The Cloud System Management Software Market is expected to register a CAGR of 26.2% over the forecast period from 2021 - 2026. Cloud computing technology is rapidly becoming the norm with cloud solutions and services growing. Cloud computing has reduced the need for organizations and enterprises to invest in their own physical IT infrastructure. According to a 2019 Cloud Computing Survey by the Cloud Security Alliance, 69% of the world’s enterprises migrate business-critical applications to the cloud. Among the many factors that compel business organizations to move their applications and operations to the cloud include significant financial savings. With an increased focus on digital transformation, artificial intelligence, and big data analytics, multiple organizations turned to cloud computing. Cloud spend, on the other hand, is rising, as organizations adopt multi-cloud strategies and put more workloads and data in the cloud.
- As Cloud software became a mainstream component in any business IT environment, it attracted the need to manage and run applications through a SaaS model or mange a cloud architecture with an IaaS or PaaS platform. As soon as the concept of Infrastructure-as-a-Service (IaaS) came up, enterprises resorted to deployments between private and public, multiple public, and numerous private and public clouds. Thus, there was a considerable shift of the landscape toward monitoring and analytics factors for performance, cost, and configuration over the cloud system management adoption. Likewise, vendors in the market studied led to the expansion of portfolios by leveraging strategic collaborations and acquisitions.
- For instance, in 2019, Splunk Inc. made three critical acquisitions on similar lines. It acquired Omnition, Signal FX, and Streamlio to indicate an increasing market demand for multi-cloud applications, containerized applications, and microservices. Also, as per Turbonomic’s State of Multi-cloud survey, from 62% in 2019, 75% of respondents in 2020 used containers and cloud-native over varying stages, such as exploring, pre-production, early production, advanced production, or platform-first. Similarly, on enhancing the analytics and monitoring front, in February 2020, Datadog acquired Madumbo, an AI-based application testing platform. With this, the former leveraged the same into its core technology and simultaneously strengthened and extended into digital experience monitoring capabilities for its customers.
- According to the 2019 Annual State of the Cloud Survey, 84% of enterprises with over 1,000 employees are now adopting a multi-cloud strategy. This figure is a 3-point jump from 81% in 2018. Based on current data, there would be a massive adoption and implementation of a multi-cloud strategy in the foreseeable future. However, multi-cloud deployment presents several challenges, primarily the monitoring of multiple cloud environments. To address this concern, enterprises are always looking for a hybrid cloud management portal customized for multi-cloud strategies. According to the Flexera 2020 State of the Cloud Report, 93% of enterprises have a multi-cloud strategy, 87% have a hybrid cloud strategy. Additionally, 20% of enterprises spend more than USD 12 million per year on public clouds, and 59% of enterprises expect cloud usage to exceed prior plans owing to COVID-19.
- As the global health crisis continues, companies globally adopt remote work policies to mitigate the spread of the virus. Enterprise solutions are increasingly being adopted by companies to reach a remote audience with cloud-based applications. This further caused the priorities among such organizations to shift. 75% of financial service organizations are looking for operational experience, whereas 66% of healthcare organizations opting to optimize costs, as per the Apptio survey 2020. As the cost reduction priorities grow, the pressure on IT systems and software to deliver more is growing. Therefore, as an impact of COVID-19, the cloud software segments look to SaaS delivery models with proactive and predictive optimization capabilities, enhanced application performance, and robust cost management.
Key Market Trends
BFSI is Expected to Hold Significant Share
- As more banks and financial services organizations look to monetize data by predicting customer spending patterns, insights-driven from unstructured datasets, the demand for AI, predictive analytics, and big data continues to grow. As a result, multi-cloud financial management and FinOps are becoming significant drivers of cloud management for systems and services. The present state of data science and machine learning pervasiveness in banking and other financial service offerings attract the mission-critical development of cloud management.
- Moreover, the General Data Protection Regulation (GDPR) led BFSI-based organizations to change how they think about data. Being accustomed to stringent regulation, banks, investment funds, insurance companies, and allied businesses have been tasked with managing their data even more closely to avoid fines and reputational loss from failing to comply with the regulations.
- Likewise, American Fidelity (AF), supplemental insurance products and enrollment benefits provider, has over 1.5 million policyholders across 49 states of America, with more than 2.5 million policies. The company struggled to realize the performance of its critical customer-facing enrollment systems. These enrollments further operate across a hybrid, multi-cloud environment built on a mix of on-premise systems, Azure and AWS environments. Dynatrace offers multiple monitoring tools to obtain single view-based visibility into its environment and eliminate performance blind spots, which significantly improved AF's application performance.
- Also, instead of extending offerings concerning the BFSI sector, in May 2019, Apptio acquired Cloudability Inc. The latter's Financial Operations (FinOps) Platform brought in over USD 9 billion in enterprise cloud spending across AWS, Microsoft Azure, and Google Cloud. With this acquisition, capability extension in the form of providing a real-time understanding of cloud spending, and continual optimization of cloud costs attracted varied clientele for Apptio.
- As of August 2020, Apptio launched an Integrated Kubernetes Financial Management as a container orchestration layer to enable the allied organization to scale its commitment to containerized workloads. This is in line with the growing segment's container usage, as its benefits are being realized across application development and operations.
Asia-Pacific is Expected to Witness Highest Growth Rate
- The Asia-Pacific is expected to witness growth owing to the growing spending on IT infrastructure, rise in adoption of cloud-based applications, and increasing demand for automation of processes. A cloud management platform is becoming a basic need for enterprises with multi-cloud deployments, one addressed by almost all cloud providers. Multi-cloud has become the norm for most enterprises across the Asia Pacific region. It is expected that 84% of CIOs in the Asia Pacific believe multi-cloud would constitute up to 50% of their hosting environment in the next three years.
