4 October 2023
General Industry Update
IDC reports that in Q2 2023, spending on cloud computing and storage infrastructure surged nearly 8% YoY to $24.6 billion. Shared cloud infrastructure emerged as the standout category, experiencing impressive growth of 13.7% YoY, reaching $17.9 billion for the quarter. This segment has now surpassed non-cloud spending, which saw an 8.3% YoY decline, settling at $14.4 billion.
IDC’s full-year forecast anticipates a 10.6% growth in cloud infrastructure spending compared to 2022, reaching $101.4 billion, while non-cloud infrastructure will decline by 7.9% to $58.5 billion. This widening gap emphasizes the dominance of shared cloud infrastructure, which is projected to hit $72 billion for the year. IDC attributes this growth to the demands of complex processing tasks required by AI applications.
In the long term, IDC envisions a continued upward trend, with cloud infrastructure spending expected to reach $156.7 billion by 2027, boasting a CAGR of 11.3% and accounting for nearly 70% of total computing and storage infrastructure expenditure.¹
In line with these findings, Kyndryl, an IT infrastructure services provider, released the results of its first survey on mainframe modernization. The survey, which polled 500 business and IT leaders around the world, revealed most organizations are adopting a hybrid approach to modernizing their mainframe systems and finding big savings as a result.
The primary goals of modernization efforts are to enhance efficiency, agility, and innovation within enterprises. According to Kyndryl’s findings, 95% of respondents are migrating at least some mainframe tasks to cloud platforms, with most businesses moving an average of nearly 40% of their workloads to the cloud.
Businesses have experienced significant financial benefits as a result of this migration, seeing cost reductions and increased profitability ranging from 9% to 11%. On average, organizations are saving $25 million annually, contributing to the collective $12.5 billion in savings per year across the businesses surveyed.
In addition to financial gains, respondents pointed out that this transformation has sparked innovation by enabling increased scalability and quicker time-to-market. These results underscore the positive return on investment associated with mainframe modernization and cloud migration.²
Company Specific Updates
CrowdStrike Holdings Inc
CrowdStrike announced in September that it was acquiring Bionic, known for its pioneering work in Application Security Posture Management (ASPM). This acquisition will augment CrowdStrike’s Cloud Native Application Protection Platform (CNAPP) by integrating ASPM capabilities. The goal is to provide unmatched cloud security through a unified platform, making CrowdStrike the first cybersecurity firm to offer end-to-end code-to-runtime protection for the cloud.
This strategic move was announced during the CrowdStrike Fal.Con 2023 cybersecurity conference and follows the company’s robust Q2 FY24 financial results, where its cloud security segment showed impressive growth. CrowdStrike’s annual recurring revenue (ARR) from its public cloud surged to $296 million by July 31, 2023, a remarkable 70% YoY increase, and a result surpassing most competitors in the cloud security space.
“We pioneered cybersecurity for the cloud era, and the addition of Bionic further extends our cloud security leadership on our mission of stopping breaches,” said George Kurtz, co-founder and chief executive officer at CrowdStrike.³
In September, Oracle took significant steps to enhance its Oracle Cloud Infrastructure (OCI) offerings and provide customers with more options and flexibility in deploying applications and managing workloads on OCI.
Oracle expanded its collaboration with VMware to assist customers in modernizing their VMware workloads on OCI. Customers can now subscribe to the Oracle Cloud VMware Solution through VMware Cloud Universal, simplifying procurement, accelerating cloud adoption, and streamlining cloud-related expenses. This solution will appeal especially to businesses with hybrid cloud architectures, flexible migration timelines, and those requiring top-notch scalability and performance.⁴
Oracle also expanded its partnership with Red Hat, a provider of open-source solutions. Red Hat OpenShift, a hybrid cloud platform, will now run on OCI. Customers can confidently deploy Red Hat OpenShift on both OCI Compute virtual machines or bare metal instances, whether it’s customer-managed installations or on-premises data center environments. This collaboration also includes joint customer support.⁵
Investing in Cloud Computing with DATA ETF
If you’re interested in investing in a cloud computing ETF, consider the Evolve Cloud Computing Index Fund (DATA ETF), Canada’s first cloud computing ETF. DATA ETF invests primarily in equity securities of companies located domestically or internationally that have business operations in the field of cloud computing. To learn more about DATA ETF, please click here: https://evolveetfs.com/data/.
Portfolio Strategy and Activity
For the month, Splunk Inc made the largest contribution to the Fund, followed by Elastic N.V. and CrowdStrike Holdings Inc. The largest detractors to performance for the month were Oracle Corp, followed by Salesforce Inc and Amazon.com Inc.
- Bourne, J., “Cloud infrastructure spending ticks over thanks to complex workloads and AI,” Cloud Computing News, October 3, 2023; https://www.cloudcomputing-news.net/news/2023/oct/03/cloud-infrastructure-spending-ticks-over-thanks-to-complex-workloads-and-ai/
- MacRae, D., “Mainframe modernisation driving $12bn+ cost savings for businesses,” Cloud Computing News, September 18, 2023; https://www.cloudcomputing-news.net/news/2023/sep/18/mainframe-modernisation-driving-12bn-cost-savings-for-businesses/
- “CrowdStrike to Acquire Bionic to Extend Cloud Security Leadership with Industry’s Most Complete Code-to-Runtime Cybersecurity Platform,” CrowdStrike, September 19, 2023; https://ir.crowdstrike.com/news-releases/news-release-details/crowdstrike-acquire-bionic-extend-cloud-security-leadership
- MacRae, D., “Oracle Cloud Infrastructure joins VMware Cloud Universal Program,” Cloud Computing News, September 12, 2023; https://www.cloudcomputing-news.net/news/2023/sep/12/oracle-cloud-infrastructure-joins-vmware-cloud-universal-program/
- MacRae, D., “Red Hat and Oracle bring Red Hat OpenShift to Oracle Cloud Infrastructure,” Cloud Computing News, September 25, 2023; https://www.cloudcomputing-news.net/news/2023/sep/25/red-hat-and-oracle-bring-red-hat-openshift-to-oracle-cloud-infrastructure/