EuroCloud Native and ISG have once again undertaken a survey among German IT decision-makers regarding their use of cloud strategies. The core finding: the appeal of public cloud-based development and operation concepts is markedly increasing. However, a fundamental paradigm shift is still pending.
The incremental shift to cloud native is continuing: 27 per cent of IT decision-makers state that their companies have already set up applications in public cloud environments and also have them running there. Compared to the previous year, this marks an increase of five percentage points – this is one of the key results of the user survey, which the market research and consulting company Information Services Group (ISG) (Nasdaq: III) conducts annually together with EuroCloud Native (ECN), the cloud native initiative of the industry association EuroCloud Deutschland, in order to investigate the interest of German user companies in cloud native approaches. As in the previous year, 200 IT decision-makers from SMEs were surveyed for this purpose.
“The survey results show a significant increase in the willingness of German enterprises to switch to cloud native applications, especially among companies in the midmarket,” says Heiko Henkes, Director and Principal Analyst at ISG. Once again, the cost pressure factor is one of the most important drivers of this development. Against the backdrop of worsening inflation, nine out of ten respondents see cloud native solutions as an important means of reducing their IT service operating costs. This approval rating is a definite top score. However, there is also increased satisfaction with the content-related value propositions of the cloud native approach – above all the automation possibilities in capacity allocation and the gains in speed when restoring and restarting cloud native-based solutions. In addition, the fact that there is less regulatory concern about cloud solutions in SMEs compared to the previous year is having a positive effect on the adoption of cloud native concepts.
Small steps policy
Notwithstanding these findings, the authors of the study go on to say that the actual paradigm shift in the areas of development, deployment and operation is still pending. As was the case in 2021, this year’s survey also reveals that cloud native concepts are rarely harnessed to their full potential. Instead, the majority of companies continue to rely on a policy of small steps. This is confirmed by the market experience of Felix Höger, Board Member at EuroCloud Germany: “In the current economic environment, even pioneering companies are increasingly taking a cautious approach, focusing cloud native budgets on smaller-scale development projects that pay for themselves in the short term.”
The fact that smaller-size projects currently predominate is evident from the answers to the question of what kind of development projects are used in software engineering to switch from monolithic to cloud native approaches. In this instance, 41 per cent of decision-makers admit that they are currently focusing primarily on application customisation. In contrast, only a quarter of respondents say that new developments are on their current cloud native roadmap.
In explaining why this is the case, the authors of the study point out that new developments are exposed to a considerably higher risk of being faltered and possibly even disrupted by the lack of skilled personnel. The situation is aggravated by the fact that staff turnover is increasing in parallel to the shortage of skilled workers. The latter causes the onboarding workload to rise sharply, especially in IT. In order to be able to control the project goals despite all of this, most cloud native teams are opting for smaller and thus more easily manageable projects.
The extent to which the labour market shortages influence investment decisions is confirmed by the answers to the question concerning the current greatest obstacle to implementing cloud strategies. Although the “lack of skilled workers” was already the factor cited by far the most in 2021, this year’s figures are another eleven per cent higher: the survey thus indicated an increase from 37 to 48 per cent. In the meantime, almost every second decision-maker sees the lack of skilled workers as the most significant obstacle to implementing their planned company roadmap.
Door opener No. 1: Cost reduction
Against this background, the market opportunities for specialised cloud native service providers continue to grow. “Enterprises are particularly receptive to providers who can not only prove their expertise and effectiveness, but also demonstrate the cost savings that can be achieved by switching to cloud native,” says Dr. Nils Kaufmann, Head of EuroCloud Native. The fact that 92 per cent of those surveyed see the reduction of operating costs as an important or even very important factor when it comes to evaluating cloud native projects reveals the keen interest that the majority of IT decision-makers have in the cost issue. “This is the highest ranking in the list of factors surveyed by ISG. However, central technical aspects come in immediately after this. For example, the factor of automated scaling was cited as a top factor by 88 per cent of respondents, while the rapid recovery of cloud services was cited as an important objective for 87 per cent of the respondents.
About the Information Services Group (ISG)
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 800 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.