Insights / Blog / Public Cloud and Digital Transformation Initiatives for 2021
March 18, 2021

Public Cloud and Digital Transformation Initiatives for 2021

Paul Nashawaty
Principal Analyst

Market Topics

Application Modernization

The Influx of Digital Efforts

2020 was a challenging year for people and business alike. As we look to 2021 and the future, businesses have shifted and ramped up the focus on digital transformation initiatives. These initiatives are emerging from the need for a remote workforce and increased digital marketing and sales efforts, fueled in part by an influx in budget from reduced travel. This more digital mindset means more customers are looking online to experience everything from shopping to virtual travel to social events and more—and companies are scrambling to accelerate their digital transformation efforts to meet the need.

The responses from ESG’s 2021 Technology Spending Intentions Survey clearly show that budgets are being reallocated to support these digital initiatives. The data shows that 65% of organizations that have mature digital transformation initiatives will increase IT spending for 2021, with 60% of initiatives in early stages and 56% in planning only stages. This is compared to 27% of respondents with no digital transformation initiatives on their roadmap.

Overall, the data shows the year-over-year percentage increase in digital transformation initiatives for 2021 IT budget over 2020 as follows:

  • Mature projects: 4.33% increase 
  • Early stage projects: 3.2% increase
  • Planning projects: 2.05% increase year 

Note that the percentages may seem negligible, but when considering the typical enterprise IT budget, it is significant.  

The data also indicates that 59% of mature organizations are looking to move on-premises workloads to the public cloud in 2021 in an effort to support these initiatives. This is largely due to the increase in focus to adopt digital tools to optimize collaboration, increase operational efficiencies, and provide differentiated ways to connect with customers.

Driving Toward Results

In my brief on Public Cloud and Digital Initiatives for 2021, I analyzed the data from the Technology Spending survey and came away with a few essential takeaways.

  • Nearly 75% of organizations report either having mature digital transformation initiatives or that they are currently implementing and executing various digital transformation initiatives.
  • Business project teams may start by deploying in public clouds (or by adopting containers), then may seek the option to deploy across hybrid or multi-cloud environments.

The past six months have caused cloud users to push the accelerator even more. The maturity of these organizations also may be considered. Adding serverless and containers as part of the strategy is also a consideration in conjunction to co-exist in a heterogeneous environment with the public cloud.

The Proof Is in the Data

There is no mistake in the momentum of public cloud adoption. Digital transformation initiatives reap the benefits of the cloud, but they also need to leverage the existing business infrastructure. This is why application and infrastructure modernization is so critical to the success of future-focused businesses.  

As you can see in the following chart, organizations are focused on driving operational efficiencies. But it’s important to also note that 25% of these businesses are developing entirely new business models. This paradigm shift will require a new way of interacting with existing, heritage systems such as databases, ERP, and other workloads. To bridge the gap, businesses will need to adapt with not only new resource skills to accommodate these new models, but also find new ways to interact with their customers through modernized front-end applications.


Next Steps for Businesses

Organizations will need to ask when and if the larger strategy drives digital initiatives to the public cloud. Business approaches, as well as the success, can vary based on the execution of the project, including: The go-to-market and routes-to-market, the impact to the existing business model and transition to the next, the ability of your internal resources to execute the new strategy, etc. These approaches should be considered prior to executing and pivoting the business into a new direction.

The bottom line is you need to continue to sell your products and services to the marketplace – but the traditional methodology of doing so is no longer a viable option. As your customer is forced to digitally transform, so are you. You can either embrace the new paradigm of digital marketing-based selling versus old school methods, or you will find that your competition will. Customers are not going to go back to relying on trade shows – they have already spoken loudly and clearly – sell to me the way I want to be sold to or get out of the way.

Clearly, business evolution is inevitable. Adopting current trends and new business models is a way to strengthen the way you connect with your customer base. For example, having the ability to deliver your offering in the cloud is expected from most clients and customers. This allows businesses to shift costs from a large initial investment to an operational investment based on how clients want to consume your offering.

Cloud does not necessarily mean you can stand up an offering on a new infrastructure. It also may define how your offering is built or modernized to take advantage of the new resources. For example, being cloud-resident is not often good enough. The offering should have the ability to leverage a modern, elastic infrastructure. Scale up, scale down, and scale out as appropriate.

Cloud-ready applications are moving up in cloud maturity but having a cloud-native ability allows the offering to take full advantage of the resources and infrastructure. Also, this ability makes the offering competitive and cost-effective by using fewer resources like serverless or containers for microservices.

Here are top key points from the respondents to the ESG’s 2021 Technology Spending Intentions survey:

  • Public cloud infrastructure (including serverless) adoption has almost doubled in five years.
  • Nearly half of organizations now have a cloud-first strategy.
  • Nearly 8 in 10 remaining on-premises workloads will move to cloud candidates over the next five years.

These points support the importance of fully understanding the public cloud adoption for new digital initiatives.

In fact, business are sending far less people to shows or in-person meetings due to the pandemic but we find that this trend will continue and in-person events will become less popular. Business will rely on other sources of education and digital initiatives are driving towards these efforts.

The ESG’s 2021 Technology Spending Intentions survey indicates that the top two ways to gain customer confidence are product reviews and product evaluations.  

  • Product reviews: 45% of respondents find these most valuable
  • Product evaluation/performance testing: 42% of respondents find these most valuable

Based on the survey data, this  type of content is critical for potential buyers to learn about, research, and evaluate IT products and services. Providing this type of information this way will get the most traction for educating audiences.

Interested in learning more? Download my brief, Public Cloud and Digital Transformation Initiatives for 2021, to read more on this topic or contact me to discuss how to implement cloud-based strategies in your business. 

Unparalleled insights from analysts with an "insider" perspective

From strategy and product development to competitive insights and content creation, we deliver high-quality, actionable support services.