The COVID-19 pandemic represented a technology tipping point, accelerating digital transformation efforts, and compressing timelines from years to months, in some cases. As large and enterprise organizations worked to maintain business continuity while pivoting to a work-from-home structure, cloud technology played a major role. Infrastructure as a Service (IaaS) and Software as a Service (SaaS) via the cloud provided organizations the ability to flex up and down, scaling to the needs of the business. The economics were also attractive allowing companies the ability to avoid large fixed monthly costs through a pay as you go structure providing infinitely more operating flexibility.

According to NPD’s U.S. B2B Distributor Track® and Reseller Tracking services IaaS saw year over year revenue growth of 33% for the five months ending May 2021, as companies looked to migrate to a more scalable, cost effective, and agile structure.

From a SaaS perspective, total revenue for cloud enabled B2B software increased by 6% year over year with the highest growth coming from Data Loss Prevention and Endpoint Protection (up 42%) and Data Protection and Recovery (up 40%) categories. The highest percentage of total revenue was generated by the Content and Collaboration category at 37%, with revenue growth of 14% for the period.

In the first five months of 2021, B2B software growth via cloud generated a 12% increase year over year with on-premise experiencing 6% growth. From a mix perspective, we are seeing migration to cloud, which represented 18% of revenue in 2020 and 19% in 2021. This migration is expected to continue as companies fine tune their strategies with many adopting a hybrid model to leverage the benefits of public, private, and on-premise depending on their organizations own unique needs and requirements.

While the benefits of the cloud are significant, challenges are also present in dealing with the growing level of complexity of managing multiple strategies concurrently. Organizations need to look beyond the short-term benefits of relocation from on-premise to cloud and instead consider the long-term benefits of designing and constructing a true cloud-driven model. The latter allows an organization to fully take advantage of what the cloud can provide not only now, but well into the future.