Cloud Transformation: Benefits, Strategies and Trends 2025

Cloud technologies such as Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) have established themselves as indispensable and have now become a commodity. Companies use IT resources flexibly and cost-effectively, while innovations can be implemented and put into productive use more quickly. Today, hardly any company can afford to ignore the cloud and rely entirely on on-premises operations.

80 %

of study participants state that cloud computing will play an important role in their company's success over the next five years

Consequently, analyst firm Gartner is forecasting global revenue from public cloud services of 723.4 billion dollars by 2025. This corresponds to an increase of 21.4 percent compared to the previous year. According to Gartner, all cloud service segments are expected to see double-digit growth in the current year 2025, with demand for all cloud services increasing significantly.

A recent survey of more than 680 C-level decision-makers conducted by the digitalization consultancy valantic together with the Handelsblatt Research Institute comes to a similar conclusion and supports Gartner’s forecast. 80 percent of the survey participants believe that cloud computing will play a decisive role in the success of their company in the next five years. This puts cloud computing ahead of the megatopic of artificial intelligence (79%) and just behind cybersecurity technologies (81%), which naturally also play a key role in securing the cloud against attacks, theft and misuse.

According to another result of the valantic survey, the transport & logistics, retail & consumer goods, automotive and food & beverage industries in particular have recognized the importance of the cloud when it comes to reducing operating costs, streamlining workflows, increasing scalability and bringing new products to market as quickly as possible. Cloud computing acts as a basic technology that significantly accelerates the use of other technologies such as artificial intelligence or quantum computing or, for many small and medium-sized companies, makes them possible in the first place.

Multi-cloud and hybrid cloud strategies

Many companies today take a best-of-breed approach, combining the cloud offerings of two or more different providers such as Microsoft, AWS or Google Cloud. They aim to minimize dependency on a single cloud provider – the keyword here is vendor lock-in – and maximize their own flexibility.

Best-of-breed strategies from the multi-cloud allow companies to use the best of all cloud worlds, so to speak. However, interconnectivity and data exchange between the individual cloud services is not always a sure-fire success, on the contrary. Cross Cloud Integration Frameworks (CCIF) will therefore play an even greater role in the future than they do today. Good cloud integration tools include, for example, DCKAP Integrator, MuleSoft Anypoint Platform, Informatica Intelligent Cloud Services, Boomi and TIBCO Cloud Integration.

The hybrid approach – a combination of on-premises IT and cloud infrastructure – will continue to gain in importance, particularly in data protection-sensitive sectors such as financial services and healthcare. Particularly sensitive data and services will continue to be stored on in-house servers in order to provide the best possible protection against misuse and theft, partly because this is required by law. It remains to be seen whether the Sovereign Cloud announced by AWS in Germany, for example, will change this. Gartner predicts that around 90 percent of companies worldwide will pursue a hybrid cloud strategy by 2027.

Cloud providers offer similar services, but each has its own strengths. AWS stands out with over 200 fully featured services in different cloud areas, making it ideal for cloud-native solutions or SAP integrations.

Microsoft Azure impresses with its strengths in enterprise integration and hybrid solutions. Especially with Azure Arc, which enables companies to manage on-premises, multi-cloud and edge environments. Google Cloud, on the other hand, is particularly strong in the areas of data analytics and AI, with tools such as BigQuery for analytics and TensorFlow for machine learning, making it an excellent choice for data-driven businesses. Hybrid solutions on all three platforms allow customers to leverage the full potential of each provider’s services and maximize the value of their cloud investments.

Cost optimization and increased efficiency

Optimizing costs and increasing efficiency are among the core business objectives that companies want to achieve through cloud transformation, among other things. In view of the current recession in Germany and rising costs due to economic uncertainty, companies will be paying particular attention to the efficiency of their cloud spending. Efficiency-enhancing measures in the cloud include

Automation of resource management

Tools for the automatic scaling and management of cloud resources. Functions such as Auto Scaling, AWS Trusted Advisor and AWS Cost Explorer help companies to manage resources dynamically and efficiently.

Cloud-native software development

Amazon Q currently has the highest reported code acceptance rates in the industry for multi-line code suggestions. This means that efficiency in software development will increase once again. Azure also offers similar services with GitHub Copilot and Google Cloud with Cloud AI. They help developers to write and improve code faster.

