Microsoft is expanding its industry-specific cloud offerings into four new industries — financial services, manufacturing, nonprofits and retail — in response to growing business urgency to move to the cloud.
But other vendors have already established clouds in these niches. Amazon Web Services, Google, IBM and others all offer clouds by sector, too.
Leading the market, AWS holds 45% of the worldwide public cloud IaaS market share, according to the latest Gartner data on the cloud services market. Microsoft, the next-closest competitor has 17.9% of the market, trailed by Google at 5.3% and IBM at 1.7%.
Cloud vendors are always looking to innovate and differentiate their offerings from the competition, and the dive into industry-specific cloud is part of that strategy. As businesses move more data to the cloud, they're looking to comply with niche sector regulations and concerns.
"In terms of complexity, some of the workloads that are moving into the clouds now are much different in nature," said Sid Nag, VP analyst at Gartner. With more nuance to accommodate for, industry-specific clouds allow vendors to provide a specialized cloud offering to each organization without starting from scratch.
No longer an afterthought, cloud is becoming a core underpinning for more businesses. Compliance, governance and regulations become more important and need to be architected from the get-go, according to Nag. Offering industry-specific clouds lessens the burden of accounting for those specifics on both vendors and organizations.
For vendors, industry-specific cloud gives them room to compete with AWS, the cloud provider dominating the market, Nag said. But beyond that, industry-specific clouds are filling a business need.
Microsoft vs. Google vs. IBM
Microsoft announced its latest industry-specific clouds on Wednesday as a part of its efforts to expand sector offerings. Cloud for financial services, manufacturing and nonprofits are all new offerings from Microsoft. The company will also update its healthcare cloud in April and publicly preview the retail offering in March.
The strategy is largely a response to customer demand for industry relevance, according to Alysa Taylor, corporate VP or Microsoft Business Applications and Global Industry Marketing.
Microsoft touts common data models, APIs and cross-cloud connectors as tools that differentiate them from competitors, according to Taylor.
"We have to be able to tailor our cloud services to help organizations be more agile, be more responsive and future proof because I think things are changing at such a rate," Taylor said.
Through industry-specific clouds, Google offers its internal capabilities to businesses, according to Lori Mitchell-Keller, global leader of industry solutions at Google Cloud. For example, retailers have the option to use Google's search algorithms for their own websites.
Google's AI and ML offerings also differentiate from competitors, according to Mitchell-Keller. "We want to definitely be a cloud provider, but we want to be a business solutions provider as well," Mitchell-Keller said. "We don't want to be an IT provider from infrastructure. We want to be able to really help our customers move forward."
The vendor offers eight industry clouds, and identified them by considering their levels of competition and ability to differentiate, according to Mitchell-Keller. Google also takes the hybrid cloud approach to its services. Because rip and replace can be a hassle, Google Cloud embraces the customer's options to use multiple clouds, according to Mitchell-Keller.
Google works with members of each industry to develop the specific solutions that meet its needs, according to Mitchell-Keller.
IBM offers its own industry-specific cloud services, notably its financial services cloud, to help the sector meet regulatory and security requirements. The company looked at regulated industries such as telecommunications, healthcare and government as it looked at sector-specific clouds.
"Even within particular industries, there are a lot of common needs that make it helpful to define industry-specific clouds so that people can move faster onto cloud," Hillery Hunter, VP and CTO at IBM Cloud, said. "We've seen that this shift into moving faster onto cloud really underscored by investments that we've been making on data protection and security."
IBM focuses on building in compliance and security capabilities specific to the industry with core open-source based technologies, according to Hunter. Cloud provides flexibility at a time when businesses are in flux and industry-specific clouds make it easier to make the leap.
"Industry-specific cloud gives people the opportunity to move to cloud more quickly because a bunch of the considerations of that industry have been baked in and taken into account," said Hunter. There's also a synergy of stakeholders all dedicated to the same industry contributing to the solution.
AWS did not respond to a request for comment by the time of publication.
What to know before switching to an industry-specific offering
Vendors will often try to sell the benefits of their latest offerings, but businesses looking beyond the sales pitch can determine which cloud option is most beneficial for them.
"It behooves the companies and organizations to make sure that their cloud provider of choice is compliant with the same rules and regulations that they'd have to adhere to when there are things on premises," Nag said. "They want to make sure that the cloud provider they choose is already doing all of that for them so they don't have to worry about it."
Generally, the industry-specific clouds bring tailored offerings to the business, but there are still several to choose from as more vendors develop niche offerings.
"Do your due diligence, do your homework so you don't pick the wrong provider," said Nag. The due diligence won't end once a provider is selected. Businesses will have to continuously check with the vendor to make sure the cloud service is up to the latest regulations and mandates for their industry.
And industry-specific clouds can be more of a marketing term than anything else. Most major cloud providers already adhere to regulatory needs and provide the niche services, according to Nag.
"If your current provider is providing those capabilities that you need for your particular needs, you don't necessarily have to set up the industry cloud," Nag said. "You can go along with your existing incumbent cloud provider."