The main challenges hindering cloud computing

Cloud computing is the backbone of countless services and platforms. We often don’t even realize how much of our daily life relies on cloud computing, and while the cloud does solve a lot of problems and challenges, it also has its fair share of issues to deal with on its own. Here, we will explore some of the key challenges which are hindering the growth of cloud computing.

According to Eurostat, 41% of EU enterprises used cloud computing services in 2021. The most popular services were the obvious ones – email and storage. According to the data which was collected in December 2021, a whopping 75% of Sweden’s companies use the cloud, in comparison to Bulgaria that came in last with just 13%.

Other interesting stats show that 73% of cloud-using enterprises rely on complex services, for their security improvement, database hosting, application development, and testing and deployment. Eurostat says 61% of companies use the cloud for office applications and overall, the use of cloud computing increased 5% compared to 2020.

And while most companies rely on basic cloud services, this doesn’t mean other segments aren’t getting attention. Quite the opposite. It’s understandable that most companies decide to dip their toes in the cloud with basic services, but after they see the benefits, many start to explore other opportunities, too.

Eurostat notes that in 2021, 72% of large enterprises used the cloud – a 7% increase from 2020. Medium-sized companies also increased by 7% to 53% with small companies using the cloud the least – just 38% of them, with a 5% jump.

There’s also a healthy jump in cloud computing use in specific sectors. For example, the increase in the retail trade sector is 7%. Naturally, the IT and communication sectors are the biggest cloud users – 76%. The professional, scientific and technical enterprises come in second with 56%. All other industries are below 50% when it comes to the share of companies using the cloud.

Bad or Great news?

This data can make some people think that cloud computing isn’t developing well and isn’t as popular as first expected. On the contrary, there’s steady growth in all types of cloud services, sectors, industries, etc. It’s small but steady, and it shows that companies are continuing to invest in the cloud more and more.

However, all of this also tells us that there’s still enormous potential in the cloud computing segment; we can expect a steady cloud market for years to come. There is a lot of room for innovations and new services which could have a disruptive effect in certain segments.

There’s also room for growth in specific service models. For example, cloud Software-as-a-Service is used by 94% of all types of companies. The use of cloud Infrastructure-as-a-Service is above 73% for all sizes of companies. And the use of cloud Platform-as-a-Service is below 38% and with huge room for growth.

That’s not to say it’s going to be easy. There are some cloud challenges which the industry will have to solve along with its expansion and development. Let’s explore them.

Where are the chips?

The global chip shortage hampered a lot of ambitions during 2021. The wait times for various IT equipment ballooned from weeks to months and months. There are still conflicting forecasts on when the problem will be solved. Some analysts expect that the chip shortage will start to ease by the middle of 2022 at least for some main industries, where as other analysts predict the shortage will continue well into 2023. For sure it will take time until chip availability is stable and predictable enough, and until that happens, the cloud will suffer a bit.

The chip shortage affects enterprise data centers more than cloud providers, says Infoworld. Cloud providers are less sensitive to chip price and availability issues as they have much better management and sharing of their resources. They are used to constant resource management, and thus their plans are stronger and better-managed.

Many large cloud computing providers are taking control of the overall process of chip development and deployment by making their own so that they can adapt the hardware to their software goals. As such, we can expect that the chip shortage will have a lesser impact on the industry.

But that can only go so far. One of the reasons for the chip shortage is the lack of certain materials. So, even if there’s production capacity, the supply chain simply struggles to get enough materials for the factories. So, the industry will be – and is – affected by the shortage even if it is less than other segments.

There are other side effects, too. The chip shortage affects other electronics like laptops, smartphones, etc. These are devices that enterprises rely on and need for their workflow and to access said cloud services. So, if enterprises’ upgrade cycles are disrupted because of chip shortage, that could affect their cloud strategy.

