The future is already in the cloud, and the insurance industry knows it. Any company that wants to boost the digital transformation of its business must continue in the path of cloud adoption. Being Cloud-Ready and Beyond is no longer just a possible path, but a need, and insurers must prioritize and focus on three main trends: the elasticity, the innovation and the productivity that comes with the Cloud.
Core services such as cloud infrastructure, platforms and applications are maturing, and are prevalent in companies of all types. Many companies already use more than one public cloud service and are investing in cloud-based initiatives. As cloud usage expands to address new use cases, demand for its services and the cloud's ability to support new application models and functionalities also increases.
According to Gartner (Forecast: Public Cloud Services, Worldwide, 2020-2026, 2Q22 Update) public cloud services are expected to grow by 20% by 2022. With a five-year compound annual growth rate of 20% as well. And spending on public cloud services will increase by $625 billion over the course of this forecast.
With all this boom in cloud adoption many opportunities and certain trends are emerging for the insurance industry. The preference in the use of certain services offered by the CSPs as industrial clouds and digital marketplaces, that directly influence the dynamics of the company. In addition, multi-cloud environments are becoming more frequent, with distributed cloud models, increasing opportunities and competition in the market.
Cloud-native practices foster new architectures and operating models with which new operational services emerge. And as the cloud becomes more integrated throughout the enterprise environment, other challenges arise. Among these are certain regulations for social, political or data ownership, which still need to be studied, in a still very new and changing environment. In addition to the potential for cloud to bring sustainability benefits on a large scale.
Finally, emerging technologies in cloud computing continue to disrupt adjacent markets and create new product categories. So, both technology and service providers, and insurance companies must understand these new trends in order to take advantage of the opportunities and remain relevant and competitive in the marketplace.
NTT DATA has studied the main challenges that insurance companies face when implementing a cloud-based governance model. It not only involves a transformation in the way of proceeding, but also in the company's mindset. A change in the business strategy of insurers with which we can help with our Cross and Insurance cloud offering. In our latest Thought-Leadership whitepaper "Insurers in the Cloud Journey", we describe how insurance companies will be able to define the best transformation roadmap for their business by achieving a global digital vision.
Assess areas where innovation and composability can be driven by the industrial industry-tuned cloud, as a generic cloud may not offer the same level of interoperability. Learn to see the difference between marketing and reality in industry-specific cloud offerings, assessing it against use cases, features and risks. And maintain ongoing communication with vendors about the industry cloud ecosystems they plan to support or plan to be a part of in the future.
So regardless of whether industry cloud providers are driving governance, composability, insurance applications, services or data, the CIO must use these capabilities to know where the differentiation is, and be vigilant that other critical areas are not underserved.