Driven by technology developments such as the internet of things (IoT), artificial intelligence/machine learning (AI/ML), and advanced analytics, remote and edge sites are being transformed into revenue engines, generating insights that help companies improve operations, drive growth, and disrupt markets with innovative as-a-service revenue streams. IDC projects that 55.7 billion IoT devices will be deployed by 2025, capable of generating almost 80 zettabytes of data and furthering the opportunity for business innovation and insights at the edge.
Given the influx of connected devices, IDC predicts that the total spending on edge infratructure will grow to $41.7 billion by 2025. Manufacturing operations, production asset management, and smart grids are among the key use cases fueling edge deployments, IDC says, with emphasis on business intelligence/data analytics, content delivery, text and image analytics, and networking and security.
Driven by the push for edge computing to drive real-time insights and localized actions, Gartner anticipates, nearly 75% of enterprise-generated data will be created and processed outside of a traditional data center or cloud by 2025. Companies pursuing cutting-edge use cases see the potential for distributed cloud to up-level the value of edge deployments and address new operational challenges. Examples include augmented reality (AR) for optimized maintenance and repair work, ingesting machine data for predictive maintenance, or gathering medical images and pushing them to the cloud for retention and compliance with HIPAA regulations.
At the same time, the distributed cloud model holds potential for traditional workloads, enabling organizations to modernize on-premises systems as they advance on a tiered cloud journey. Specifically, a distributed cloud model can refashion legacy systems with a cloudlike experience, including deployment flexibility, pay-as-you-go utility-based billing, and automation that reduces the number of operational and administrative tasks.
According to ESG, 46% of organizations plan to invest in technologies that deliver a “cloud-like” experience for their on-premises data centers over the next three years.
Enterprises have an appetite for alternative deployment models, given the challenges associated with cloud sprawl. Research shows that companies enlist, on average, 2.6 public and 2.7 private clouds. The complexity exists even as most companies have migrated initial workloads such as web servers, backup, disaster recovery, and productivity applications. Even with the rise of software as a service (SaaS), 92% of companies indicate that they expect on-premises software spending to grow, especially for enterprise applications such as enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), and business intelligence (BI) still residing in company data centers. However, these workloads may run on legacy infrastructure that is costly to run and maintain: An estimated 72% of IT budgets are spent on maintenance and administrative tasks, and the perpetual cycle of deployment, maintenance, and hardware refresh can lead to ballooning total-cost-of-ownership (TCO) metrics.
Different IT environments and differing system silos are putting pressure on IT organizations to develop skills mastery in two universes. They must acquire new skills in areas such as containerization, cloud security, automation, and orchestration. At the same time, they are challenged by the need to maintain expertise to manage legacy on-premises infrastructure, which still requires significant manual administration.
Data regulatory mandates such as the General Data Protection Regulation (GDPR) in Europe are creating yet another burden for IT organizations as they confront data compliance, sovereignty, and proximity challenges. Regulations are changing with greater frequency, so many companies are seeking to repatriate workloads back on-premises for greater risk mitigation.
All this momentum tees up nicely for distributed cloud growth. According to MarketDigits, the distributed cloud market is projected to reach $5 billion by 2026, up from $1.3 billion in 2020 and growing at a CAGR of 26.4% during 2021−2026.
The key benefit to customers: flexibility and choice without being locked into any specific provider ecosystem or tied to one specific deployment model. “Distributed cloud allows organizations to tap into best-of-breed cloud services, by giving them access to those solutions through a centralized management engine,” notes Haren.
Distributed cloud allows organizations to tap into best-of-breed cloud services, by giving them access to those solutions through a centralized management engine.
