Investments in cloud computing services have steadily increased over the past few years, largely a result of the rise of the digital workplace and the challenges brought on by remote and hybrid work. But there’s another reason businesses are investing more money into cloud solutions: driven by the chip shortage and subsequent hardware crisis, businesses are looking to build their digital resilience.
According to new research, global enterprise spending on cloud infrastructure services approached $53 billion in Q1 of 2022, representing a 34% increase from the first quarter of 2021.
This trend is only expected to continue over the next several years. As we covered in a recent article about the distributed cloud, the cloud computing market is rapidly evolving, with new solutions aimed at providing more flexibility to businesses who have become increasingly decentralized during the hybrid work era.
Cloud services are also uniquely positioned to solve another relatively new challenge impacting businesses across the world: the chip shortage crisis.
What is digital resilience?
Digital resilience refers to a business’s ability to continue operating at their usual levels of productivity and efficiency during a crisis – such as a security threat, an adverse event that impacts the marketplace, a major technological failure, or any other threat to business operations.
Digitally resilient organizations have a number of steps in place to mitigate damage in case of threatening events. They have a multilayered security strategy, rapid incident response procedures, and – most importantly – they prioritize data centers and infrastructures that are more reliable and less dependent on volatile resources.
Hardware shortages are highlighting the growing importance of digital resilience.
The semiconductor chip shortage has massively impacted the price and availability of IT hardware over the past year. This problem has impacted businesses across the globe, and it’s far from over – with CEOs of major tech companies preparing for at least another year of hardware availability issues.
This global chip shortage has exposed the growing importance of digital resilience and drawn a stark contrast between businesses prepared to face the challenge and those that aren’t.
Companies who rely on consistent, high-quantity hardware purchases have encountered unprecedented hurdles as a result of supply chain issues. These companies are now looking to the cloud to become more resilient, building out secure and scalable infrastructures that rely less and less on hardware availability to keep their workforces efficient and productive.
That’s a big reason why hyperscale cloud solutions have become such sought-after commodities over the past year. Large businesses are signing massive long-term contracts with the leading cloud service providers – AWS, Azure and Google Cloud (these three providers accounted for 62% of all cloud spending in Q1 of 2022.)
These businesses recognize that spending more on cloud solutions now will enable them to significantly reduce costs in the future. With the marketplace for new hardware experiencing unprecedented volatility, corporations who lack cloud-based infrastructures have no choice but to purchase essential hardware at high prices.
That’s not to mention the frequency with which companies have to refresh, update, and replace their existing hardware. We’ve seen many organizations embrace new sustainable IT practices to prolong their hardware refresh cycles – and these strategies only become more successful when paired with cloud-based solutions that consume far less resources than strictly on-premises infrastructures.
The hardware shortage may be a temporary problem, but it’s had a permanent impact on the global technology landscape. Business leaders now recognize that some problems are too far-reaching to ever truly prepare for – and that when these problems do arise, the organizations with greater investments in digital resilience will have the best chance at remaining competitive in the market when the dust settles.
