2023 Cloud Predictions: tapered growth, increased cost and complexity, but still a bright future ahead.

It has been over a decade since cloud computing went mainstream, and public cloud infrastructure has evolved rapidly since then, moving further up the stack with differentiated capabilities and greater service abstraction. In 2022, cloud services experienced improved ease of use, better cost optimization options, and increased security. Despite this progress, cloud service providers continued to face challenges around lack of talent with cloud expertise, complexity of multi-cloud environments, and compliance hurdles to onboard to cloud.

Looking ahead to 2023, cloud predictions suggest further growth will be tapered for the leading Cloud Service Providers (CSP): Amazon Web Services, Microsoft Azure, and Google Cloud. The slowdown in growth comes as enterprise customers struggle with the broader macro environment and not fully realizing the benefits of their original business cases that drove investment in cloud to begin with. Also, the complexity and overhead in managing multiple cloud-based deployments is becoming increasingly difficult as enterprises build out their own unique hybrid architectures by combining cloud services with on-premise solutions.

Despite these challenges, the long term view of cloud computing remains bright as cloud technology continues to evolve and become more accessible (particularly with highly regulated industries like Financial Institutions and Aerospace & Defense). Also, CSP vendors are moving up the stack with differentiated and abstracted capabilities from core infrastructure services that are enabling better process automation, data analysis and insights, and enabling a wider range of business and technical customers to engage with and build on the cloud (e.g. serverless computing, low code / no code, data and analytics platforms). Read more here about how the cloud has grown up .

As cloud providers continue to invest in making cloud service offerings easier to use and optimized for cost, experts predict that cloud adoption will remain strong moving forward. Additionally, cloud vendors are launching innovative cloud architectures such as serverless computing platforms and edge computing capabilities to address the need for faster application response times and enhanced security features. Companies can also leverage new cloud technologies like virtualization, containerization, and artificial intelligence (AI) to help them get the most out of their cloud deployments.

In short, 2023 cloud predictions suggest that cloud computing will continue to grow, albeit more slowly than in previous years. The cloud market is likely to become increasingly competitive as cloud vendors strive to differentiate their offerings and add new features. Despite the increased cost and complexity of cloud services, cloud computing is here to stay and enterprises should take advantage of the opportunities it offers for greater efficiency and business agility.

2022 Year in Review.

2022 showed a lot of frustration in enterprise customers who are “multi-cloud”, but unfortunately really have “multiple clouds” that are disparate, heterogenous, and not living up to the promises of their financial business cases. However, there was an equal amount of development and promise in the evolution of multi-cloud towards the Supercloud or Metacloud for horizontal improvement, and the Industry Cloud for vertical improvement. A few highlights:

2022 Big 3 CSP performance. According to CRN Cloud Market Share Q4 2022 report, enterprise IT spending on cloud infrastructure services in Q4 2022 reached $61.6 billion! However, this represents a YoY spending increase of 21%, which although great for any other sector's standard, is less than prior years for cloud.

Additionally, per CRN's report:

• In the fourth quarter of 2022, Microsoft gained in cloud market share while Amazon Web Services (AWS) and Google both saw growth.
• AWS still holds the largest portion of the market at 32%, but Microsoft has increased its share to 28%.
• Google Cloud Platform is also growing steadily with a 14% increase since 2021.
• The quarterly report from Synergy Research Group shows that Azure and GCP are rapidly closing in on AWS’s lead as they continue to add new customers each quarter.

Multi-cloud. Multi-cloud was the big topic in 2020-21, and while it has persisted through 2022, it is typically coming with a tag of complexity . Many enterprise cloud customers have arrived at multi-cloud by accident, rather than a deliberate strategy, which is resulting in environment sprawl, lack of ecosystem consistency, and suboptimal cost and economic models. The vast majority of these ecosystems are also characteristic of “multiple clouds” of independent and disparate cloud environments, rather than “true multi-cloud” which features end-to-end automation and orchestration of all CSP and data center environments.

