Gannatti Christopher WisdomTree

WisdomTree : Transition to cloud accelerates through pandemic

WisdomTree: When we look back, we will see how Cloud Computing was a tool that was used during the coronavirus pandemic to enhance the resilience of global business …

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By Chris Gannatti, Head of Research, Europe, WisdomTree

The pandemic was a catalyst to accelerate many cloud migration plans.

There are unique situations across many different countries, but if businesses have migrated to the cloud, employees can then access their work no matter where they are so long as they have reliable internet.

Cloud companies can do many different things, but if we focus on companies in the following categories; Ecommerce, education, communications, security and administrative tasks as a starting point, we can see how practical their applications are.

Paypal is a well-known player in the internet-based payments platforms industry – you may not even think of it as a cloud company. Shopify, based in Canada, has seen significant growth. In June 2020, it announced the beginning of a partnership with Wal-Mart, one of the biggest retailers globally.

No company better encapsulates the growing prominence of cloud companies than Zoom Video Communications. Zoom became a household name by making it easier than ever to visually communicate with each other regardless of their physical locations. Many communication or collaboration-focused cloud applications, such as Slack or the offerings of Five9 also saw their demand increase markedly. In fact, the communications space has become so hot that Microsoft, with its Teams application, has taken notice and is also competing to become the preferred provider of business communication cloud-based applications.

Seemingly overnight, many people had to shift a major portion of their day-to-day lives onto the internet. With such a shift, the applications are important, but in some ways the data security is even more important. Companies like Zscaler and Okta have benefitted significantly due to the increased focus on security. Since February, Zscaler Private Access (ZPA) traffic grew over 10x and the Zscaler Cloud Security Platform reached a new milestone of securing 100 billion transactions per day .

With a global lockdown in place, the pandemic created an environment where online approaches to education became the only option for many. 2U provides a service for universities that became immediately more valuable as a result of the Covid-19 pandemic. Since its founding in 2008, 215,000 adult-learners have benefited from 2U’s offerings .

Companies like Docusign have thrived by taking the simple but, in the case of the pandemic, onerous task of signing a physical document and place this squarely into the digital world. What’s more, the addressable market looms large, as Docusign only has about 661,000 paying customers .

The BVP Nasdaq Emerging Cloud Index has delivered a return of 52.4% so far in 2020 .  Zoom Video Communications, on its June 2020 earnings call, reported year-over-year revenue growth of 169%. On a weighted average basis for all of the firms within the BVP Nasdaq Emerging Cloud Index, this figure stood at 40.2%. As a reference point, the Nasdaq 100 Index stood at 13.4% .

When thinking about the long-term potential of cloud computing, it is worthwhile noting that 94% of businesses have at least one cloud-based software solution. By 2025, it is expected that more than 50% of enterprise software is cloud based, and by 2030, it’s expected that more than 80% of enterprise software is cloud based . The Covid-19 pandemic might be accelerating some of this transition in the near-term, but the path that we take from here until 2030 will determine the real story.

In short, the world of enterprise software is shifting from ‘on-premises’ being the main model to ‘cloud computing’ becoming the main model. It isn’t often that something like this comes along that can benefit almost all businesses in some way. If people have the coming three, five or 10 years in mind, we see a lot of appetite in this space.


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