Impact of COVID-19 Crisis on Cloud Services

1. SGA Perspective April 2020 C CRISIS VID-19 Impact on Cloud Services

2. CONTENTS Introduction 1 3 The cloud tech silver lining 2 4 3 Changes in the way of working in the long run 6 Demand outlook in a post-COVID-19 world 4 8 SGA Perspective | April 2020 www.sganalytics.com 2

3. INTRODUCTION The growing health crisis caused by the novel coronavirus has impacted industries in a very negative way. The dependence on technology for essential service areas such as press, healthcare, banking, grocery, pharmacy retailers and suppliers has tremendously increased in order to continue their day to day operations. A large chunk of the world’s organized workforce has made a sudden shift to remote working. Companies and governments have had to ensure that the platforms being used for remote operation are secure, operate at the required network speed for home use and at the same time facilitate co-workers to socialize remotely with each other. Companies offering cloud computing services and remote collaboration services have been on the forefront to minimize the disruption. Such a crisis response framework would be hard to imagine without the availability of these modern tools and technologies. SGA Perspective | April 2020 SGA Perspective | April 2020 www.sganalytics.com www.sganalytics.com 3 3

4. THE CLOUD TECH SILVER LINING Amazon’s on-demand cloud computing services is experiencing pressure on its infrastructure like never before in order to maintain platforms such as Netflix and Zoom, both of which are witnessing heavy usage across the world. In addition to supporting consumer and business use platforms, Microsoft, Amazon, Google among others have swiftly responded to the healthcare authorities’ call to action to use their capabilities to store and aggregate data, create dashboards and simulations for healthcare workers to access in real-time. With usage across applications surging, smaller cloud service providers have also risen to the occasion. • The setting up of COVID-19 HPC (high-performance computing) Consortium including Amazon, IBM, Microsoft and Google in partnership with federal agencies and research institutions reflects the joint effort to combat the novel virus. This consortium is aiming to offer online computational resources that can execute highly complex problems to researchers through the cloud. • Google Cloud is collaborating with government agencies in the US and Spain to map the spread of the virus, provide a host of cloud solutions or the G-Suite, an AI-powered Chatbot to resolve queries and issues of citizens swiftly and offering real-time information about hospitals and patients to healthcare officials. • Other tech giants like Alibaba and IBM are also offering free additional cloud services to their existing customers. With the gross negative impact to the world economy, disruption of daily life and loss of life, governments and corporates are pooling in resources to build cloud infrastructure that can increase the pace of pharmaceutical innovation towards the launch of a vaccine. Cloud computing companies have (at the time of writing) not yet faced many complaints from their customers regarding technical difficulties. However currently there are many enterprises that have their business-critical applications running on physical servers and use on-premises software. SGA Perspective | April 2020 www.sganalytics.com 4

5. • Microsoft has already stated that for any new cloud capacity, priority would be given to first responders of the pandemic i.e. healthcare systems, state and federal governments. Even if cloud computing capacity is enough to see through this crisis, supporting home internet bandwidth is crucial to make it a success. • Data security and preventing cybercrimes are also a top concern as the number of remote access users to business-critical applications increase. To that end, companies like IBM are providing free access to cloud solutions while additionally providing security solutions at no excess charge. Cloud Provider Competitive Positioning (IaaS, PaaS, Hosted Private Cloud - Q4 2019) 80% High growth & gaining marketshare Microsoft Year-on-Year Growth Rate Google Market leaders Amazon Overall Market Growth Rate Salesforce Oracle Strong niche players Rackspace IBM 35% Worldwide Market Share Source: Synergy Research Group In the current situation after several weeks of COVID-19 impact on businesses, there is a high likelihood that the likes of Microsoft, Google, IBM, Cisco, AWS, will be able to sustain the pressure. However increasing capacity of cloud platforms require manual intervention and will likely cause delays or interruptions in businesses at some point during the high peak of the pandemic. SGA Perspective | April 2020 www.sganalytics.com 5

6. CHANGES IN THE WAY OF WORKING IN THE LONG RUN Many believe that the coronavirus pandemic will change the way industries run and how people interact in general. • Education is one such example of an industry undergoing a great transformation. Edtech startups have received a great boost ever since the pandemic hit as more and more classrooms moved to cloud platforms to ensure continuity. In China the Ministry of Education has tied up with 22 online educational platforms and issued guidelines to schools to conduct classes via the internet, especially in urban areas. • Although not quite as nascent as Edtech, Fintech apps have also witnessed an increased usage of 72% in Europe (deVere Group) since the coronavirus outbreak. • Telecommuting is also likely to become more common as 74% CFOs mention wanting to move at least some of their employees to remote work post the pandemic (Gartner). The implications of such decisions could raise several questions about the security and functionality of office collaboration tools. Growth in Downloads of Video Conferencing Apps During week of March 15-21, 2020 vs. Weekly Average for Q4 2019 During COVID-19 Pandemic 35x 30x 30x 25x 24x 23x 22x 20x 20x 17x 16x 15x 14x 15x 13x 11x 11x 10x 5x 0x US UK France Germany Hangouts Meet Microsoft Teams Zoom Cloud Meetings Source: App Annie SGA Perspective | April 2020 www.sganalytics.com 6