Supercloud and Metacloud. The concept of the Supercloud started to take hold as well in 2022. Supercloud is a cloud-spanning value-add layer that hides complexity, exposes differentiated service capabilities, and adds new business (and business network) leverage beyond the raw “Lego bricks” of existing public and private clouds. Supercloud provides a consistent, ubiquitous experience for developers across the?DevSecOps?tool chain, while preserving access to low-level, native CSP services.

This would truly be a game changer, but at the moment is still aspirational. While there are some CSP native services that support multi-cloud orchestration (GCP Anthos), others that are multi-cloud by design and abstract away underlying services (Snowflake, HashiCorp), platforms that are CSP agnostic (RedHat), and integration tools that are the "connective tissue" of orchestration between environments (Istio), a silver bullet that truly enables the concept of Supercloud.

Additionally, some are using the term metacloud to describe the same capabilities in a cross cloud service layer .

Industry cloud. As we will discuss below in the industry deep dives, in order to embrace public cloud in a bigger way, a number of industries have been demanding that CSP vendors accommodate one or both of (1) industry verticalized capabilities unique to their industry; and (2) hardened cloud products and services that meet the regulatory compliance and controls needed by these customers in order to adopt public cloud.

The rise of the industry cloud could go further where commodity CSP offerings fall short, by offering services catering to vertical segments inadequately served by general CSP services. This is not to be confused with community clouds such as GovCloud, an identical, but physically disparate and air gapped offering.

Take a look at Microsoft Azure’s Industry Clouds for a good example of how CSP’s are catering to each industry segment within the broader Azure ecosystem. Also, industry partnerships are helping to create the industry cloud, such as A&D giant Lockheed Martin establishing a landmark agreement to develop the classified cloud and other advanced tech for the DoD.

Financial Institutions.?

Boston Consulting Group (BCG) published a perspective in 2020 suggesting that Financial Institutions (FI’s) need to pursue their own unique, deliberate path to public cloud . Since then, a significant amount of progress has taken place with new cloud strategies refreshed towards public, hybrid and multi-cloud. Additionally, new partnerships have been brokered with FI’s and CSPs, and core workloads and data have also moved in a big way.?

Previously, many CSP partnerships with FI’s had been established for long term cloud adoption. In 2021, NASDAQ and AWS crafted a partnership to build the global capital markets infrastructure of the future in the cloud, and in 2022 completed the migration of its first US options market , one of its six options exchanges. This solution uses AWS Outposts, and Nasdaq and AWS co-designed the ultra-low latency edge computing system for capital markets

This great article from American Banker also suggests that since 2020, US Banks have taken to the technology in a big way. The top five initiatives they highlight:

• KeyBank moving applications to Google Cloud by 2025, to create a more personalized digital-banking experience, launch products more quickly and improve fraud detection.?
• U.S. Bank shifting software to Microsoft Azure over the next three years, centered on data center consolidation, increased resiliency, and operational efficiency gains.?
• Capital One, the flagship Financial Institution in cloud, starting its own business, Capital One Software, that will take internally developed cloud and data-management software and package it for sale to other businesses.
• The Big 3 CSP's, AWS, Azure, GCP, all pitching confidential computing, which includes customers like RBC on Azure confidential compute.
• LSEG (London Stock Exchange Group) spending $2.8 billion on cloud technology over the next decade, migrating its data platform and other technology to Microsoft's Azure cloud platform.

US Treasury Cloud in Financial Services report deep dive.

