The year 2022 was good for the cloud. And 2023 will be a great(er) year for the people using it.
It may seem that 2022 was a good year for cloud providers and customers alike.
It may seem that way based on:
- Projected growth of the market. According to Statista research, the worldwide public cloud market reached close to USD$415 billion in 2022, and Gartner forecasts it to grow to $591.8 billion in 2023.
- Innovation from cloud providers. In late 2022, Gartner reported that Amazon Web Services (AWS) had released 3,084 new services and functionalities that year—about 300 more than in 2021 (and exactly 3,004 more than the 80 releases in 2011).
Growth is good and so is choice—mostly. But a closer look at these statistics tells a more complicated story. Despite the continued growth of the public cloud market, the rate of growth slowed for multiple providers in 2022. And even with a rapidly expanding set of offerings available to them, cloud customers are wary of spending more on cloud services than they already do. Cloud customers surveyed by UBS in the later months of 2022 described plans such as cutting their yearly cloud spending growth from 40% to 10% and reducing their core infrastructure spend by 20%.
For a few reasons, we plan on staying cloud enthusiasts—and optimistic ones at that—into 2023. Spending a little more on cloud services instead of a lot more doesn’t have to mean doing less cool stuff with our customers. For IT leaders, it does mean figuring out how to make the technology you have today work harder for your organization.
Get a feel for what we’re talking about with our four cloud predictions for 2023 and beyond:
- A mass movement to optimize cloud costs and spending
- Platform power: The rise of platform engineering and industry platforms
- Cloud-supported breakthroughs in supply chain management
- Better access to AI and more through better integration—and education
Scroll down for more about each of these predictions, including relevant updates from AWS re:Invent 2022. If we were lucky enough to see you there, we miss you already.
Below: At AWS re:Invent 2022, Peter DeSantis announces the launch of AWS Graviton3E, a new version of the AWS Graviton chip family that is designed specifically to power high-performance computing workloads.
1. A mass movement to optimize cloud costs and spending
If there’s a common enemy that will unite small businesses, mid-market enterprises, and large enterprises across industries in 2023, it’s out-of-control cloud costs. Research from Unisys in 2019 found that about half of organizations expected to better manage or reduce costs from moving to the cloud and 74% measured cost efficiency/savings to evaluate cloud progress. In 2022, Flexera’s State of the Cloud Report found that organizations self-estimate they waste 32% of cloud spend. That’s up from an estimated 30% wasted in 2021.
In 2023 we will address this letdown without landing back on-premises.
- Forrester predicts that while tech leaders will continue to lean into cloud-native technologies, they will increasingly need to demonstrate cloud cost management to the CFO and the rest of the C-suite. To accomplish this, Forrester predicts that organizations will turn to third parties.
- On that note, TechTarget’s Enterprise Strategy Group describes a 2023 in which cloud cost optimization tools like Datadog, Spot by NetApp, and Splunk become “mandatory.” It observes that many organizations have already made investments in these tools, but they haven’t been enforcing their use.
- In terms of provider-offered tools, Amazon.com VP and CTO Werner Vogels predicts that more AWS customers will start using its “custom-designed chips.” He’s referring, of course, to the AWS Graviton family of processors, which was still growing as of late 2022 with the launch of AWS Graviton3E.
Surprised at how much AWS has leaned into processors in the last few years? So is Amazon.com SVP and Distinguished Engineer James Hamilton—whom a Slalom team member met at re:Invent! Hamilton wrote on his blog in May 2022: “When I joined AWS a bit more than 13 years ago, I wouldn’t have guessed we would be designing and delivering custom processors but scale supports innovation at every level.”
Full disclosure: We’re pretty excited about Graviton ourselves, and were named an AWS Service Delivery Partner for AWS Graviton (and AWS Glue) during re:Invent. Check out Slalom’s Rob Flesher displaying our shiny—erm, beautifully wood-carved—new Graviton launch partner trophy on LinkedIn.
2. Platform power: The rise of platform engineering and industry platforms
Gartner predicts end-user spending on “cloud system infrastructure services,” or infrastructure as a service (IaaS), to be stronger than spending on “cloud application infrastructure services,” or platform as a service (PaaS), in 2023, but platforms still feel like the next frontier for a variety of reasons. A big one is the growing complexity of the cloud service landscape. While we’d never call 3,084 new services and functionalities in one year “too much of a good thing,” we might call it a lot to take in. That’s part of where platform engineering and industry cloud platforms come into play.