- As more Asia-Pacific enterprises move to the hybrid cloud, many innovative solutions have emerged to help organizations manage cloud applications' lifecycle in a heterogeneous IT environment. According to the Enterprise Cloud Index Report by Nutanix, a significant vendor in enterprise cloud computing, in 2019, the financial sector in India outpaces other industries in the adoption of hybrid cloud, with the deployment of hybrid cloud with a penetration rate of 21%, compared to the global average of 18.5%. Hence such developments are boosting the market's growth positively.
- Moreover, growing development in the cloud computing industry and government initiative would positively drive the market's growth over the forecast period. For instance, According to the Development Research Center (DRC) of the State Council, China's Cabinet, the cloud computing industry in the country is expected to exceed CNY 300 billion (USD 42.3 billion) by 2023, over a threefold increase from its 2018 market value of CNY 96.28 billion. During this forecast, over 60% of the country's businesses and government agencies depend on cloud computing as an integral part of their daily operations.
- Strong government backing and substantial private sector investment are behind the growth of China's cloud computing industry. According to data from the National Development and Reform Commission, the country's top economic planning body, in each year since 2010, the central government has invested over CNY 1 billion toward developing the domestic cloud computing industry. NASSCOM has also stated that Business Process Management (BPM) and IT services in India contributes to over 14% and 10% of the global demand and is expected to continue with the consistent growth in the worldwide cloud adoption rate. The government supported the need for growing IT and Infrastructure through various incentive programs. The growth of IT services in India will drive the market's growth positively.
- The growing investments and developments in the IT and telecommunication and BFSI industry in the region are expected to create opportunities for the market. The Indian IT and IT-enabled services industry is the dominant source for most countries worldwide, which accounted for over 55% of the global services sourcing businesses in 2018 (IBEF). Furthermore, Covid-19 has accelerated customer demand for digital technologies to ensure resilient enterprise business operations across the region, resulting in cloud-based offerings replacing traditional products. Key verticals such as BFSI, healthcare, and manufacturing sectors are witnessing a surge in demand for cloud-based solutions, owing to features such as remote data storage capabilities and provisioning of privileges for hosted applications.
The Cloud System Management Software market is fragmented with the presence of players such as IBM Corporation, BMC Software, Inc., VMware, Inc., Cisco Systems, Inc., Microsoft Corporation, and Oracle Corporation. Prominent cloud systems management vendors deliver customized computing solutions, and provide innovative and efficient solutions to end-users, driving the market growth. Some of the recent developments in the market are :
- July 2020 - VMware, Inc.. announced new capabilities designed further to improve the economic value of VMware Cloud on AWS while meeting an evolving set of requirements for application modernization, business continuity and resiliency, and cloud migration.
- May 2020 - Google Cloud and Splunk, Inc announced a strategic partnership to help enterprises drive actionable insights from their data and enable rapid decisions with real-time visibility across the organization. Splunk Cloud will be made available on Google Cloud to help customers unlock the value of their data.
- The market estimate (ME) sheet in Excel format
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1.2 Scope of the Study
4.2 Market Drivers
4.2.1 Increasing Adoption of Hybrid and Multi - cloud Architectures
4.2.2 Growing Unified Management of Container -based Applications
4.2.3 Preferences for SaaS -based Delivery Model
4.3 Market Challenges
4.3.1 Lack in Cloud Spend Management and Vendor Lock -in Issues in Multi -cloud Architecture
4.3.2 Security and Data Governance Challenges
4.4 Industry Attractiveness - Porter's Five Forces Analysis
4.4.1 Bargaining Power of Suppliers
4.4.2 Bargaining Power of Consumers
4.4.3 Threat of New Entrants
4.4.4 Threat of Substitute Products
4.4.5 Intensity of Competitive Rivalry
4.5 Impact of COVID -19 on the Cloud System Management Industry
5.1.1 Solution (Operations Management, Application Performance Management, Problem Management, Event and Incident Management)
5.1.2 Service (Managed, Professional)
5.2 Deployment Model
5.2.1 Public Cloud
5.2.2 Private Cloud
5.2.3 Hybrid Cloud
5.3 Enterprise Size
5.3.1 Small and Medium Enterprise
5.3.2 Large Enterprise
5.4 End-user Industry
5.4.2 Healthcare and Life Sciences
5.4.3 Retail and Consumer Goods
5.4.4 IT and Telecommunication
5.4.5 Media and Entertainment
5.4.6 Other End-user Industries
5.5.1 North America
5.5.3 Asia Pacific
5.5.4 Latin America
5.5.5 Middle East & Africa
6.2 Company Profiles*
6.2.1 BMC Software Inc.
6.2.2 IBM Corporation (Red-Hat)
6.2.3 Vmware Inc.
6.2.4 New Relic Inc.
6.2.5 Splunk Inc.
6.2.6 Microsoft Corporation
6.2.7 Cisco Systems Inc.
6.2.8 Broadcom Inc. (CA Technologies)
6.2.9 Oracle Corporation
6.2.10 Servicenow Inc.
6.2.11 RightScale (Flexera Software LLC )
6.2.12 Amazon Web Services, Inc.
6.2.13 Dynatrace LLC
6.2.14 Datadog, Inc.
6.2.15 Micro Focus International PLC
A selection of companies mentioned in this report includes:
- BMC Software Inc.
- IBM Corporation (Red-Hat)
- Vmware Inc.
- New Relic Inc.
- Splunk Inc.
- Microsoft Corporation
- Cisco Systems Inc.
- Broadcom Inc. (CA Technologies)
- Oracle Corporation
- Servicenow Inc.
- RightScale (Flexera Software LLC )
- Amazon Web Services, Inc.
- Dynatrace LLC
- Datadog, Inc.
- Micro Focus International PLC