Cloud solved its first big business problem about a decade ago. Companies with ageing servers and growing streams of data faced a choice: Buy more hardware and network infrastructure to store it all or migrate to cloud. Cloud delivered a neat solution: new technology and lower costs.

Since peak adoption in 2013, cloud has evolved from a place to store your bytes to the hub for corporate growth and innovation.

Data from Infosys’ Cloud Radar 2023 research report supports this. Companies still go to cloud to replace older digital systems, but they are just as likely to use cloud to pursue innovation, in the form of: launching new products; adding new technology or software capabilities; or integrating subsidiaries or acquisitions.

These growth and transformation motives are three times more important than cloud migration to save money, respondents told us.

To the credit of cloud providers and systems integrators, cloud works well, and companies want more. Two out of three companies increased cloud spending last year, and 80 per cent say they will increase spending next year.

The scene in India

Cloud played an essential role for Indian corporations during the pandemic, allowing knowledge workers to be productive and safe from villages instead of risking exposure in crowded cities. That necessary emergency measure is now turning into a world of distributed corporate enterprises, orchestrated by cloud connections and productivity.

Even so, MIT Technology Review’s Global Cloud Ecosystem Index ranked India 51st of 76 countries analysed. India scored high in infrastructure and IT talent but lagged in ecosystem adoption and security and assurance metrics.

Corporate cloud spending in India trails behind the US and Singapore, which spend four to five times more, according to a study by Oliver Wyman. That said, cloud adoption is growing fast and has the potential to account for 8 per cent of India’s GDP by 2026, the report states.

A 2022 study of cloud spending by Gartner grouped India into the category of lagging countries, alongside France, Germany, South Korea and Mexico. India has a high growth rate in IT spending but spends a moderate proportion of that specifically on cloud.

In addition to spending more, companies are adding more cloud providers. In 2021 companies used two or three cloud providers, and 21 per cent worked with only one provider. Cloud Radar 2023 found that three or four cloud providers is the norm and companies with just one provider is rare. Only 7 per cent of companies use a single cloud provider.

The rise of multi-cloud is a top cloud trend in India, according to Nasscom. Multi-cloud systems allow for greater flexibility and customisation in picking cloud providers, and can improve resilience and reduce the risk of vendor lock-in.

IT leaders and their business partners have developed a more nuanced view of what cloud is for, and which cloud providers are best suited for different tasks. A company might use its primary cloud provider for productivity applications and turn to a different provider to manage artificial intelligence, and a third for industry-specific workloads or processes. In 2013, cloud was one place with one use. Cloud in 2023 contains multitudes of hubs and capabilities.

Diversity of cloud providers allows for innovation, rapid experimentation, and unprecedented flexibility for enterprises. But it also brings unknown complexity and looming challenges.

The utilisation problem

Even as companies spend more and add providers, they aren’t using the cloud they’ve already committed to. Most companies are over halfway through their current cloud contracts, but they have used only 47 per cent of their cloud commitments. That adds up to more than $300 billion in unused commitments, based on financial data from the 12 cloud providers identified in our research.

Companies have a hard time using the cloud they’ve committed to and show less confidence in knowing what they will spend in cloud. Cloud delivers for business in many ways, but cloud executives tell us they are least confident in their ability to monitor, predict and optimise cost.

Corporate cloud is in a new era, and managing its complexities requires a new approach.

Cloud as an infrastructure solution worked as an IT-only operation served up across the organisation. Cloud today is a business and technology solution and needs a blended approach.

IT and business leaders can collaborate to clear up the complexity of modern corporate cloud. This starts with achieving visibility into what cloud provider companies use and what each cloud is for. With visibility in place, enterprises can understand if a cloud initiative makes business sense. With the business case in place, companies can finally develop a cloud operating model that orients the powerful capabilities of cloud towards value.

The writer is EVP-Infosys Cobalt, Infosys