Also in the Public Sector, the U.S. Department of the Treasury published a report assessing the opportunities and challenges facing the financial sector for cloud-based technology adoption . It reveals that organizations are using cloud technology to increase efficiency, scalability and security while improving customer service and organizational agility in the process. It further outlines the primary drivers for the financial sector’s migration to cloud services include the following:

• Faster development and scaling of new apps and services using cloud infrastructure and tools, particularly for AI and consumer-facing apps, such as mobile banking and trading;
• The ability to meet competitive challenges and customer demands for digital financial products with robust features and data, supported by cloud services to interface with a range of partner financial institutions and non-banks;
• The potential for increased resilience to physical and cyber incidents, with the use of multiple regions from the same CSP and broader use of encryption and zero trust models;
• Third-party providers migrating to cloud services and discontinuing existing on-premises product offerings for client financial institutions;
• The potential for lower costs when compared to a legacy IT environment; and,
• The need for a substantial expansion in IT infrastructure to support remote workers and customers’ use of digital financial services, hastened by the COVID-19 pandemic

... these are resulting in benefits for FI's of: Redundancy, Scalability and speed to deploy assets, and security.

Examples of where cloud is being used in Financial Services include: Goldman Sachs using cloud technology to enable secure customer data storage; Citibank leveraging the cloud for real-time analytics; UBS creating a secure authentication system with cloud computing; JP Morgan implementing virtual servers to improve scalability; and Nationwide Insurance using cloud technology to drive better customer experiences.

there were some significant challenges that could detract from these benefits. These include:

1. Insufficient transparency to support due diligence and monitoring by financial institutions. Community banks expressed concerns that they do not often receive details of incidents or outages impacting their systems. It is essential that financial institutions fully understand risks associated with cloud services so they can build their technology architecture with appropriate protections for consumers. While recognizing that CSPs provide significant information to financial institutions already, Treasury believes that further efforts are needed to achieve the right balance of information sharing between CSPs and financial institutions.?
2. Gaps in human capital and tools to securely deploy cloud services. The current talent pool needed to help financial firms tailor cloud services to better serve their customers and protect their information is well below demand. CSPs need to increase employee engagement experts, and to improve supportive technological tools and adoption frameworks that can help ensure that financial service firms design and maintain resilient, secure platforms for their customers.
3. Exposure to potential operational incidents, including those originating at a CSP. Many financial institutions have expressed concern that a cyber vulnerability or incident at one CSP may potentially have a cascading impact across the broader financial sector. While cloud services can have potential benefits for resilience and security, financial institutions are still exposed to risks associated with technical vulnerabilities at CSPs and face practical challenges to mitigating such risks or migrating their operations to another provider.
4. Potential impact of market concentration in cloud service offerings on the financial sector’s resilience. The current market is concentrated around a small number of CSPs, which means that if an incident occurs at one CSP, it could affect many financial sector clients concurrently. This concentration likely exists across banking, securities, and insurance markets, but Treasury and the financial regulators need to close significant data gaps to assess how the sector might be affected by this type of incident. Nonetheless, Treasury believes that there are opportunities to enhance cooperation among financial regulators and between the public and private sectors.
5. Dynamics in contract negotiations given market concentration. The limited number of CSPs may give CSPs outsized bargaining power when contracting with financial institutions. This outsized negotiating advantage could limit the ability of financial institutions, particularly smaller financial institutions, from negotiating advantageous contractual terms for cloud services.
6. International landscape and regulatory fragmentation. The patchwork of global regulatory and supervisory approaches to cloud technology can make it nearly impossible for U.S. financial institutions to adopt cloud consistently at a global scale, reducing CSP use in the market and raising costs for cloud adoption strategies, which ultimately impacts consumers. Additionally, changes in regulations abroad may subject CSPs to direct oversight by foreign financial regulators, which could create regulatory conflicts negatively impacting the quality and security of services to all CSP clients.