In its list of the top 10 strategic technology trends for 2023, Gartner describes platform engineering as providing “a curated set of tools, capabilities and processes that are packaged for easy consumption by developers and end users.” It effectively reduces friction along the path of an engineer’s code from idea to working software—reliably, securely, observably, and with scalability. Platform engineering is less about insulating engineers from the amount of options in the cloud ecosystem and more about allowing engineers to stay in a state of flow for longer.
Right on, say we. In 2022, our engineering division Slalom Build relaunched our Cloud, DevOps, and Security capability with the new name and vision of platform engineering. Learn more in a LinkedIn article from Slalom’s Rob Cummings, who is now the senior director of platform and site reliability engineering.
Industry cloud platforms
In Gartner’s list of trends for 2023, it also includes industry cloud platforms, which it describes as combining “SaaS, PaaS, and IaaS with tailored, industry-specific functionality.” According to Gartner, industry platforms help organizations “adapt to the relentless stream of disruptions in their industry.“
If “relentless” sounds about right for you and your industry, help is on the way. The hyperscalers hear you, and they’ll continue to respond in 2023 with an influx of platforms and solutions built to tackle the unique challenges of different industries. For example, AWS introduced AWS for Advertising & Marketing at re:Invent, an initiative that features new and existing capabilities from AWS and AWS Partners (we’re one!) for customers’ advertising and technology workloads.
3. Cloud-supported breakthroughs in supply chain management
Here’s a sector that’s been significantly impacted by the events of the past two years: logistics and supply chain management (SCM). In the area of enterprise application software, SCM is considered to be the fastest-growing market segment, with an estimated revenue of $20.4 billion in 2022, according to Gartner. Much of this growth can be attributed to the ongoing effects of supply chain disruptions, not just on enterprises but on small businesses, with 23% of small-business owners reporting that supply chain disruptions have had a significant impact on their business, according to the National Federation of Independent Business.
The proverb “Necessity is the mother of invention,” which evolved through translations of Plato, still rings true today. In 2023, we predict that more technology providers will create and improve upon solutions built to alleviate persistent supply chain pressure. Of course, many providers have already started. It wasn’t long into re:Invent 2022 before CEO Adam Selipsky announced AWS Supply Chain, a cloud-based, machine learning application that uses machine learning (ML) to help supply chain leaders mitigate risks, lower costs, and ultimately increase resilience.
Some more good news for supply chain leaders? A December 2022 decrease in pressure per the Global Supply Chain Pressure Index, disrupting the upward trend seen in October and November 2022. While the decrease was moderate, it’s one downward trend we want to see more of, and cloud-enabled innovation gives us a good reason to believe we will.
Overall, I see a trend that AWS is investing in tighter and easier integration of its services, doing the heavy lifting and allowing our clients to focus more on getting faster and more meaningful insights from data by simplifying use of AI and ML services.
4. Better access to AI and more through better integration—and education
We noticed the same thing as Forrester did in its recap of re:Invent for Forbes, where it described the theme of 2022’s announcements around data and analytics as “ease of adoption and integration.” To illustrate, Forrester cited announcements including:
- Easier data ingestion into Amazon Redshift (i.e., Amazon Aurora zero-ETL integration)
- More (22 more, to be precise) data connectors for Amazon AppFlow
To round out that list, we might add the following re:Invent announcements, which were recapped on LInkedIn by Yassir Elyamani, a principal consultant and data and analytics leader at Slalom:
- Amazon DataZone for governed analytics at scale
- AWS Data Exchange for AWS Lake Formation for easier integration of third-party data
All this integration simplifies the complexity of working with the cloud and will lead to more opportunities for a more diverse array of users to adopt technology like artificial intelligence (AI). That’s our last prediction—but we’ll add one caveat: integration and simplification aren’t all that you need to successfully implement emerging technology. For organizations to achieve real and long-term business outcomes with the cloud and cloud-supported technology, their teams will still need to understand how the cloud works and how to wield the right tools for the right jobs. That’s why we predict that in 2023 and beyond, initiatives to democratize technical skills will serve to grow the cloud workforce, as well as the level of equity and inclusion inside it.
Here are three such initiatives announced in 2022:
- Educator enablement like the new program from AWS Machine Learning University (MLU) to help community colleges, minority-serving institutions, and historically Black colleges and universities teach database, artificial intelligence, and ML concepts
- Internal technical expert development like the Slalom Cloud Residency, our program to recruit and build future cloud technologists of different geographies, identities, and backgrounds through a combination of training and real-world client projects
- Government-led initiatives to codify and enforce the responsible use of technology by organizations for the protection of people, including the AI Bill of Rights
These initiatives and the other events of 2022 reviewed in this article have given us a lot to look forward to in 2023. And even where there’s room for improvement (we’re looking at you, cloud costs), a little nudge from necessity—that mother of invention—might be a little bit of a gift.