Is hyperscaler dominance helping or hindering business growth?

Written By

Ashish Varerkar
Head of Cloud Native



Ashish Varerkar, head of cloud native, LTIMindtree argues that a multi-cloud strategy offers greater control and flexibility while reducing risk.

The rapid pace of innovation is being powered by the ability to compose business solutions through a combination of interoperable cloud-native, fully managed AI and ML services, coupled with a multitude of managed services now available on the public cloud. This, plus a focus on hyper-automation, cost control and sustainability are fuelling the hyperscalers’ growth.

Today, AWS, Microsoft Azure and Google Cloud own two-thirds of the U.S. Infrastructure as a Service (IaaS) market and nearly four-fifths in the UK. As a result, hyperscalers now account for half of all major data centres.

Hyperscalers are an attractive proposition for many organisations, with their large ecosystem offering a wide variety of cloud products such as compute, storage, databases, analytics, networking, developer and IoT tools. But aside from the ‘one-stop shop’ offering, there are several hidden operational, security and financial risks of being locked into one vendor that may limit an organisation’s ability to innovate and grow.

Unfortunately, once you are locked in, your applications, APIs, integration and databases might be set up in a way that makes it very difficult to move to another environment without huge efforts of re-write and/or migration. Also, the cost of migrating your data is significant.

There are numerous risks with keeping all your data and applications with one cloud provider including obsolescence or inability to leverage better services, scaling, resiliency, sovereignty, security, and ability to negotiate better cost. Relying on one provider and risking being completely knocked offline if they are attacked might be putting your organisation at significant risk.

Also, if a cloud provider changes their product offering in a way that disadvantages you or they increase their prices, this can add unnecessary complications and costs to your cloud strategy if you are locked into their ecosystem.

Despite announcing slowing growth in the last quarter, the three hyperscalers continue to dominate the cloud computing market, so much so that it is prompted regulatory concern. Ofcom recently announced that it was expanding its remit under the Enterprise Act 2002 to investigate the public cloud and the internet communications market. This will involve the regulator launching a market study to examine the position of AWS, Microsoft, and Google in the UK’s cloud services market.

While the risks of vendor lock-in can be challenging, hyperscalers offer significant benefits enabling organisations to create better and faster experiences for their customers. Organisations can offload the management of their infrastructure to the cloud and move their tech innovation requirements e.g., AI, machine learning and analytics, giving them the flexibility and scalability to innovate and evolve.

For industry-specific requirements, hyperscalers offer industry-specific cloud services such as AWS for industrial, designed to optimise operations and reinvent supply chains for manufacturers or Microsoft industry cloud designed to solve business use cases across retail, healthcare manufacturing and other verticals. Overall, this approach enables organisations to embrace innovation and focus on business outcomes, rather than worrying about the day-to-day technical aspects.

But to avoid the risks associated with vendor lock-in, working with multiple cloud providers is a better approach. By deploying 80 per cent of your workloads in a primary cloud provider for example, and then 20 per cent in a secondary cloud provider, with a cloud-native posture to enable technical interoperability, you can harness the benefits of both cloud platforms and translate them into business results. This also enables you to maintain more operational and financial control over your cloud strategy, rather than being at the mercy of one provider.

There is no doubt that hyperscale cloud providers have unrivalled scale, innovative technology, and deep expertise, but their market dominance is causing concern among regulators and the wider industry. While their growth has been the result of continued innovation, achieved by adding new products and services to their portfolio, vendor choice is becoming more and more limited and vendor lock-in remains a significant risk. But with the right multi-cloud strategy, you can reap the benefits of the hyperscalers while maintaining greater control and flexibility over your cloud architecture and reducing security risk. This makes it a win-win for everyone.

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