As part of addressing these challenges head on, Treasury has developed recommendations that may assist the financial sector in realizing the benefits of cloud services in a way that is safe, secure, and responsible. To execute these recommendations, Treasury will continue working with U.S. financial regulators and other agency partners, as well as financial firms and CSPs. It is also launching an interagency Cloud Services Steering Group within the next year that will address a number of the issues identified in the report through:

• Promoting closer domestic cooperation among U.S. regulators on cloud services
• Conducting tabletop exercises with industry
• Reviewing sector-wide incident protocols in light of growing reliance on cloud services
• Considering ways to appropriately measure cloud service dependencies across the sector and assessing systemic concentration and related risks on a sector-wide basis; and
• Identifying ways to foster effective risk management practices in the financial services industry

(Source: Treasury announcement ; report )

Clearly cloud computing is here to stay and Financial Institutions have embraced cloud technology in a big way. While it was a slower industry to adopt due to its security, resiliency, and regulatory compliance barriers, the majority of app, workload and data to be onboarded to cloud is clearly ahead of us for the industry.

From data center consolidation, increased resiliency, cloud platform migrations, innovation through cloud-native services, and cloud cost optimization - cloud has become the core of FI's digital transformation strategies for 2022.

In summary, It's safe to say cloud has become much more central to the infrastructure plans of Financial Institutions for 2022, and cloud technology investments are only expected to grow as cloud providers continue to invest in making cloud service offerings easier to use and optimized for cost savings. ?2023 cloud predictions suggest that cloud computing will continue to grow, albeit more slowly than in previous years. The cloud market is likely to become increasingly competitive as cloud vendors strive to differentiate their offerings and add new features. Despite the increased cost and complexity of cloud services, cloud computing is here to stay and companies should take advantage of the opportunities it provides for greater efficiency and business agility.

Clearly cloud computing is here to stay and Financial Institutions have embraced cloud technology in a big way. While it was a slower industry to adopt due to its security, resiliency, and regulatory compliance barriers, the majority of app, workload and data to be onboarded to cloud is clearly ahead of us for the industry.

From data center consolidation, increased resiliency, cloud platform migrations, innovation through cloud-native services, and cloud cost optimization - cloud has become the core of FI's digital transformation strategies for 2022.

In summary, It's safe to say cloud has become much more central to the infrastructure plans of Financial Institutions for 2022, and cloud technology investments are only expected to grow as cloud providers continue to invest in making cloud service offerings easier to use and optimized for cost savings.?2023 cloud predictions suggest that cloud computing will continue to grow, albeit more slowly than in previous years. The cloud market is likely to become increasingly competitive as cloud vendors strive to differentiate their offerings and add new features. Despite the increased cost and complexity of cloud services, cloud computing is here to stay and companies should take advantage of the opportunities it provides for greater efficiency and business agility.

Aerospace & Defense.?

In the Defense world, the Joint Warfighting Cloud Contract (JWCC), the replacement to JEDI, was awarded .?The DoD now has an enterprise wide vehicle and continues it's journey to enable the warfighting cloud in a multi-cloud architecture and Cloud Service Provider supported ecosystem.?

Amazon, Microsoft, Google and Oracle were part of this $9 billion award by the Pentagon on the Joint Warfighting Cloud Capability (JWCC) contract, which is the replacement to the original JEDI solicitation.?

The stated purpose of the JWCC contract is to "... provide the Department of Defense with enterprise-wide, globally available cloud services across all security domains and classification levels, from the strategic level to the tactical edge...”?

While this finally brings an enterprise-wide option , each of the branches of Service have established robust, dedicated cloud infrastructure environments (e.g. Air Force Cloud One and Platform One, Army cArmy Cloud and the ECMA ).

Consider further reading here from some of my recent articles on how the DoD Cloud has evolved in support of its digital transformation ambitions:

• The DoD Is Shifting The Way It Acquires Cloud To A Multi-Cloud And A Warfighter-Centric Strategy
• The Department of Defense Evolution From The Enterprise Cloud To The Warfighting Cloud
• DoD Digital Modernization Strategy: Perspectives On Maintaining a Competitive Digital Advantage In The Modern Battlespace

More broadly, it’s key to note that many Defense agencies are starting to slowly shift away from the notion that all facilities, infrastructure and services must be bespoke and dedicated, air gapped from all others (e.g. AWS GovCloud).

