No downturn in Cloud-Data Warehouse market

While economic forecasts for 2023 are focusing on a major slowdown in economic activity, all predictions for the data warehousing industry show the market continues to expand.

Countries in the G7 and G20 are all feeling the pinch from rising prices, squeezing businesses‘ profit margins as not all increases can be passed on to consumers facing a real drop in living standards and disposable income.

But partly for that reason, businesses across all five continents are pursuing digital transformations and increasing use of data analytics and business intelligence to gain a competitive edge, by selling more and reducing costs through more efficient production and logistical processes.

Recent research by US firm Technavio predicts the global Cloud data warehouse market will grow by $17.74 billion by 2027. The next five years will see a record year-on-year growth rate of 27.62 per cent, although the momentum of the market‘s growth will decelerate over that period.

North America – the fastest growing region in the Cloud data warehouse market – will account for almost 50 per cent of the anticipated growth worldwide.

Cloud data warehouse solutions offer potential benefits from lower power consumption, and improved write speed, with small-to-medium size enterprises (SME), increasingly turning to off-prem solutions.

Technavio report SME enterprises and organisations across the healthcare, IT, manufacturing, telecoms industries – plus banking, financial services and insurance companies and those working in the government and public sectors are following the trend.

SMEs are under constant pressure to upgrade in response to technological advances. To gain or maintain that competitive edge they often are compared to larger enterprises, where the size and cost of changes to data platforms and data analytical operations maybe prohibitive.

In those industries that made the switch to the Cloud early in the transformation period, data volumes tend to be much higher, and they are also looking to optimize bigger data sets more profitably.

Data standardisation, flexibility, connectivity, and business intelligence provided by Cloud data warehouses are also helping large enterprises to run their business more profitably.

One of the biggest driving forces in the growth of the date warehouse industry in the Cloud is the increasing use of devices connected to the Internet of Things (IoT) around the world.

Household and industrial devices that have sensors collecting data in vast quantities are now the norm, while the car industry, healthcare and even smart cities in some parts of the world mean there is no slowdown from the IoT either as data centre networks proliferate.

Such data sets require bigger storage systems, and large-scale data analytics to manage and analyse data effectively to drive business intelligence insights.

This major trend will continue to grow in all those sectors mentioned – no doubt the widespread adoption of driverless cars and lorries will lead to another large spike.

During the next five years, increased availability of 5G mobile networks will also drive growth between now and 2027, increasing the need for computing facilities at the cutting edge in the Cloud.

One of the biggest disruptors of increased growth rates will be vendor lock-in, according to Technavio. Also known as customer lock-in, the use of products and services which cannot be easily changed to a different vendor‘s service or product will be a major challenge over the middle part of the decade.

The fact that software applications are normally designed by different vendors to work with specific data platforms and tools, makes switching both difficult and potentially very expensive.

Technavio‘s research also predicts that the master data management (MDM) solutions market will also grow by $17billion by 2026, with an annual growth rate of 17 per cent.

Again, the increasing volumes and complexity of data are a key driver of growth in the market – predicted to be 14 per cent by the end of 2022.

Data that includes everything from customer reviews, feedback and social media posts is not-very-well structured data. Such customer data held outside an enterprise‘s data platforms, containing customer preferences and buying patterns is equally important to every business. Added to that, audio and video clips – which can contain text and pictures – are just some of the other sources of information available to organisations today.

That increases the demand for MDM solutions, – if that valuable data can be processed and help create meaningful insights. On top of that, advances in machine learning (ML), artificial intelligence (AI) and neuro-linguistic programming (NLP) are also contributing to market growth.

Applications incorporating AI/ML algorithms allow analysts and business users to find meaningful insights, much more easily, and are being increasingly adopted. They also provide data for improved operational efficiencies and a better understanding of consumer behaviour, which give the data owner a significant competitive advantage.

Advances in analytics platforms and software will be even more relevant and advanced over the next five years, increasing numbers of business sectors.

The USA and Canada are key regions in the MDM solutions market‘s growth, with 30 per cent of the increase expected to derive from those two countries, according to Technavio.

Companies in the banking, financial services and insurance sector will account for the majority of the market growth.

The need to increase revenue, while meeting regulatory compliance requirements and reducing costs while providing customer-centric services – added to the digitalisation of all core banking and insurance processes – will drive the adoption of more MDM solutions thanks to the increased volume of data that will generate.

You can read the full report here.