Spot Instances and Savings Plans

Companies could increasingly rely on AWS Spot Instances, Azure Reserved Instances, Azure Spot VMs or Google Preemptible VMs to reduce costs.

Serverless technology

Serverless architectures such as AWS Lambda could become even more popular, as they enable a flexible infrastructure that is billed according to usage. Comparable solutions are also offered by Azure with Azure Functions and Google Cloud with Cloud Functions. These services enable companies to run their applications dynamically and scalably without having to manage a fixed server infrastructure by using event-driven, serverless computing resources.

Database migration

With Aurora Limitless Database in conjunction with Graviton, an up to 40 percent better price-performance ratio can be achieved. Azure Cosmos DB, which offers a scalable and powerful NoSQL database solution for global applications, and Google Cloud Spanner also realize the same benefits. Cloud Spanner offers a highly scalable, relational database-oriented solution for business-critical applications.

Artificial intelligence and machine learning

The integration of AI and machine learning will be another important cloud deployment scenario, especially for companies that want to increase their efficiency through data-driven insights. AI plays the role of a cloud driver here. “The use of AI technologies in IT and business operations is inexorably accelerating the role of cloud computing in supporting business processes and outcomes,” says Sid Nag, Vice President Analyst at Gartner.

AWS already offers a wide range of AI and ML tools and services, such as Amazon SageMaker, which helps developers and organizations quickly build, train and deploy models into production. These tools are expected to become even more user-friendly and accessible in 2025, enabling companies in Germany to implement their AI initiatives more efficiently and cost-effectively. Many companies anticipate potential savings of 40 percent in order to train the models.

With Azure Machine Learning, Azure AI has a comprehensive platform in its portfolio that supports companies in developing, training and efficiently implementing their own models. Automated ML simplifies the modeling process and increases automation in the creation of machine learning models. In addition, the model review ensures transparency and traceability of the models. According to a survey by IDC, around 30% of companies plan to use codeless development tools for their AI and automation initiatives by 2024.

Google Cloud AI plays a central role in AI and ML. With Vertex AI, Google offers a platform that unifies all steps of the machine learning pipeline, from data preparation to scaling. Vertex AI uses powerful AI tools such as AutoML and TensorFlow to help companies develop innovative solutions efficiently. A survey of 81 Chief Information Officers (CIOs) found that 27 percent consider Google Cloud to be their “most strategic” AI provider, an increase from 15 to 27 percent within six months.

Strong focus on security and data protection

In times of uncertainty and economic challenges, security aspects and the protection of company data will continue to be a top priority, even in the cloud. The focus is on meeting compliance requirements and protecting data from attacks, encryption (ransomware) and theft. As a rule, it is the responsibility of the respective cloud provider to meet security standards such as ISO 27001/17/18, the EU GDPR or the NIST 2 Cybersecurity Framework. With a multi-cloud strategy that combines several services from different cloud providers, however, the company using the services is also responsible.

In addition, the demand for edge computing and IoT solutions will continue to grow, as companies in the manufacturing, logistics and automotive industries will increasingly rely on data-driven models in the coming years to optimize processes on site but connected to the cloud. Edge computing brings cloud functions closer to devices and machines, reducing latency and enabling real-time data processing.

Trend: Industry-specific cloud services

Cloud providers and their partners will increasingly offer industry-specific solutions. Customers no longer want a battle of terminology, but expect their technology partners to understand the business, know the industry and offer customer-specific cloud services that generate real added value as quickly as possible. To this end, leading cloud providers are developing specialized offerings for various industries.

Azure for Healthcare offers industry-specific solutions that support compliance with regulations such as HIPAA and provide tools for secure data exchange and advanced analytics to improve patient care. AWS supports healthcare organizations with its AWS for Health Services with machine learning capabilities for diagnostics and secure data management solutions that comply with healthcare regulations.

Google Cloud for Retail helps companies optimize inventory management, predict market trends and improve the customer experience through AI-powered personalized shopping recommendations.

Conclusion: Technological innovations and cost optimization as key topics

The cloud market in Germany will be characterized by a focus on cost optimization, efficiency and security as well as a deep integration of technologies such as AI, applied AI, edge computing and serverless solutions. Companies are focusing on more flexible, scalable and cost-effective cloud solutions, which they combine in the multi-cloud, for example via a connectivity super layer. Hyperscalers have invested heavily in industry solutions for this purpose in recent months. Cloud providers will continue to invest this industry expertise in their own industry-specific services and employees.