Commercial technology like Zero Trust, if done right, can remove the need for dedicated infrastructure and components, and more importantly clear the path for expanded coverage by cloud as defined in the OCONUS Cloud Strategy, and edge capabilities.

Read more here from the Army CIO about how some of the Services are exploring exactly this as the future of the enterprise and tactical network for the DoD.

Additionally, the Aerospace & Defense (A&D) vendors have started to converge in the Defense Cloud ecosystem. For example, A&D giant Lockheed Martin also established a landmark agreement to develop the classified cloud and other advanced tech for the DoD.

2023 predictions.?

TLDR:

• Prediction 1 - Cloud infrastructure growth may temporarily taper, but the enterprise commitment remains.?
• Prediction 2 - CSPs will continue to buy market share.?
• Prediction 3 - A further push into the intelligent cloud with AIOps.?
• Prediction 4 - Core systems for mission critical workloads will finally start to move.?
• Prediction 5 - Early movers will have to address their cloud complexity and rationalize the architecture, aided by the Supercloud and Metacloud.?
• Prediction 6 - Microsoft and Amazon may follow suit with Google’s multi-cloud and open standards strategy.?
• Prediction 7 - CSPs will get into Web3 in a bigger way.
• Prediction 8 - Cloud-native extends out to the edge.
• Prediction 9 - The renaissance of cloud repatriation.
• Prediction 10: The rise "up the stack" with increased cloud agnosticism.

Prediction 1 - Cloud infrastructure growth may temporarily taper, but the enterprise commitment remains.??

Will 2023 show an increased or decreased adoption curve in the short term? And what will happen over the long term? On the one hand, some outlets including ZDNet suggest that migration is not stopping and there's no going back . Cloud computing spending continues to rise – and once apps have moved to the cloud, they tend to stay there (with some exceptions of “data center repatriation”). Gartner is also predicting that spending on?public cloud computing services?will grow 20.7% in 2023 to $591.8 billion – up from the $490 billion predicted for 2022, which Gartner says represents a growth rate of 18.8%.??

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Meanwhile, in the recent market turbulence of inflation and pullback in public stocks, a number of articles have shown the pull back in the public cloud market growth, and each CSP as well . According to Tech Crunch, the cloud infrastructure market growth in aggregate has dipped to 24% , with varying rates for each of the Big 3 CSPs. Also, according to the Uptime Institute, while AWS reported a quarter-on-quarter revenue increase of 27.5% for Q3 2022, this is down from 33% in Q2 — the slowest growth in its history. Microsoft’s CFO has also commented that Azure could see revenue growth decline in their next quarter, following disappointing 35% growth in the three months to September 2022.

Yes, in this space, 20 to 35% growth as reported by CSPs recently is considered “disappointing” in the context of the last few years. AWS, for example, had seen revenue increase by 30 percent to 40 percent every year since 2014 until this most recent earnings report. Granted, these are still net extremely positive growth trajectories by all considerations, just significantly lower than what the growth of the large CSPs have been used to in recent years.?

Read more here about how growth continues to slow with cloud spend and overall CSP growth rates , the investment in data center build outs, and other competitive threads that may impact CSPs such as edge computing. Also, Battery Ventures has a great OpenCloud Report 2022 with more statistics that show growth durability at massive scale for the Big 3 CSPs despite the current macro environment:

Additionally, all of the the Big Tech players and Cloud Service Providers have conducted layoffs. In 2022 the tech industry laid off over 150,000 people . In the first few weeks of 2023, Microsoft announced 10,000 job cuts. Amazon reported 8,000 above what it originally called for.

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This is also potentially influenced by a lack of benefits realization from the earlier promise of cloud’s cost savings opportunities .?

Prediction 2 - CSPs will continue to buy market share.?

