Today’s Fast-Growing, Cloud-Computing Giants Are Defying Gravity

The English scientist Isaac Newton, famous for disseminating the laws of motion and gravity and for inventing the telescope, wrote to a colleague centuries ago, “If I have seen farther, it is because I stand on the shoulders of giants.” He meant it as a metaphor that over time has come to symbolize scientific progress and innovation.

Today I will humbly assume that we stand on the shoulders of cloud computing giants. Despite the current downturn in the technology market, many of these huge and fast-growing companies are thriving by using cloud software to manipulate and analyze incredible amounts of data, fundamentally changing the way we live and work.

Cloud companies are poised to create billions, perhaps trillions of global economic value, and represent a bright spot in a bleak economic environment characterized by geopolitical turmoil, rising inflation and ongoing supply chain challenges.

Simply put, Marc Andreessen was right in his 2011 prediction that software would eat the world. Software has already taken over the high-tech world, but there’s more to the menu.

Inflation leads to innovation

We are at a historic market inflection point. “Cloud penetration” refers to the amount of enterprise technology spending that is attributed to cloud-based software instead of outdated technologies running on on-premise servers and is scaling rapidly with ample room for growth. As predicted in a report released earlier this month, by 2022 cloud spending will account for about 25% of total technology infrastructure spending of $919 billion.

Looking back at history, today’s inflationary market dynamics will lead to a stepwise increase in technology adoption as companies leverage increasingly sophisticated software to make operations more efficient and reduce costs. Where there is a downturn, market dynamics gravitate toward technological innovation.

We saw it in the 1960s, 60 years before the advent of satellite navigation systems, electronic spreadsheets, and personal computers. It was more than 30 years ago, with scripting languages ​​and multimedia platforms evolving at the peak of inflation in the early 1980s. And we’re seeing that now with the cloud.

Future growth will come from the industrial and economic sectors, so far late to Mr. Andreessen’s 10-year-old software party. But they can still benefit from the cloud’s ability to capture and analyze data.

Already, many of the largest and most profitable businesses in the world today are supported by major cloud providers. These include Amazon Web Services (a subsidiary that is currently the company’s most profitable segment and could soon surpass Amazon’s core e-commerce business), as well as Google Cloud and Microsoft Azure. Last month, Google said its cloud computing division posted revenue of $6.9 billion, up 38% in the quarter just ended, while Microsoft said revenue from its Azure and related cloud services business jumped 35% despite slowing consumer spending.

These backbone cloud services help provide the infrastructure for new cloud data startups such as Databricks* (of which Battery is an investor), Snowflake, MongoDB, Twilio, Okta, and more. It is increasingly recognized for its ability to deliver significant operational efficiencies and deflationary effects. to their customers.

According to company earnings reports and statements, four of these five companies have total revenues of $1 billion or more, and all continue to post double-digit growth rates in today’s uncertain economy.

From drugs to ketchup to clothes

Cloud technology has a wide range of applications that benefit both consumers and businesses. These range from Walgreens’ use of predictive data analytics to predicting demand for specific drug prescriptions, to Kraft Heinz’s calculating optimal condiment inventory on supermarket shelves nationwide, to Rent the Runway leveraging cloud-enabled, automation-based robots. Faster processing time for returned designer clothing.

These early enterprise cloud adopters stand on the shoulders of cloud giants, and the views from up there are impressive. More startup cloud software providers are waiting to offer their services to enterprise customers. About 15 private “unicorn” software companies (worth around $1 billion) are worth today. 10 billion dollars Even after the recent stock market decline, it is based on research data from Pitchbook and our company.

Are those ratings crazy? That may or may not be the case given the cloud opportunity. A significant portion of the world is left behind by intractable data challenges. It’s terabytes of information that no one collects, organizes, or analyzes at a huge opportunity cost. The cloud is the only place with sufficient computing power to enable the necessary storage, security and analytics at this massive scale.

Further complicating this disconnect is the fact that a surprisingly small percentage of workers are data savvy and most have low levels of confidence in data-driven decision-making, according to a 2020 Accenture report. This means that the majority of the global workforce is not fully aware of the potential power of data, and that lack of understanding is costly.

The true potential of the cloud

Despite these challenges, I firmly believe that we will soon see the quantum leap in accuracy and productivity needed in an inflationary environment and made possible by cloud innovation. Consider Newton’s law of inertia. Any object will remain in a straight line at rest or in constant motion unless a force is applied to change its state. An important factor is at work today that signals that we are entering a technological growth spurt.

We could soon see cloud-enabled programs like “generative AI” generating trillions of dollars through more sophisticated assistance from machines, industries that need to produce original work, whether it be computer coding, social media posts, sales collateral, or legal papers. With the potential that exists, you will see transforming industries that currently require people to produce. Increased economic value and labor productivity.

Cloud data will also transform fields such as medicine and patient care. Specializations like genomics will usher in a new era of precision medicine, using massive amounts of data to change the way disease is treated and leveraging the cloud to analyze complex genetic and patient information, including social determinants of health. The cloud revolution in healthcare will soon lead to highly personalized care that promises to reduce patient side effects. faster and more effective treatment; Improving health equity.

Access to home ownership is also improving as part of this new cloud data revolution, allowing more families to accumulate wealth. Mortgage lenders turning to the cloud can more easily analyze a borrower’s income, employment, assets, property appraisal, payment history, and detailed loan term, among other data points. This in turn will improve productivity and accuracy for lenders and system fairness for consumers. We can reach a point where we can incorporate non-traditional metrics (e.g. rent or student loan payments) into mortgage loans or credit score tracking, benefitting consumers that make a huge difference.

Science fiction writer William Gibson said: “The future is already here. It’s just not evenly distributed.” Data manipulated in the cloud is an incredibly powerful resource, but it must be used well. Cloud technologies will help us get there and may even help us escape our current economic hardship.


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