The coronavirus outbreak paralyzed economies as it spread around the world. However, people who were bound to homes turned to a variety of technology tools that allowed them to continue interacting and working. This would have been difficult to do just 10 years ago, but thanks to cloud computing, such capabilities have greatly improved.
The adoption of cloud computing has been on the rise for a number of years. According to Canalys, organizations spent a record $107 billion on cloud computing infrastructure as a service in 2019, up 37% from previous years.
But what exactly is “cloud computing?” Various online glossaries define it as the “on-demand availability of computer system resources, especially data storage and computing power, without direct active management by the user.” The many benefits include its lower up-front IT infrastructure costs and the ability to upload and run applications more quickly.
The majority of online retailers rely on the cloud to not only operate day to day but also to provide the flexibility needed when transactions surge, such as was the case when stay-at-home mandates were in place. Indeed, many consumers turned to Amazon, Instacart, and other online platforms, all of which are backed by cloud computing, to procure groceries, daily essentials, and medical supplies during this critical time.
In 2019, US online retail sales, as a percentage of total retail sales, reached 16%. It is likely this percentage will jump to well over 20% this year as more consumers and businesses continue trends established during the coronavirus outbreak. As such, cloud-computing adoption will grow.
As we emerge from this crisis, it is expected that many businesses across all industries will begin scaling up their digital transformation efforts and invest heavily in IT and cloud resources. Indeed, one of the lessons learned from the pandemic was that supply chains that are dependent on manual tasks or antiquated technology struggled to keep up with demands. Moving forward, these businesses will need to particularly fast track technology investments with a focus on cloud-based solutions or face the consequences.
Indeed, agility will be more important than ever before as businesses are likely to face a much different landscape. Real-time supply chains backed by strong data analytics will be required in order to compete successfully. Cloud computing will serve as the backbone of these supply chains.
Managing costs should also become easier because of cloud computing. Automating audit processes, for example, results in not only uncovering cost savings but it also offers the ability to identify trends and perhaps aid in the development of new products and services.
As more businesses invest in transformation and dependency on shipping goods increases, shipping costs will be scrutinized. A number of technology firms are now offering cloud-based solutions to analyze such costs. Such services are often more accurate and quicker than traditional means. In addition to uncovering cost savings, shipping data is able to be further analyzed for network optimization, measuring carrier performance and forecasting.
According to Gartner, by 2022, up to 60% of organizations will use an external service provider’s cloud managed service offering, which is double the percentage of organizations from 2018. Organizations will also increase their reliance on a number of cloud technologies.
The result will mean real-time (or almost real-time) access to data from across an organization and the ability to analyze all this data to assist in strategic decisions that companies will need to make quickly to an environment that is quickly changing.
Cathy Morrow Roberson is President of Logistics Trends and Insights, LLC, a logistics market research firm. Cathy can be reached at croberson@LogisticsTI.com.
This article originally appeared in the May/June, 2020 issue of PARCEL.