2022 featured an interesting set of very large scale acquisitions to help bolster functional capabilities for CSPs as well as deep entrenchment with industry verticals. A few notable examples:

• Google Cloud buys Mandiant to further industrialize and scale its cybersecurity operations and incident response posture in the cloud.
• Google also acquired Israel-based cybersecurity startup 'Siemplify' reportedly for?integration into Google Cloud.
• Read more here on notable cloud acquisitions last year

Outside of the Big 3 CSPs, a number of targeted acquisitions have happened as well.

• Oracle makes a huge splash in the healthcare industry with an acquisition of Cerner.
• Private equity and investment management titans Vista Equity Partners and Elliott Investment Management acquired Citrix to take it private
• Thoma Bravo acquired Anaplan, a cloud native financial and business planning platform for $10.7 billion

Given the cloud growth slowdown with the Big 3, and a number of targeted acquisitions, overall acquisition activity may slowdown commensurate with cloud and broader market conditions, but players looking to differentiate with industry solutions and capabilities "up the stack" will mean more deal activity is likely ahead of us.

Prediction 3 - A further push into the intelligent cloud with AIOps.?

The more enterprise customers shift critical workloads and data into the cloud, the more CSPs native data environments and other cloud-based monitoring and support platforms (e.g. Splunk, MoogSoft, Data Dog, ServiceNow) are creating the “data anchors” of authoritative data sources and systems of record by which the intelligent cloud can learn and act upon.

Additionally, CSPs have seen this trend and are launching more services for “CSP-native intelligence” as well as striking partnerships, such as the OpenAI and Microsoft partnership, extending services out to Azure OpenAI .?Combine this with the much broader recent popularity of tools in this space like Generative AI and ChatGPT (100 million chat bot users in 2 months! ), and the potential for exponential adoption of AI in a cloud-native context is more and more probable.

Read more here about how your cloud might not be as smart as it could be .

Prediction 4 - Core systems for mission critical workloads will finally start to move.?

As discussed above, highly regulated industries have been reluctant to move mission critical, data intensive, high risk workloads (e.g. real time transaction processing, systems of record).

However, that will change even more this year with COTS software vendors and SI's offering a mechanism and glide path to migrate, such as cloud-enabled core banking with FIS , Thought Machine's cloud-native core banking technology , and nCino's Bank Operating System . A&D giant Lockheed Martin also established a landmark agreement to develop the classified cloud and other advanced tech for the DoD.

Migration to the cloud will be much easier than a "go it alone" path when industries like Finance and Defense have vendor support to get their most sensitive workloads and data to the cloud.

Prediction 5 - Early movers will have to address their cloud complexity and rationalize the architecture, aided by the Supercloud and Metacloud.?

The business case and architectural simplicity for cloud has not played out quite as many had envisioned or as advertised by CSPs.?Enterprises will refresh their cloud strategies and address their “multiple clouds” issues to true multi-cloud in a way that is cost effective, balanced, and architecturally simplified.?

The evolution of true silver bullet ecosystems and orchestration fabric of the Supercloud and Metacloud will also aid in better integrating and rationalizing the current cloud estates of the enterprise.

Prediction 6 - Microsoft and Amazon may follow suit with Google’s multi-cloud and open standards strategy.?

Who wants to be the anchor of the enterprise’s hybrid and multi-cloud strategy? If the vast majority of enterprises are declaring a multi-cloud strategy, and have sprawl to address per the predictions above, a new anchor needs to be established outside of the data center. GCP made the first step forward with Anthos .?Microsoft followed suit with its own suite of hybrid and multi-cloud tools .

As a matter of fact, all of the “Big 3” Cloud Service Providers are officially strategically Multi-Cloud . However, the vast majority of their services are not "multi-cloud native", nor are certain integration services mature enough to enable the Supercloud or Metacloud as described above, and it is not likely that CSP's want to serve in this role in order to maximize workload and data volumes within their own CSP boundaries.

