Cloud Computing 2.0 will drive the Next Phase of Digital Transformation: IDC

In this interview with Rajiv Ranjan, Associate Research Director, IDC, Amit Singh explores the realm of Cloud Computing 2.0 and its impact on technology landscapes and digital transformation efforts across industries. Amidst the challenges posed by the COVID-19 pandemic, the rapid adoption of cloud services has presented new demands and complexities. Rajiv sheds light on the key technologies driving the next phase of innovation and transformation in the cloud market, addressing evolving business needs and providing insights into use cases, benefits, challenges, and the influence of cloud-native applications and architectures.

How does Cloud Computing 2.0 shape the overall technology landscape and digital transformation efforts across industries?
During the COVID period and immediately after that, the adoption of cloud services was quite strong and fast for business continuity, and support virtual workforce. The public cloud grew largely during this period. However, this led to new set of demands and challenges. Customers went to the public cloud in a hurry without understanding the services in detail, whether an application needs to be on-premises or on the cloud, and with little understanding of application best-fit scenarios. This led to higher cloud costs, performance issues as well as heightened security concerns as applications were not on-premises. In addition to that, a virtual or a hybrid workforce would generate data at many remote locations through their devices. Capturing, managing, and utilizing this data has come up as a big challenge.

The next phase of technologies that will see a hike in demand in the cloud market are already and would continue to address the above issues:
• Hybrid multi-cloud architectures for application best-fit scenarios, avoid vendor lock-in
• Growth of private cloud in India due to the need for higher performance, greater control of applications, and regulations, and utilizing the existing skills of IT teams.
• Containerized applications supported by Kubernetes which would drive microservices architecture. Helps to further increase compute resource utilization, and run and manage individual applications efficiently.
• Serverless computing for short-term computing requirements where end users want to pay only when they use compute resources and do not want to deal with sourcing and configuring compute instances on the cloud.
• Artificial intelligence is probably the hottest topic now. AI applications will grow fast and would be driven by public cloud services. The need for process automation, improving customer experience, higher operational efficiency, and the design of innovative products are key drivers.
• Data modernization: Next-generation cloud databases and data lakes will see higher adoption as organizations struggle to manage and extract valuable insights from enterprise data. One of the other challenges is the inability to share operational data with key stakeholders due to data being captured in different formats, poor data quality, and governance issues.

Cloud computing 2.0 will certainly drive the next phase of digital transformation as it will help modernize the current legacy IT infrastructure to make it digitally fit and ready for the next wave. Cloud computing will drive modernization and enable the implementation of next-gen technologies like AI, IoT, Blockchain, Kubernetes, Data lakes, etc. Modernization would be largely driven around 3 areas: Infra modernization, Application modernization, and Data modernization.

What are the key drivers behind the emergence of Cloud Computing 2.0 and its response to evolving business needs in various sectors?
Here are the drivers of cloud computing 2.0:
• Need for increased business agility and digital business innovation
• Better data-driven decision-making to service customers better and drive process improvements
• Need for increasing customer experience and satisfaction
• Employee productivity improvement

Business priorities have changed and the above-mentioned points are the top priorities for enterprises today. To support this, digital transformation is imperative and hence need for next-generation cloud technologies

What are the specific use cases and industry applications where Cloud Computing 2.0 technologies make the most significant impact?
A few of the use cases are:
• AI: KYC verification, customer onboarding for bank and insurance customers
• Edge computing: Oil exploration sites, local computing, and IoT solution requirements in manufacturing layout site locations
• Data lakes, analytics: Creating hyper-personalized products and services by retailers for their customers, personalized financial products on mutual funds, stocks based on customer data on their internet browsing, and their interests.

What are the potential benefits and challenges businesses may face while adopting and integrating Cloud Computing 2.0 solutions?
Here are the benefits of adopting Cloud Computing 2.0 solutions:
• Flexibility/Mobility – Enables Hybrid workplace as applications can be accessed from anywhere, allowing employees to work from anywhere, at any time
• Automate existing processes and streamline them
• Increased Agility & Scalability that enables bringing new products faster to market. Responds efficiently to peak business needs
• New Revenue Streams – Companies can launch new innovative digital products and services
• Cut CAPeX costs by migrating to the cloud or as a service model.

However, there are many challenges that enterprises face:
• Lack of adequate skill sets to manage the transition to new technologies and manage them
• Difficulties in integrating well with on-premises applications, other public cloud services, and edge
• Performance and Reliability depending on applications and workloads
• Build a common control plane to manage different workflow and management tools of service providers
• Unified security monitoring and management systems across public clouds
• Modernization costs could go higher than allocated budgets due to a lack of visibility
• Poor data quality, governance, and security challenges

How does the Cloud Computing 2.0 paradigm influence the development and deployment of cloud-native applications and architectures, and what advantages does it offer organizations?
Cloud computing 2.0 is significantly driving application modernization. Transforming legacy applications to cloud-native architecture is essential now. Technologies under the 2.0 phase drive the following:
• Helps to decide whether a legacy application needs to be re-hosted (lift and shift), or re-architected, rewritten, or refactored based on business priorities. Cloud computing 2.0 enable these technologies and helps turn legacy apps to cloud-native
• Micro-services architecture is enabled by cloud computing 2.0, which helps cut down on heavy resources and complexities of traditional virtual machines. Also, helps manage, and edit applications in isolation.