Many companies have referred toAmazon AndMicrosoft As the only two options when it comes to adopting cloud computing. But IT executives now realize they have the power to bargain in an increasingly competitive field.
Businesses and governments sign cloud computing contracts with a variety of vendors, select certain characteristics and let vendors compete in order to keep costs low, say senior executives and analysts in the field. This opens up business opportunities for companies like Google at Home Alphabet , Oracle Corporation and IBM, although Amazon and Microsoft are still dominant and have the bulk of revenue from the cloud.
Credit reporting company Experian began moving toward cloud computing with Amazon’s service in 2014. It has since added services from Microsoft, Google and more recently Oracle, whose technology has historically been used in its own information centers, said Marvin Lally, systems manager at Xperian.
“The fact that there are more options is good,” he told Eli, adding that they create competitive pressures “that we want to take advantage of.”
Companies like AT&T also sew a network of vendors, including Microsoft, Google and others.
“We are seeing more and more customers adopting a strategy of using many cloud services simply because some of the workload works better or more efficiently on other clouds,” said Clay Maguric, vice president of Oracle’s cloud infrastructure.
Expenditure on cloud infrastructure is expected to reach $ 106.8 billion in 2022
Global spending on cloud computing infrastructure rose 32 percent last year to $ 59.2 billion, according to Gartner, and is expected to reach $ 106.8 billion in 2022.
Growth in cloud spending accelerated during the epidemic, helping Amazon and Microsoft introduce another round of strong quarterly earnings later this week. While using multiple clouds can hurt Amazon and Microsoft sales, in most cases they get at least some of the customers’ expense.
Wall Street expected Amazon to announce more than 30% year-over-year sales in cloud sales in its third-quarter results on Thursday. Microsoft’s Aura cloud services revenue, which has been the focus of investors’ interest, increased by 51% compared to forecasts for an increase of 43.1%.
92% of companies this year had a multi-cloud strategy
Not only corporate buyers are rethinking their spending on information technology. When the CIA began a significant move to the cloud, the agency signed an agreement with Amazon in 2013. Last year, towards the end of the original contract, the CIA said it had chosen to use several vendors to take advantage of the extensive cloud capabilities available by working with multiple vendors.
This month, the Pentagon canceled plans to grant a $ 10 billion 10-year contract to Microsoft that was controversial. The Pentagon has said it will replace the contract, known as JEDI, with several separate contracts.
John Sherman, the Pentagon’s director of information technology, said JEDI was designed while the department’s needs were different “and our cloud discourse was less up-to-date.” Both Amazon and Microsoft will be allowed to participate in the new tender, and the Pentagon will also turn to IBM, Oracle and Google for bids, Sherman said. The Pentagon hopes to close the contract by April.
Many companies have closed contracts for some cloud services. To some extent this was done by chance, say analysts and industry experts. Sometimes different departments within a particular organization have signed with different vendors.
This year, 92% of companies held a cloud strategy, up from 81% in 2018, according to an annual industry report released by Flexera Software.
Still, working with some cloud providers brings with it challenges. Each company has its own way of managing technology, such as storage or networks, and transferring information between clouds can be cumbersome, industry executives say.
In the USAA, the insurance company from San Antonio, tried for years to work with several cloud providers, among other things, to build resilience with the ability to transfer information as needed, but found it not easy, said Michael Wilt, vice president of cloud computing at USAA.
“Every cloud provider, even when he tells you no, is trying to create a situation that will be locked in for him,” he said.
This has led to the creation of a series of software companies that produce tools designed to run applications more successfully across several clouds. One of the hottest cloud services companies in the last two years has been Snowflake , Which helps companies manage their data in several clouds. The company’s stock soared when it was issued last year, though has since fallen from the highs it has reached.
“Two-and-a-half years ago, everyone was working with Amazon,” said Steve Molineif, CEO of Aviatrix Systems, a network software provider that helps organizations manage their clouds across multiple vendors. “Now everyone is working with multiple clouds.”
Major cloud providers are giving their own tools to allow customers to bridge systems. But many customers are wary of these options because cloud companies want to own as much of the business as they can, industry executives say.
“You need an independent provider of a multi-cloud platform,” said Dave McGeant, CEO of HashiCorp, which provides tools to work in multiple clouds.
Google said it uses open source technology that can be adopted for free so that its customers have more control over which cloud to use.
“Our customers do not want to repeat what happened in the 1990s when they were stuck with one provider,” said Eyal Manor, vice president of Google’s cloud services.
Microsoft said they work with customers on their cloud needs, including those involving other vendors. An Amazon spokesman said most customers, even those talking about using multiple vendors, stay with one of them.
The Pentagon, meanwhile, is already looking ahead, with plans for another major cloud tender in 2025.