7. - Cloud-based workplace collaboration tools like Microsoft Teams, Zoom, Cisco WebEx and Slack have been around for a long time, however, with the increased dependency by a large remote workforce, tech companies would have to enhance their cloud infrastructure capacity. - The threat of phishing attacks and the vulnerability of collaboration tools due to their easy integration with third-party apps are being recognized, due to which companies are likely to revamp their security guidelines for employees to minimize the risk of sensitive information leaking out. Video Conferencing Applications 1.56 4.84 0.5 Mar Feb 2020 Jan Zoom Microsoft Teams Daily U.S. mobile users volumes increased to a significant number in March 2020 (Users in $mn) Slack Source: Reuters.com SGA Perspective | April 2020 www.sganalytics.com 7

8. DEMAND OUTLOOK IN A POST-COVID-19 WORLD While the tech industry is not immune to the impact of the coronavirus pandemic, cloud computing services are likely to lead the recovery phase in the coming year. Storage and server sales are predicted to fall in 2020 by 5.5% and 3.4% (IDC Forecast) amid the disease outbreak as most businesses are putting in heavy efforts to transform their IT infrastructure. Storage and server sales 7 5.5% 6 5 3.4% 4 3 2 1 0 2020 Source: IDC Forecast Market predictions also state that with the prolonged and fast spreading pandemic and recession setting in, the global technology market could decline by 2% or more in the year 2020 (Forrester). Despite the forecasts depicting a decline in IT budgets, many industry experts are advising businesses that a knee-jerk reaction to shrink tech budgets could be counterintuitive. CXOs and CTOs are already planning for a post-pandemic world in which way of doing business is likely to change drastically. With advisories restricting business travel, investing in platforms that facilitate virtual interactions is the way forward. Microsoft Teams An explosive growth in daily users (in millions) 45 40 35 30 25 20 15 10 5 20 32 44 0 Before COVID-19 After COVID-19 March 11 After COVID-19 March 19 Source: crn.com SGA Perspective | April 2020 www.sganalytics.com 8

9. Additionally, more staff working from home calls for greater deployment of security infrastructure as well as supporting workers with high speed network connectivity at home. Therefore, although the recession is likely to take toll on demand for IT services and solutions in the next 12 months, in the medium and long term it is highly likely to grow. The global public cloud-services industry will increase by 33% in value and $350 billion by 2022 (Gartner). This is based on market insights that indicate businesses rarely scale back their cloud operations and are almost always likely to increase capacity. Even if there is understandable skepticism on market forecasts, it is certain that life as we know it going forward will be even more connected and driven by technology in a post-COVID-19 world than ever before! SGA Perspective | April 2020 www.sganalytics.com 9

10. About the Authors Nayanjyoti Das AVP, Research & Insights A market intelligence professional with 15+ years of experience in Research & Insights. He has significant exposure in conducting both quantitative and qualitative programs for several global firms across Technology and Consumer Goods sector. He has seamlessly executed several market & competitive intelligence, benchmarking, consumer insights assignments, developed business strategies (GTM, expansion and digital), and launched ROI tools & Innovative indexes. Rubica Bhowmick Senior Analyst, Retail & Technology An experienced research solutions professional with over 5 years of experience in retail, CPG, and technology industries, particularly in the US market. Her work has ranged from B2B technology vendor benchmarking, go-to-market strategy, retailer insights to consumer insights research for leading companies. Rubica holds a Master’s degree in Economics. Sharing Insights Watch and enjoy our corporate videos THE CEO SPEAK: Success Mantra of a Research & Analytics Firm Click on the above titles to watch the videos RESEARCH | ANALYTICS | TECHNOLOGY New York | Seattle | London | Zürich | Pune | Hyderabad About SG Analytics For over a decade, SG Analytics has been one of the leading global research & analytics firms with offices in USA, UK, Switzerland, and India, servicing scores of customers across the globe. We are the partner of choice for Fortune 500 companies across several sectors. We have been recognized as the “Best Employer” by the World HRD Congress in 2018. For further information, please visit our website:sganalytics.com Join the conversation This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by SG Analytics (SGA) and is not intended to represent or imply the existence of an association between SGA and the lawful owners of such trademarks. Information regarding third-party products, services, and organizations was obtained from publicly available sources, and SGA cannot confirm the accuracy or reliability of such sources or information. Its inclusion does not imply an endorsement by or of any third party. 10 SGA Perspective | April 2020 www.sganalytics.com Copyright © 2020 SG Analytics Pvt. Ltd. 10