Pandemic Boosts U.S. Demand for Cloud Solutions as Companies Seek Greater Agility

U.S. demand for cloud-based solutions has continued to grow during the COVID-19 pandemic, as companies recognize they can better prepare for major disruptions by subscribing to software and infrastructure as services, according to a new report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2021 ISG Provider Lens Enterprise Application-as-a-Service Platforms report for the U.S. finds the pandemic led to more cloud adoption as companies raced to implement remote work and improve their customers’ digital experience. Cloud applications was the only segment of IT spending that did not decline due to the pandemic, and it continues to grow, ISG says.

In the second quarter of 2021, the annual contract value of large cloud-based, as-a-service engagements for the Americas region rose 33 percent, to a record $5.9 billion. Infrastructure-as-a-service (IaaS) rose 33 percent, to $3.9 billion, and software-as-a-service (SaaS) advanced 31 percent, to $1.9 billion, both records.

“The pandemic made companies realize they need more flexibility to respond to major challenges, including COVID-driven facility shutdowns, travel restrictions, workplace health and safety, and other business disruptions,” said Bill Huber, ISG partner, digital platforms and solutions. “Cloud-based applications and solutions allow employees to work from anywhere and help organizations become more agile and resilient to constant changes in market dynamics.”

U.S. enterprises are embracing next-generation SaaS solutions utilizing technologies including artificial intelligence, machine learning, predictive analytics, edge computing and support for the Internet of Things (IoT), the report says.

Changes in customer requirements have caused the design of enterprise applications to shift, leading SaaS providers to build platforms with cloud-native technology, user-centric designs and modern application programming interfaces (APIs) for easy integration. As cloud-native applications also address dynamic workload and data requirements, they lead to growing demand for connected cloud infrastructure.

More advanced APIs are helping to drive SaaS growth, according to ISG. These APIs enable channel partners and integrators to easily combine sets of applications that meet the needs of specific customers. This shortens the time to market for new offerings, allowing providers to focus on their core capabilities and develop functions that set them apart.