The lowdown on industry clouds

Industry clouds are nothing new. In the beginning, public clouds providers abounded until the market normalized around the big three: Google, Microsoft, and AWS. The players that could not keep up often declared that they would become a vertically oriented cloud, aka an industry cloud.

Industry clouds offer cloud services that are purpose-built for a specific industry, such as retail, insurance, banking, healthcare, manufacturing, and so forth. This means the cloud can deal with vertical-specific issues such as the rules and regulations of how an enterprise in a certain market sector and/or geographic location must process, store, audit, or secure its data and operations.

Yesterday the focus was on just getting to cloud, with less emphasis on industry-specific or industry-compliant features. Today most enterprises have 20% to 30% of their workloads migrated to the public cloud. They can now see the potential benefits of having industry-specific services with public cloud providers. Tomorrow enterprises will demand that their cloud providers offer industry-specific services.

Here’s some evidence that these industry-specific cloud services are starting to appear:

• AWS and Goldman Sachs have collaborated to create data management and analytics solutions for financial services organizations.
• IBM expanded its Cloud for Financial Services for signature clients and partners.
• Microsoft announced in November 2021 the general availability of the Microsoft Cloud for Financial Services.

Many Global 2000 companies want industry-specific services right now. More enterprises are joining the chorus because cloud services for many of the public cloud providers are at a feature-saturation point. Simply put, public cloud offerings that focus on horizontal services such as storage, compute, databases, and special services such as artificial intelligence and edge have been built out at such a speed that the typical Global 2000 company can’t keep up. Or they don’t find these new horizontal services to be at the same level of value, and they need industry-specific services.

Therefore, many of the big announcements at cloud events will focus more on improvements to tactical features, such as enhancements to storage and compute, rather than entirely new products that may or may not be adopted. Given the quantity of new cloud services released in the past, market saturation of horizontal services was bound to happen at some point. It’s a good sign that the cloud market is approaching this more mature state.

That brings us back to industry clouds, which are the latest way for the larger cloud providers to offer more value while standing up net-new services. We’re likely to see a great many industry-specific clouds and cloud services pop up during the next few years as those with industry-specific applications will now have compelling reasons to move them to the cloud.

If you ask today’s CIOs why some applications won’t move to the cloud, they will mention issues such as a lack of systems that can deal with compliance, or vertically oriented applications and data that are too important to entrust to the cloud. Cloud providers now offer or will soon offer prebuilt, industry-specific features and services that typically will be better than anything companies could build and maintain themselves.

The coming industry-specific world of cloud will move the needle enough for many enterprises to commit their critical data and applications to the cloud. The cloud providers understand this paradigm, and in many cases, the development and deployment of industry-specific cloud services may be a loss leader that will drive more adoptions.

It’s important that we understand the likely motivations of the cloud providers before we adopt any cloud services, and I’ve made some educated assumptions here. There is always risk when you become too coupled to any cloud services because they will all go away at some point in time. Using these industry-specific services still carries that risk. However, given past patterns, I think it’s a low risk.

Bottom line: Are industry clouds a good thing? I think so. When it comes to industry-specific services, we usually reinvent the wheel each time we build a new application. With cloud services available on demand that fit within the many vertically oriented applications that companies build, companies can move faster and relegate the headaches of ever-changing and complex industry-specific services to someone else’s problem domain. I’m all for that trend.