To The Cloud & Beyond

By AJ Tomas

 


 

Summary


Despite the dislocations caused by the pandemic, 2020 was arguably a banner year for cloud computing. The top cloud-native companies raised private capital at sky-high valuations. HashiCorp raised $175 million at a $5.1 billion valuation, and Stripe was reportedly in talks to raise a new funding round at a $70 billion+ valuation. In the public markets, Snowflake’s IPO was one of the most anticipated public offerings of the year, opening at $245 per share. The adoption of public clouds such as GCP, AWS, Azure, continued to accelerate as teams were forced to work in distributed environments. Survey results show that both enterprises and SMBs are looking to increase their workloads and data stored in the public cloud within the next twelve months.


We are certainly still in the early stages of the cloud. Companies that already have tremendous scale are continuing to grow in the double digits. Looking to the decade ahead, we can expect to see more equity value generated by cloud companies and the continued migration towards the public cloud. Therefore, with all of the workload and data on the public cloud, the need for companies to continuously secure information in an agile development environment and against dynamic new threats will become increasingly mission-critical. Currently, the average cost of a data breach is between $8.64 million and, on average, it takes 279 days to identify a breach. These attacks have material impacts on business organizations. Cloud-deployed SaaS solutions will be able to help developers secure the infrastructure before or during deployment, and continuously monitor the company’s assets.


Even in these early days of the cloud and cloud security software in particular, we are already starting to see venture investing giants like Sequoia Capital, New Enterprise Associates, Lightspeed Ventures and Index Ventures back emerging technologies that protect cloud assets.


Cloud In 2020


Private and Public Cloud Companies


The data collected and aggregated by Bessemer Venture Partners illustrates the growth story of the cloud. 2019 to 2020 was specifically a year of many milestones for cloud companies as a whole. Enterprise SaaS and IaaS both crossed the $100 billion run rate. The private cloud crossed the $1 trillion market capitalization marker. However, there are two sets of figures in particular stand out. First, the tremendous creation of equity value, particularly over the last four years, illustrates that businesses are embracing the benefits of the public cloud and how it can empower businesses to create and capture value in new ways. Second, companies that are already at scale continue to grow in the double digits. This is because cloud powers software products. It is the engine driving the continued growth of software. As such, if software is powering the technology industry as it eats the world, and “cloud is eating software,” then the cloud’s TAM goes beyond just the software market, extending to a portion of the technology industry as a whole.


Cloud Utilization


Leveraging the public cloud empowers businesses in many ways from facilitating collaborative continuity to provide new technological solutions to their customers. Most enterprises are currently adopting a hybrid cloud strategy. This involves either having multiple public clouds and multiple private clouds, or utilizing multiple public clouds while maintaining a singular private, on-premise cloud. As the data shows, public cloud adoption (i.e., Google Cloud Platform, Amazon Web Services, Microsoft Azure) is accelerating amongst enterprises and SMBs.


Flexera’s annual State of the Cloud report sampled 750 businesses (enterprise and SMB) across North America and Europe. More specifically, organization decision makers such as CTOs were asked to answer a series of detailed questions about their current and planned future cloud usage. There are four key takeaways from the survey data.


1. Cloud Strategies: Multi-cloud and Hybrid cloud

A snapshot of where enterprise workloads and data are being stored.


2. Migration: Increased Public Cloud Adoption


The following 3 key indicators together point to the increasing migration of SMB and enterprise data to the cloud. First, over 47% of respondents have self-reported a cloud spend of at least $2.4 million. Second, both enterprises and SMBs claim that their organization, pre-pandemic, has already been planning to increase their workloads and data stored on the public cloud over a 12 month time frame. Finally, despite the pandemic, a majority of businesses project their cloud spend to increase. COVID-19 has helped accelerate existing public cloud migration tailwinds due to the critical need to digitize certain services and the difficulties of utilizing an on-premise solution during a pandemic.


3. Cost Sensitivity: Demand for Centralized Software Platforms