There may be pressures upcoming in 2023 to force CSPs to become more integrated, open standards based, and agnostic than they currently are to meet the demands of enterprise customers.

Prediction 7 - CSPs will get into Web3 in a bigger way.

A lot of activity has happened with CSPs and Web3:

CSP managed blockchain service offerings: every major CSP vendor maintains some presence in the blockchain space. Amazon Web Services now provides a Managed Blockchain Service . Google Cloud just established a Web3 team to support its customers in the Web3, blockchain and crypto space, and also go into the web3 act with managed blockchain node service . Microsoft Azure is investing heavily into the concept of decentralized, digital identity on the blockchain , which we touch on more in our recent post here . Azure also maintains its own blockchain solution offering .?

A significant portion of blockchain nodes are hosted on the public cloud, and many of the CSPs have some form of support and product offerings for blockchain environments and developers. For example,?according to blockchain management platform Chainstack, over 60 percent of all Ethereum nodes rely on cloud-based services , with 25 percent running on just one provider: Amazon Web Services (AWS).

With the further development of Web3 and Digital Assets capabilities, and broader enterprise adoption of blockchain, CSP's will be well positioned to continue to host solutions and expand its remit.

Want to read more on what might happen this year? Here's another great cloud prediction article from Tech Republic .

Prediction 8 - Cloud-native extends out to the edge.

Cloud workloads and data are increasingly shifting towards edge computing. Edge computing is a type of distributed computing that brings compute, storage, and networking capabilities to the edge of the network close to where data is generated or consumed. This approach can reduce latency, mitigate bandwidth costs associated with utilizing cloud services, provide better privacy and security, and enable more real-time applications.

Cloud-native edge technologies and architectures have been developed in recent years to take advantage of the distributed nature of edge computing. These architectures typically employ containerization, microservices, serverless functions, and other cloud native concepts at the edge of the network. This enables organizations to deploy services closer to their users or devices and benefit from the advantages of edge computing.

Leading vendors are providing cloud-native edge solutions that enable organizations to get started quickly and easily with edge computing. For example, AWS provides their Outposts solution which enables customers to deploy a fully managed and configurable compute and storage rack at the customer’s premises with access to native AWS services. Microsoft also provides their Azure Stack Edge solution, which enables customers to run Azure services and applications closer to their users or data sources, while being managed from the cloud.

This is a highly competitive space where many players, not just the Big 3 CSPs, are innovating and competing for market share. Hardware players and chipmakers (Dell , HPE , Intel ), data center providers (EdgeConneX ), ISPs and Telco's with strong cache and content delivery offerings, and the CSP's themselves are all in the mix.

For an industry tailored example,?AWS announced its Modular Data Center for the?United States Department of Defense ?Joint Warfighting Cloud Capability (JWCC) contract.

While MDC's are not new technology, many DoD programs are looking at various models that enable OCONUS cloud footprint, edge workloads and data, disconnected ops (DDIL) functions, low / ultra low latency requirements, large scale local workload footprints, and more in a cloud-native manner.

While there are dedicated appliances, white label and commodity hardware, et al, this is an extra CSP-native tool in the toolkit for the DoD to consider how it extends its capabilities out to the warfighter. It could also enable the consumption of CSP-native services like Outposts, or extend out CSP-agnostic aspects of the stack like containers.

Looking ahead into the future, edge computing is expected to become even more prevalent as organizations increasingly need to process data in real-time and reduce bandwidth costs associated with cloud services. Additionally, more cloud-native edge architectures are expected to be developed that will enable organizations to take advantage of the distributed nature of edge computing while still leveraging existing cloud platforms and services. Ultimately, edge computing is here to stay and is sure to play an important role in the future of enterprise IT.

Prediction 9 - The renaissance of cloud repatriation.

