services is rising
• At 63 percent, relational DBaaS has the highest adoption among enterprises
• AWS, Azure and Google container-as-a-service offerings are experiencing notable growth
Enterprises embrace multi-cloud
Enterprises have almost entirely embraced multi-cloud; ninety-three percent of respondents reported having a multi-cloud strategy. Eighty-seven percent are taking a hybrid approach, combining the use of both public and private clouds.
Organizations currently use multiple clouds
Organizations currently are using 2.2 public and 2.2 private clouds on average. Also, they’re experimenting with an additional 1.2 public clouds and 1.7 private clouds.
Enterprise cloud spend is growing
Twenty percent of enterprises said their annual spend exceeded $12 million, and 74 percent reported that cloud spend exceeds $1.2 million per year. These figures represent a large increase over last year in which 13 percent of enterprises reported an annual spend of more than $12 million, and 50 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 the survey prompted Flexera to add a question that gauges how the pandemic might affect cloud plans. Virtually all countries have implemented stay-at-home policies for consumers, work-from-home policies for employees and shutdowns of nonessential businesses. Some industries are experiencing massive economic impacts as a result of the pandemic. Cloud demand will undoubtedly shift due to these events.
A subset of 187 survey respondents indicated how they expect COVID-19 to change their cloud plans. More than half said cloud usage will be higher than initially planned. Some of the increase resulted from 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 23 percent. Moreover, respondents expect their cloud spend to further increase by 47 percent in the next 12 months. This 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 cost continues 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 fourth year running
For the fourth 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 expanding use of containers.
Among enterprises, Azure has nearly closed the gap with AWS in the breadth of adoption, while Oracle has moved into the number four spot, followed by VMware Cloud on AWS.
AWS and Azure adoption rates rose somewhat among enterprises over the previous year. Azure closed the gap slightly, reaching 91 percent of AWS adoption among enterprises as compared to 90 percent in 2019.
Google exhibited the most robust growth among the top five. Google adoption rates rose by 70 percent—a sizable increase from 2019.
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. Forty percent of enterprises spend $1.2 million or more annually on AWS. By comparison, 36 percent spend $1.2 million or more annually on Azure, showing Azure’s footprint is approaching that of AWS. Only 18 percent of enterprises reported spending $1.2 million or more annually on Google, which is less than half of AWS or Azure.
The number of VMs deployed is also a measure of the extent of enterprise use of each cloud provider. Based on this metric, Azure is approaching AWS in the percentage of enterprises with at least 100 VMs. Fewer respondents said they’re running 100 or more VMs in Google. Meanwhile, Google has experienced large growth in this metric since 2019.
Most heavily used PaaS services have shifted
Organizations are increasingly leveraging the many PaaS services from cloud providers. The top three are relational database as a service (DBaaS), container-as-a-service and data warehouse. The most noticeable change is that container-as-a-service jumped from sixth place in 2019 to second place this year. 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.
Growth rates for the various cloud services provide visibility into how enterprise usage is changing over time. The top five fastest-growing cloud services for 2020 include IoT, container-as-a-service, machine learning/AI and serverless.
The Flexera 2020 State of the Cloud Report reveals that multi-cloud continues to be the dominant strategy, with nearly all surveyed enterprises adopting it. The most common multi-cloud approach among enterprises is a mix of multiple public and multiple private clouds.
The use of public clouds continues to grow dramatically in all organizations. The growth has driven a significant increase in public cloud spend, and the COVID-19 outbreak may drive 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 fourth year in a row.
Organizations are moving to the cloud because of its scalability, economy and reach. And they’re using several metrics to measure the resulting business value of cloud. Cloud advantages have proven to be especially valuable as organizations have had to adapt nearly overnight to the work-at-home explosion intensified by COVID-19.
For the complete survey results, download the Flexera 2020 State of the Cloud Report.