Why companies are flocking to the cloud more than ever

• By 2025, 85% of enterprises will have a cloud-first principle, according to Gartner.
• The cloud can have benefits like slashed IT costs, more flexibility, and increased efficiency.
• Cloud tools have also helped companies adjust to the COVID-19 pandemic.

The shift to cloud computing has been one of the most significant tech trends of the past few years. While it used to be the norm for companies to own and operate their own data centers, the amount of business software running on traditional servers is set to shrink to 32% of all enterprise applications by 2022, roughly half what it was in 2019.

Forrester senior analyst Tracy Woo put it bluntly:

"It's well understood using cloud is necessary to stay competitive," she told Insider. "The question most are weighing is when and should we be moving all of our workloads to the cloud?"

Moving to the cloud can create a host of benefits for companies, including slashed IT costs, more flexibility, increased efficiency, improved security, boosted performance, and the potential for innovation and developing new capabilities, according to Woo and other experts. And the pandemic has only accelerated this transition and digital transformation.

Why companies flock to the cloud

One of the first benefits that brought attention to the cloud, according to Canalys research analyst Blake Murray, was scalability, meaning the ability to increase or decrease resources to satisfy evolving demands. That remains a draw: For example, the NFL was able to lean on Amazon Web Services to live-stream its virtual draft last year, when it needed to use far more cloud capacity than typical.

Companies that embrace the cloud can additionally find "benefits in innovations" like artificial intelligence and machine learning use cases, according to Gartner research vice president Ed Anderson, as well as "operational efficiency and cost savings."

For example, American Airlines told Insider that uniting its backend system on cloud improved the customer experience, like giving people more control over rescheduled flights, while Capital One said that moving completely to the cloud allowed it to save money and increase the security of its products.

Case studies like that highlight why firms are anxious to make the leap to the cloud: A whopping 85% of enterprises will adopt a cloud-first principle by 2025, according to Gartner research VP Sid Nag, meaning that they'll be focusing on how to free up IT resources and deliver the most business value using the cloud.

Why the pandemic has accelerated cloud adoption

The COVID-19 pandemic has also increased cloud adoption: Almost 70% of organizations using cloud services plan to increase their cloud spending in the wake of the pandemic according to a Gartner survey published in November.

"COVID and the shaky economy brought on a lot of focus to business priorities - specifically accelerating to a more digital business that would enable a company to more readily respond to changing circumstances," said Woo. "It also forced companies to take a bigger focus on good business fundamentals in reducing costs in order to get through tough financial times."

Nag's report highlights three priorities firms have focused on: Preserving cash and optimizing IT costs, supporting and securing a remote workforce, and ensuring resiliency. "Investing in cloud became a convenient means to address all three of these needs," he wrote.

Cloud services also helped companies "keep their businesses viable and online and connected to their customers and partners," added Anderson, who co-authored a report about this shift.

Experts note that the trajectory of the pandemic, and the lingering effects thereafter, have informed their predictions for cloud adoption in 2021.

"I think that cloud services are maybe - to steal the term - like a 'new normal' for business," said Canalys' Blake Murray. "I think the growth will continue. There doesn't seem to be anything that would change minds, especially if the economy stabilizes more. I think people will pour more investment into digital transformation."