Bain Report Examines How Investments in IoT, the Hybrid Cloud, AI, and Flexible Supply Chains Drive Growth
7Park Data provided Bain & Company with data on enterprise cloud computing spend for its recently released inaugural global Technology Report. It’s an exhaustive examination of how the pandemic continues to create challenges and opportunities for technology companies, and how these trends may impact other industries like commercial real estate.
We have been regularly reporting on how the pandemic has accelerated enterprise spending on the cloud platforms and services of the Big 3: Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). Our recent look at the database market explains why our analysts expect database spending on Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP) to eclipse database market leader Oracle within the next three-to-five years.
Bain acknowledges this trend of companies migrating their applications and data stores from data centers to the cloud began before the coronavirus struck, and predicts it won’t slow when a vaccine becomes widely available.
“Early in the pandemic, IT decision makers said they expected decreased spending on software maintenance contracts and on-premise IT to continue at least through 2021. The expected spending reductions have only grown more pronounced as the pandemic has unfolded.”
More than two-thirds of the CIOs Bain surveyed said they plan to use multiple public cloud infrastructure providers to avoid vendor lock-in and control costs. However, in a revelation that should be good news to investors who are bullish on AWS, Azure and GCP, few companies have actually done so.
The report includes this chart we developed to illustrate Bain’s findings that more than 70% of respondents are using only one provider. The minority who do use multiple public clouds spend more than 90% of their public cloud budgets with one vendor.
One reason why enterprises have made implementing cloud computing a priority is to accommodate how their employees have adapted to working from home for such an extended period of time. In fact, more companies are extending their work from home policies into next year or making them permanent.
And as 7Park Data’s Data Scientist Eugene Wu explained in his August article for Propmodo, the Bain report confirms that some CRE asset classes investors considered safe before the pandemic struck remain among the most risky.
“The implications for office space and real estate alone are staggering. Many technology companies are considering allowing significant portions of their staff to work from home permanently; reducing their office footprint; and replacing large banks of cubicles with fewer, better-equipped hoteling spaces,” write the report’s authors.
Follow this link to view and download the Bain report, “Technology Report 2020: Taming the Flux.”