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Why More Enterprises Are Embracing Industry Clouds

Generic public cloud services aren't a fit for all use cases — that's where the emerging market for industry clouds is taking hold.

Industry clouds have picked up significant momentum in 2022 as organizations increasingly realize that a generic one-size-fits-all public cloud offering isn't always the best option.

With an industry cloud, configurations, policies, and technologies are designed and tailored for a specific market vertical. For example, there can be industry cloud services just for retail, healthcare, financial services, or any other industry. There are industry cloud offerings available from the big public cloud providers including AWS, Google, and Microsoft, as well application-driven vertical offerings from vendors such as VMware, Snowflake, and Databricks.

"We've seen massive proliferation of industry clouds among the hyperscalers and from SaaS players in the past few years," Tracy Woo, an analyst at Forrester, told ITPro Today.

The market is near saturation for attracting end users willing to sign on for a "cloud for everything" offering that has been the messaging for the past decade, Woo said. In her view, the IT industry has reached an inflection point where those who have been reticent to adopt cloud especially in highly regulated industries realize they need the public cloud to remain competitive.

What Industry Clouds Are — and What They Aren't

According to Woo, the biggest misconception surrounding industry clouds is driven by the marketing veneer around these offerings.

For instance, some might have the perception that Microsoft Cloud for Financial Services and AWS for financial services are just general cloud services that have been repackaged with a ton of industry-specific messaging around them. The reality, Woo said, is that there is a real movement to make these industry-specific. For example, AWS has teamed up with Goldman Sachs and Nasdaq to make a financial services industry product, and Google invested $1 billion in CME Group to do the same.

The move to industry clouds is one that vendors and professional services organizations are increasingly embracing. Aki Duvvur, vice president of offering & integration for Kyndryl's Cloud Services Practices, told ITPro Today that industry clouds are vertical solutions that wrap rules, regulations, and industry value into the deployment models of public cloud providers.

"The focus is often on business outcomes versus a traditional public cloud deployment model, where the focus is often on feature/function pricing alone," Duvvur said.

While there is growing interest in industry cloud offerings, Chris Noble, CEO and co-founder of Cirrus Nexus, told ITPro Today that it is important to recognize that industry cloud is not a big step change. As such, he suggests that the expectations around what industry clouds can deliver have to be set and managed accordingly.

"In practical terms, industry cloud is a logical grouping of applications and systems specific to an industry; however, it is not just that," Noble said. "Industry cloud comes prepackaged with all the security controls, policies, configuration, and management tools that are necessary to readily deploy solutions for specific business processes."

What Are the Benefits of Industry Cloud?

Different industry verticals have different regulatory compliance requirements. A need to meet specific industry regulations is a key driver for industry cloud adoption, but it's not the only one.

“Highly specialized industries such as banking, medical, or government have adopted purpose-built cloud solutions for a long time," Jared Haleck, chief product officer at Kantata, told ITPro Today. "We're now starting to see industries with less regulatory oversight, like legal and construction, racing toward purpose-built solutions as well."

Haleck noted that data from a study conducted by Forrester Consulting on behalf of Kantata shows that this shift toward purpose-built solutions tailored to the specific needs and use cases is happening right now in the professional services industry. Seventy-eight percent of business leaders agree that technology vendors limit professional services organizations when they provide generic, rather than industry-specific, solutions and services to address unique professional services needs.

“As industry clouds have evolved over the years, the core benefits have moved from mitigating regulatory risk to inevitably offering more value than horizontal solutions," Haleck said. "Cloud computing is relatively new compared to other industries, and similarly, as time goes on more specialized products will emerge."

For example, the automotive industry has progressed with automobiles aimed at almost every type of specialized use case — from ruggedized utility vehicles to self-driving vehicles, he said. Haleck expects that the IT industry will see the same trend toward specialization in cloud computing over the years to fit specific needs and use cases.

Best Practices for Industry Cloud Adoption

There are a number of best practices for enterprise IT leaders to consider when moving to an industry cloud model.

Christian Iantoni, partner, Cloud & Digital, and PwC industry cloud co-leader, told ITPro Today that it's important to realize that not all industry clouds are alike.

"Everyone defines it differently, even the leading industry analysts, since it's such a nascent market," Iantoni said. "You have to really know what you want, and how you will measure success, to best bring the right partners together to deliver for you."

Iantoni recommends three guiding principles for organizations looking to adopt an industry cloud approach:

1. Collaborate. Bring your business people and technical people together into agile working teams and update your operating model to enhance speed and efficiency. Hire and grow the best business and technical talent to work alongside each other.

2. Partner. Pick your preferred ecosystem partners, and go deep with them to co-invest and co-build — hold them accountable with skin in the game to achieve your desired business results.

3. Compete. Truly define your competitive differentiation points and determine where you need to invest to differentiate and where you need to invest to be most efficient to win alongside your competition.

About the author

 Sean Michael Kerner headshotSean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He consults to industry and media organizations on technology issues.
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