The shortage will also bring in some benefits. Some enterprises will see greater security for their operations in the cloud. And service providers will be even more motivated to invest in innovations and new features to draw even more interest towards their platforms.

Energy efficiency will matter more

With the near certain constant growth of cloud computing, it means investments in infrastructure and data centers will continue as well. The usage will also rise on a constant basis. The result? A constant rise in energy consumption. During the COP26 conference for the climate change it was estimated that the telecom industry will use up to 20% of the global electricity by 2030. A serious chunk of that will be due to data centers and the Internet as a whole.

So, cloud service providers must invest and work seriously on energy efficiency. This means a lot of innovations and improvements on a continuous basis. Initial investments can be hefty and the switch to sustainable energy sources will be a challenge. Despite that, it’s already underway and many providers have announced carbon neutral goals, including Neterra.

A paper on Nasdaq noted that improving the energy efficiency of the cloud is quite the challenge. It also points out five key measures already becoming popular among cloud providers:

1. The use of renewable energy sources.
2. Reusing the generated heat from the servers to warm up nearby buildings.
3. Improving the overall energy efficiency and cooling of data centers.
4. Ensuring proper recycling of old hardware to get the most out of it.
5. Use of long lifespan hardware containing less toxic materials.

Moving to sustainable energy sources is of great benefit for cloud providers, and not just  for the obvious reasons. Yes, this will lower their long-term costs. Yes, it will make them compliant with future regulations.

There are other indirect benefits, too, like improving their overall reputation on the market, attracting more customers that rely on carbon-neutral services to lower their own corporate carbon footprint, and it makes their costs more predictable, which is key in any business venture.

Regulations and politics

As the cloud becomes more prevalent, it will continue to draw the interest of governments. There are already a lot of geopolitical battles which affect the IT industry – from banngs certain technologies, to business restrictions, and calls for regulations, etc. Some of the largest cloud providers are owned by IT giants and there are calls to split these big companies into smaller ones.

Countries and regions also have vastly different approaches, too. The EU, for example, is going heavy on the data security front. Other countries are demanding IT companies of certain sizes to open local offices and process the data of their citizens within their borders. Sometimes this will mean severe changes to a company’s plans, including the need to add more facilities or risk fines and even bans.

So, it will not be easy for cloud providers to handle these issues. In fact, this is probably the most complex issue as it changes constantly and it may have drastic, sudden impacts on bottom lines, roadmaps and even service availability.

Should we worry about vendor lock-ins?

One of the main benefits cloud computing providers tell their potential customers is freedom. Once you get on the cloud, you can use it everywhere you have internet access. Clients also expect they can mix and match services as they see fit, althoughoften that is not exactly the case.

Sometimes the reason is not the cloud provider itself, but the hardware it uses. This is the so-called vendor lock-in where customers and/or cloud providers are “locked” into using only specific vendor(s) for their services and/or hardware. Often this is shown as one of the biggest IT problems in general.

Over the years a lot has been done to ease vendor lock-in and improve interoperability. Sometimes actually, that’s  unavoidable. For example, when you must use specific, patented technologies which are owned by said vendor. The lock-in isn’t necessarily bad  if done right, i.e. offer at least some interoperability.

The industry seems to have managed to solve this rather well -or at least there’s no visible issue for the customers. This is what a 2020 Bain & Company survey tells us: two thirds of CIOs say they would prefer to use cloud services from several vendors to avoid a lock-in. Despite that, 71% actually only use one provider, so the remaining 29% spend about 95% of their cloud budget on only one provider anyway. So, it seems that – at least for now – customers are happy to rely on one main provider and have a few more just as a backup.

As we can see, there aren’t really major issues in the cloud computing segment. Most problems are already being worked on and will be improved and solved. The major issue remains the outside the industry and in the hands of politicians and regulators. Apart from that, the cloud will solve all issues in time and will continue to innovate.

Another topic, that could be interesting for you, might be this one:

2022 could be a big year for the cloud industry. Here’s what to expect