Danielle Hernandez (Senior Research Analyst)

Thomas Kurian, CEO of Google Cloud (hyperscale public cloud platform), hosted a round table with several members of IDC’s European research team at Google Cloud Next in London in November 2019. This blog provides a summary of Kurian’s statements specifically around the top challenges and competitive advantage of Google Cloud Platform (GCP) in the race between hyperscalers to grasp the biggest possible share of the market.

The App Explosion Is Driving Growth in the Public Cloud Platform Market

Hyperscale public cloud platforms are the main enabler for hyper-agile app development and deployment. According to IDC’s research, hyperscale public cloud platforms could potentially accelerate organisations’ ability to speed up digital innovation at 50–100 times the frequency of traditional approaches. IDC believes that by 2023, 500 million new apps will be created, equal to the number built over the past 40 years, and over a third of all production apps will be hyper-agile.

This “hyperscale revolution” is one of the key trends in today’s technology industry. According to IDC, the proportion of public cloud spend as part of the total software market in Europe increased rapidly from 2% in 2013 to 9% in 2017, and we forecast that it will reach 21% in 2021. With the acceleration of the spend in public cloud platforms, we have seen the market concentrate into three players — Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform (GCP) — which together own more than half of the total market share.

European IDC Public Cloud Platform Tracker

The Hyperscalers Race for Market Share

The hyperscale revolution is generating a war for market share among public cloud platform providers in Europe, with GCP in third place, according to IDC. We are in the very early stages of this game, however. Given the aggressive growth in the market, the positioning of the big players could change radically over the next five years, as European organisations are just at the beginning of the migration journey for mission-critical enterprise applications to the cloud. During the round table, we asked Kurian to comment on GCP’s competitive advantage and the top challenge to winning the hyperscalers war.

CEO Perspective on Competitive Advantage: GCP’s Technical Superiority

Kurian said GCP serves Google’s consumer services as the provider of their IT infrastructure, including the most visited website in the world — the Google search page. He said Google’s consumer services hold under a quarter of worldwide internet traffic, with the next player at only 2%. This was used to illustrate the technical superiority of Google Cloud in terms of scale, performance and security. According to Kurian, “In case there was a major technical failure in GCP, it would become evident to the market due to the reach of Google consumer services.”

Top Challenge: Market Perception of GCP’s Enterprise Readiness 

Kurian admitted that GCP is not currently perceived by the market as an enterprise-ready solution. His focus therefore is to transform its sales organisation, which has traditionally gone to market with an extremely technical approach. Kurian is determined to empower GCP’s sales teams with a narrative that highlights the financial benefits that its solutions could unleash for customers — rather than technical functionalities and features. One of his first decisions after becoming CEO of Google Cloud was to focus on the top 6 industries that generate the biggest share of the total revenue for the company. In parallel, Kurian is working with his team to provide an overview of GCP’s ability to deliver business outcomes, such as acceleration of lead conversion and inventory optimisation.

IDC’s Perspective

Hyperscale public cloud platforms are the main enabler for hyper-agile app development and deployment. IDC’s research, however, shows that 67% of European organisations are building a hybrid cloud technology architecture for the future, where on-prem has a strong presence in the space of mission-critical applications.

There are several reasons why companies in the region opt for a hybrid technology strategy, including regulation, latency issues and security concerns. Take SAP’s ERP workload as an example; according to IDC’s 2019 European Multicloud Survey, only 15% of European organisations plan to migrate the totality of their SAP workloads to the public cloud, and the top reason is security concerns. This trend is consistent across all mission-critical workloads, with most organisations in the region opting for a hybrid-multicloud model.

Who Will Win the Hyperscalers War?

The winner in the hyperscaler war will be decided in the next five years, with IDC predicting that 60% of European organisations will modernise their core IT. The public cloud platform provider that most effectively addresses security concerns to win the largest foothold in mission-critical workloads will not only drive consumption of their infrastructure services in the short term, but also gain a competitive advantage in providing a wider range of services to customers in the long term. Once European organisations modernise their core processes with best-of-breed applications to achieve new efficiency standards, business leaders will need to drive differentiation from competitors through innovative use cases built as extensions of the standard packaged software — thereby leveraging intelligent technologies provided by the hyperscalers.

Recommendations for GCP

  • Open up customer conversations with a focus on business outcomes, but also quickly bring in the hybrid-multicloud narrative using Anthos and the companywide commitment to open source as an anchor point.
  • Address security concerns with a strong narrative around data ownership, security and privacy that is highlighted along the entire customer journey, and draw a clear line between Google’s consumer and enterprise services.
  • Highlight the efforts to drive ethical use of AI, with an explainable AI initiative. As the European Commission starts work on a new law governing the use of AI based on European values — with the first version due in 100 days from now — it is important for Google Cloud to emerge as a trusted partner in all questions AI, where the customer is supported in using AI responsibly. The business case for AI initiatives also needs to be well understood and articulated.

If you want to learn more about this topic or have any questions, please contact us or head over to https://uk.idc.com and drop your details in the form on the top right.

Appendix

multicloud survey

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