Study: Adoption Of Cloud-Native Applications Set To Double By 2020

Study: Adoption Of Cloud-Native Applications Set To Double By 2020

New research from global consulting company Capgemini has indicated a significant step change in enterprise cloud adoption through the increased use of cloud native applications – applications and services built to perform optimally in the cloud, leveraging platform as a service (PaaS).

Shailo Rasanayakam
Posted by Shailo Rasanayakam

According to the study, 15 per cent of new enterprise applications are cloud native today, with adoption set to increase rapidly in the next three years, jumping to 32 per cent by 2020.

Franck Greverie, cloud and cybersecurity group leader at Capgemini, said: “This is an exciting shift in our industry. We predict that cloud-native architectures will become the default option for customer-facing applications by 2020, driven by a need to continuously deploy innovations at an accelerated pace and enhance the customer experience.

“Businesses that delay adopting this approach will struggle to make up the gap with cloud-native competitors.

“Organisations need to listen to their CIOs and understand the huge potential of cloud-native technology to deliver business benefits and innovation. CIOs must also address culture and skills gaps within their own organisations on the road to being cloud-native leaders.”

The study of more than 900 senior professionals working in both IT and the wider business, from 11 countries across Europe, the Americas and Australia, attributes this shift in cloud adoption to a desire to improve business agility (74 per cent), increase collaboration with external partners (70 per cent) and deliver better customer experiences (67 per cent).

It identifies a small group of ‘leader’ organisations that are already committing to cloud-native applications – those with more than 20 per cent of their new enterprise applications developed in this way – with these leaders almost twice as likely to report increases in organisational revenues attributable to cloud-native applications than slower adopters (84 per cent versus 44 per cent).

Compared with the laggards (organisations where less than 10 per cent of new applications are built using a cloud-native approach), cloud-native leaders also:

  • Are more likely to describe their approach to software development as agile (69 per cent to 37 per cent), their deployment as automated (78 per cent to 46 per cent), and their development operations teams as integrated (69 per cent to 38 per cent).
  • Display a more growth-focused attitude towards IT functions, with improving the customer experience (90 per cent), business agility (87 per cent) and scalability (85 per cent) viewed as higher priorities than reducing costs (79 per cent).

The study found that as adoption increases, CIOs at organisations leveraging or planning to leverage cloud-native applications expect IT to become even more central to supporting business ambitions, including the development of new business models (67 per cent), rapid scaling of the business (72 per cent), quicker updating of products/services (71 per cent) and adopting new routes to market (68 per cent).

However, many CIOs are facing challenges in building business cases to invest in cloud-native apps from business leaders that see cost reduction as the priority for IT teams.

These challenges range from the organisational, including battling an ingrained culture that is opposed to the nature of cloud-native working (65 per cent) and a skills shortage when developing cloud-native apps (70 per cent), to the technical, such as difficulties integrating with legacy infrastructure (62 per cent) and being locked in to vendor contracts (58 per cent).

Digital challengers drive sector disruption

Just over a quarter of high-tech firms (26 per cent) and almost a third of manufacturing firms (29 per cent) are cloud-native leaders, compared with just 11 per cent of banking providers, 18 per cent of insurers and 22 per cent of consumer products, retail and distribution (CPRD) firms.

Priorities are changing as a result of the digital challengers – banks now build 10 per cent (the average across all banks surveyed, including leaders, late adopters and laggards) of their new applications using a cloud-native approach, while almost half of insurers (47 per cent) and almost one-third of CPRD firms (27 per cent) say that cloud native forms a core part of their technology strategies.

All three groups – banks, insurers and CPRD firms – plan to spend considerably more on PaaS in three years than they do today (41 per cent, 44 per cent and 41 per cent respectively).

Building a cloud-native business

The report also offers six recommendations to help CIOs turn their organisations into cloud-native leaders:

  • Assess the application portfolio and identify priorities for cloud-native development.
  • Build credibility by demonstrating a cloud roadmap and ability to deliver growth.
  • Start small and then scale up to develop a skilled team.
  • Adapt the IT operating model to support both business agility and stability.
  • Be pragmatic in selecting technologies.
  • Incubate a culture of innovation, collaboration, testing and learning.