Major Challenges Faced by Cloud Service Providers

Oddup
4 min readNov 15, 2019

As an increasing number of companies embrace digital transformation, cloud service providers are in a unique position to instantly offer robust hardware and software solutions. Thanks to the rise of cloud-based infrastructure, companies do not have to locally deploy and maintain hardware to leverage the many benefits of cutting-edge technologies such as artificial intelligence and machine learning. For many organisations that have had little reason to increase their technical investment over the years, the cloud offers a way to expand business operations even in the absence of a large budget or in-house talent. Cloud providers also ensure that businesses do not have to deal with security, availability, and reliability related complexities.

Enterprise Cloud Adoption Is on the Rise

By connecting to remote servers over the Internet, organisations can easily satisfy their storage, computing, and analytics requirements without having to own any hardware or supplementary IT infrastructure. Cloud services allow organisations and startups to improve customer engagement, increase process efficiency, automate simple workflows, and rapidly scale whenever required.

Consultancy firm, IDC, has predicted that approximately 60% of all IT spending will be dedicated to cloud-based infrastructure by the year 2020. Another statistic by Gartner claims that by the year 2025, 80% of organisations will migrate from utilising on-premise data centres to a cloud-first strategy. This uptick is most easily explained by the fact that businesses are now interested in multi-cloud solutions, and are willing to split their cloud needs between two or more service providers.

Even today, enterprise spending and adoption of public clouds are on the rise. Rightscale estimates that 50% of enterprises spend more than $1.2 million annually on a public cloud service, with 13% spending $12 million, which is roughly ten times more.

Challenges Faced by Cloud Service Providers

In spite of the staggering uptick in enterprise cloud adoption, however, cloud service providers face a few unique challenges that hinder their ability to adequately keep up with growing market demand.

Currently, Amazon, Microsoft, Google, and a handful of other tech giants serve the lion’s share of the cloud market. Given that most businesses are leveraging cloud-computing infrastructure to adopt new technologies such as virtual reality, deep learning, and Internet of Things (IoT), a monopoly of large service providers could limit technological growth and adoption on a broader scale. Collaboration between these players may also lead to stagnant prices and lackluster support.

Thankfully for businesses, though, metrics such as scalability, latency, and geographical presence have the potential to render one or multiple service providers untenable. Consequently, demand for competition and new players in the cloud market are on the rise.

Digital-first startups are some of the most significant consumers of cloud-based infrastructure and services, thanks to their rapid development culture, ballooning storage needs, and massive computation requirements. Traditionally-offline organisations that are in the midst of digital transformation are also turning out to be heavy users of cloud services. According to a report by IDC published in July 2019, worldwide public cloud services spending will more than double by 2023, with a five-year compound annual growth rate (CAGR) of 22.3%. Developing regions such as China and Latin America are expected to increase cloud spending significantly as well, at around 49% and 38.3% CAGR respectively over the same five-year time span.

How Oddup Can Help

As a result of the cloud’s unprecedented growth, service providers need to keep a close eye on global startup, geographical, and sectoral trends. Staying ahead of the curve and being the first to approach promising digital-first startups is imperative to success. By adopting this strategy, smaller service providers have the potential to stay a step ahead of even the most formidable competitors such as Google, AWS, and Microsoft. However, keeping track of lucrative business opportunities across a variety of sectors and locations is a difficult proposition for companies of all sizes.

To overcome this very problem, Oddup provides real-time access to startup activity and investment data spanning all relevant industries and geographic startup hubs. Oddup’s proprietary metrics allow cloud service providers to quickly gauge key growth and health indicators of startups, as well as identify geographical markets and industries that are on the verge of a growth phase. Through metrics such as the Oddup Score, which represents the health of a startup, and the Benchmark Valuation, which is the estimated valuation of a startup, as well as tools that enable investment trend monitoring, Oddup helps cloud service providers identify the next segment for their business development and expansion.

Are you ready to find the next market that is about to see tremendous startup activity and reach growing startups that need cloud services before competitors? Then take advantage of Oddup’s comprehensive data platform and suite of insights solutions — fill your details here or you reach out to us at enterprise@oddup.com. Learn more about how Oddup helps cloud service providers in our article here.

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Oddup

Oddup is the global leader in startup, investment, ecosystem, sector, and ICO insights and analysis.