The cloud has officially gone mainstream.

For years, we have been discussing how early adopters and smaller organizations have been reaping the rewards of cloud technology. Now, as we enter what some analysts are calling the second wave of cloud adoption, large-scale enterprises and “slow adopters” alike are driving a new era in cloud deployments.

Larger organizations have historically been hesitant to move their critical applications to cloud environments due to concerns over security, latency, and connectivity. However, with continual innovation and development in these areas, CIOs have become increasingly comfortable hosting their mission-critical applications in the cloud.

What is driving larger organizations to the cloud?

The answer, as always, is customers.

Large-scale enterprises are seeking to develop new efficiencies to serve their customers better. In a recent interview, Aptean Senior Director of Product Management Jeff Atkins commented how transitioning to the cloud will be essential to the survival of larger, more sophisticated organizations.

“The cloud enables businesses running on legacy technology to move to a platform that will support their customers’ business needs. Having an open architecture allows bi-directional communication via a myriad of methods. This has proven to be key to ensuring their portfolio of continued operational capabilities during times of change.”

Larger enterprises are finally learning what early adopters have known for years. What the cloud delivers is the means to offload burdensome tasks, responsibilities, and risk. The renewed focus on core competencies is having a direct effect on their ability to better serve their customers, drive new revenue from cross-sell and add-on opportunities, and develop solutions that meet their clients’ future needs.

The State of the Cloud: Top Facts and Stats About Cloud Computing

Cloud Adoption

  • Demand for cloud will grow 18% this year to $246.8 billion in total worldwide revenue from $209.2 billion. (Gartner)
  • The global public cloud market is growing at a 22% rate and will top $146 billion in 2017, up from just $87 billion in 2015. (CIO)
  • Cloud computing spending has been growing at 4.5 times the rate of IT spending since 2009 and is expected to grow at better than 6 times the rate of IT spending from 2015 through 2020. (Forbes)
  • Software-as-a-Service (SaaS) is forecasted to grow about 20% to $46.3 billion. (Gartner)
  • More than 50% of IT spending will be cloud-based by 2018. (Forbes)
  • 60–70% of all software, services and technology spending will be cloud-based by 2020. (Forbes)

“Overall, there is very strong support for moving supply chain software to the Cloud – and clear intentions to do so over the next four years.”

Supply Chain Digest

Cloud Concerns

  • The top challenges for cloud buyers are expertise, security, and cost. (Right Scale)
  • Data security continued to decline as the #1 concern from 29% to 25%. (Right Scale)
  • Lack of expertise and lack of resources also declined with only 25% citing it as a major concern, down from 32% in 2016. (Right Scale)
  • 24% of cloud users still feel that cost containment is a major concern. (Right Scale)

Cloud ROI

  • 74% of Tech Chief Financial Officers say cloud computing will have the most measurable impact on their business in 2017. (Forbes)
  • Faster Deployments, Faster Time to Value, Ease of Upgrade, and Total Cost of Ownership are the top-rated perceived benefits of the cloud. (Supply Chain Digest)
  • A mere 6.5% of cloud supply chain users are “not satisfied” with software in the cloud thus far. (Supply Chain Digest)

The Cloud and Supply Chain

Cloud deployments in the supply chain have historically lagged behind other sectors; however, that is quickly changing. Cloud deployments for supply chain applications are rising as organizations are adjusting their long-term technology strategies. In Supply Chain Digest’s Supply Chain Software Trends Opportunities 2016 Benchmark Study, the overwhelming majority (73.4%) of respondents are planning for their critical supply chain software applications to be cloud-based.

When asked about their perspectives on buying supply chain software in the cloud,

  • 35.8% forecast all, or almost all, of their supply chain software will be cloud-based,
  • 37.6% forecast some, but not all, supply chain applications will be cloud-based,
  • 18.3% forecast a cloud-based software to be a very small part of their supply chain applications, and
  • 8.3% forecast cloud-based software is not likely in their future.

The Cloud and Warehouse Management Systems

DC Velocity reported that “one sector of the market has lagged behind the others in the march to the cloud: warehouse management systems (WMS).” The central nervous system of any high-performing warehouse has remained off-limits when it comes to the cloud. Until recently, concerns about response times and uptime have largely kept users from benefiting from cloud technology.

6.5% of WMS users are currently in the cloud. That number will jump to 35.4% by 2020.

Supply Chain Digest, Supply Chain Software Trends & Opportunities 2016 Benchmark Study

According to the same Supply Chain Digest study, only 6.5% of users are running WMS in the cloud right now. This compared to Transportation Management (TMS) at 25.9%, Global Trade Management at 38.6% and Supply Chain Planning at 22.4%.

By 2020, respondents indicated that WMS deployments in the cloud will jump to 35.4%. Other supply chain applications will primarily transition to cloud-only deployments, including Global Visibility at 92.4%, Global Trade Management at 84.7%, TMS at 75.4% and Demand Planning at 70.4%.

The study concludes by stating that “there is very strong support for moving supply chain software to the Cloud – and clear intentions to do so over the next four years.” We have reported that cloud deployments will become the default option for all enterprise organizations by 2020. While many supply chain software applications are not driving this trend, they are definitely following closely on the path to a cloud-dominated marketplace.

Thanks to all of the data contributors for this article including Gartner, CIO, Forbes, Supply Chain Digest, and Right Scale. Please make sure to click on the source links and visit their sites for more information, stats and facts about cloud computing. Download Supply Chain Digest's Supply Chain Software Trends & Opportunities 2016 Benchmark Study for more supply chain software trends.

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