Trends How SMBs Will Shape the IaaS Market in 2020

In 2020, the global cloud infrastructure-as-a-service (IaaS) market is set to reach $50 billion and in India it is expected to touch at least $2.3 billion by 2022. Improved infrastructure, economic benefits and increasing innovation aided by a thriving startup ecosystem are key factors driving this growth. These trends are not unique to India. IaaS, the second-largest segment in the global cloud service market, has been predicted to see the highest growth rate across market segments, owing to rising demands that cannot be met by traditional data centers.

In 2020, the IaaS market will primarily be shaped by two drivers: increasing competition among IaaS providers and growing numbers of small and medium businesses (SMBs). The competitive IaaS market implies that players are going to go the extra mile to achieve new milestones in speed, security, costs and convenience. At the same time, a rapidly expanding entrepreneurial ecosystem will define how IaaS providers customize their offerings.

Provider Competition will Drive Differentiation

Choosing the right IaaS provider is not an easy task in today’s highly competitive market. To differentiate themselves, IaaS providers will push boundaries to capture a larger share of the market.

Trends 1 Achieving new speeds in on-demand scaling

A web hosting services company, Reclaim Hosting, faced challenges with flexibility and scale due to their reliance on dedicated servers. They were unable to scale operations beyond the United States as dedicated servers did not allow for compliance with data security and privacy regulations. That is when they migrated 80 percent of their infrastructure to DigitalOcean cloud which gave them the ability to expand their product offerings on-demand, minimize response time, and ensure an uptime of 99.75 percent. Small businesses and startups may not require much IT infrastructure in the early stages of business, but this changes as organizations rapidly expand. Growth is sometimes unexpected or seasonal, but infrastructure must be a step ahead of demand. Agile and flexible scaling and load balancing is vital to small enterprises and startups since it allows these organizations to focus on managing customers, and not worry about infrastructure. Today, a handful of IaaS providers offer super-fast scaling of hundreds of virtual machines in seconds, and on-demand scaling will continue to be a competitive differentiator in 2020.

Trends 2 Tightening the loose ends of security

Between July 2018 and April 2019, data breaches cost organizations in India an average of Rs.12.8 crore, with the global average amounting to $3.92 million. The record low trust in data security currently has created a rising demand for greater IaaS governance. As economies become increasingly data-driven, security becomes increasingly paramount. Sustainable security and monitoring against data loss and threats will be on the top of the agenda for cloud providers in 2020.

Trends 3 Reducing the cost of performance

As enterprises expand operations, there is a need for more affordable services to sustain business. Traditionally, cloud has significantly cut operations and infrastructure costs and we can expect this trend to continue. As IaaS providers start catering to different customer segments from large enterprises to small start-ups, they will have to offer better performance at lower prices. Hybrid cloud is expected to see rapid growth, particularly in India, as it offers greater cost-effectiveness on the public cloud and enhanced security on the private cloud.

Trends 4 Taking convenience to the next level

Aside from cost-effective solutions, SMBs also expect cloud providers to minimize the effort organizations spend in managing cloud infrastructure—it should NOT be complex, but as simple as clicking a few buttons! In 2020, IaaS providers will go the extra mile to offer greater convenience by including more features, simplifying usage and removing hurdles in costs and security. The focus will be on enabling everyone, from a CEO to an administrator or an engineer, to manage cloud infrastructure independently without having to deal with the complexities of the underlying hardware infrastructure. Also, more and more providers will include add-ons to their cloud offerings to align with the larger needs of customers.

Trends 5 SMB Requirements Will Drive Change

Today, SMBs understand the growing significance of the cloud, but fail to make an investment. They sometimes choose dedicated servers or shared hosting spaces as these organizations have apprehensions over data security and a lack a comprehensive understanding of cloud services. In 2020, more SMBs will embrace the cloud. However, choosing the right provider may be a bigger challenge.

In the year ahead, cloud computing will not be restricted to spinning virtual machines but will also add containers to the equation. Supporting only a handful of databases will restrict IaaS providers’ ability to address a wide range of SMBs, so these organizations will look for providers that support multiple databases.

Cloud infrastructure must accelerate processing speeds and not hamper it. So, it is recommended that SMBs invest in IaaS providers that use solid state drives (SSDs) to deliver higher performance to match the high-speed demands of today’s applications. Open source software is a natural choice for SMB entrepreneurs, but not every IaaS provider encourages this as most of them are more aligned to the needs of large enterprises. SMBs should consider choosing cloud infrastructure providers that support open source technologies rather than locking them into proprietary software or applications.

Within an SMB, a single employee may wear the hats of coder, tester, salesman and administrator. Not every coder will have the experience needed to manage infrastructure requirements like a pro! That is why IaaS providers will focus more on offering simple-to-use app building blocks that can be used by customers of varying skills.

Oftentimes, it may feel like there are just too many decisions to make and too few resources to help! In such a situation, SMBs will always rely on service providers who offer free support and access to a thriving community of developers. As entrepreneurs, one of the biggest concerns is the cost of infrastructure. As an SMB, look for providers who offer pay-as-you-go and transparent pricing. Increased productivity through faster deployments, server backups to ensure recovery of information in the case of a disaster, automatic balancing of loads during peak usage, and the flexibility to configure APIs by using a simple dashboard are other factors you must consider while choosing a cloud provider.

Last but not the least, as applications become global, SMBs need a global IaaS provider with datacentre footprint in multiple regions. This will ensure that they can easily comply with increasing regulations around data usage and storage.

I am confident that in 2020, cloud will deliver greater benefits to small businesses and startups. With rising customer expectations across the world, thanks to the growing shift towards digital, cloud is no exception. With more enhanced scaling, security, and convenience at reduced costs, SMBs can expect greater ease of business in 2020.

By Prabhakar Jayakumar

The author is Country Director, DigitalOcean India