Cloud repatriation is the process of moving a company’s digital operations, such as data and applications, from a public cloud to an on-premises or private cloud. Cloud repatriation has become increasingly popular in recent years due to security concerns, cost savings, and other competitive advantages.

The process of repatriating data to the cloud involves analyzing and assessing a company's current infrastructure, applications, and data, and then migrating those items to a cost effective platform. Companies that wish to migrate their data need to select an appropriate provider that suits their needs. This selection can be based on factors such as security, scalability, reliability, cost efficiency, compliance standards and technical support. After the selection, all data needs to be migrated from the public cloud environment, such as AWS or Azure, to an on-premises or private cloud environment.

One of the most well known stories is from Dropbox, starting back in 2016, building its platform in the cloud and then eventually exiting AWS back to its own data center facilities and infrastructure, showing that this approach of "build and standardize, then repatriate to the cloud" for lower run costs is not a new concept. However, when you consider the issues noted above of cloud complexity, multi-cloud "by accident", and cost overruns, it seems to be making a resurgence for some who have not realized their technical and financial business cases for cloud.

My prediction is that cloud repatriation may not end up as a vehicle for wholesale exit of the public cloud, but rather one of the many mechanisms to rationalize, retool, and rebalance the hybrid and multi-cloud operating models and architectures that most large enterprises have embraced.

Prediction 10: the rise "up the stack" with increased cloud agnosticism.

Cloud agnosticism is an approach to cloud computing which allows organizations to use any type of cloud technology or provider, regardless of the underlying operating model or architecture. It helps organizations become future-proof and remain flexible in their choice of cloud solutions, allowing them to easily switch between different cloud providers and services, depending on their changing needs.

The importance of cloud agnosticism is that it gives organizations greater control over their digital transformation and allows them to leverage the benefits of multiple cloud providers and services. Cloud agnosticism also provides cost-savings, as organizations have the flexibility to choose between different pricing options depending on the provider or service they are using. In addition, it enables organizations to remain competitive and take advantage of emerging cloud technologies as they become available.

Finally, by being cloud agnostic, organizations are better prepared to respond to changes in the market, such as new competitors or regulations. This allows them to quickly adapt and respond to various business challenges without having to completely overhaul as a means to prevent vendor lock in with cloud service providers such as Amazon Web Services.

Many enterprise cloud customers are evaluating their Cloud Service Provider (CSP) offerings and are closely evaluating to what degree they want to embrace and adopt every component and layer of the technology stack with cloud-native service offerings. The struggle with most organizations lies with striking the perfect balance of cloud-native versus cloud-agnostic to match their unique goals around vendor lock in, operational resiliency, agility to business demands and change, and overall architectural flexibility.

Given that (1) many large enterprises are so heavily invested in their private cloud stacks that are standardized and compliant; (2) many are looking for a way to embrace cloud in a way that does not re-introduce vendor lock-in, and (3) many in a multi-cloud model are looking for some orchestration fabric and standardization via the "metacloud" or "supercloud", I predict that cloud agnosticism could be the predominant path forward.

Read more here about whether your enterprise should go cloud agnostic or cloud-native (hint: it's a trick question!).

Conclusion.

Cloud computing has changed the way companies do business, and with 2023 cloud predictions showing further growth in cloud adoption, organizations must be prepared for a future of increasing cost and complexity. Fortunately, cloud providers are continuing to invest in technology improvements that make cloud services easier to use while providing enhanced security controls. By leveraging these advances, enterprises can capitalize on cloud technology to stay ahead of the competition and get the most out of cloud computing investments.

This article has provided an overview of cloud predictions for 2023 and discussed the challenges cloud providers face, as well as the potential opportunities cloud services offer. By preparing for a future with tapered growth but increased cost and complexity, businesses can take advantage of cloud technology to stay competitive in a rapidly changing digital landscape.

Want to read more? Check out Google Cloud's 40 stats and trends to know in 2023 as a great additional read from a leading CSP.

Photo by engin akyurt on Unsplash