The state of the cloud in the UK [2024]

Simon Edward • 26 August 2024

The cloud sector thrives in developed economies. How is it faring in the UK? Get the lowdown in our article.

The last few years have seen an explosion in cloud adoption across the world. An existing increase in the use of these services went into overdrive during the COVID-19 pandemic – a time when on-demand services were a necessity if businesses and other organisations were to survive.

The UK is no exception to this rule. Today, businesses, public services and governments all rely on cloud solutions. And there's no sign that things are slowing down, with a continual race to expand and fine-tune cloud technologies across these sectors.

This is in spite of the UK's economic woes, with a weak pound, sluggish growth and spiralling living costs making headlines worldwide.

But while the state of the cloud is broadly positive, challenges exist in the form of vendor lock-in and anti-competitive behaviours. These aren't a barrier to adoption, but they do create issues for businesses and governments alike.

In this article, we take the pulse of the state of the cloud in the UK in 2024.

Data centres

It's surprisingly difficult to get accurate figures for the number of data centres in the world – but it seems that in the UK, there are somewhere between 355 and 450. Most of these are in London.

In 2024, the demand for data centres in London is going from strength to strength, with take-up set to challenge the record of 139 megawatts in 2022.

Furthermore, data centre providers are gearing up for an increase in demand from companies investing in resource-hungry artificial intelligence (AI).

Despite this healthy trend, there's a lack of available power in London and elsewhere which is putting a dampener on growth. It remains to be seen how this will affect cloud adoption in the coming years.

The cloud and the UK government

Like many governments worldwide, the UK government is spending a lot of time and money moving its departments to the cloud. At the start of 2024, for instance, it launched two cloud services tenders that could be worth billions.

However, the Cabinet Office's Central Digital and Data Office has raised concerns that the government is experiencing vendor lock-in – the phenomenon whereby a customer struggles to switch providers.

A document from the office in question warns that the "UK government's current approach to cloud adoption and management across its departments faces several challenges" and risks "concentration and vendor lock-in that inhibit UK government's negotiating power over the cloud vendors".

This could mean the UK government has a weak hand when trying to negotiate favourable terms with its vendors – in particular, Amazon Web Services (AWS).

The government has struck many large-scale deals with AWS, including the Home Office (£450 million), HMRC (£350 million) and the DWP (£20 million). AWS also provides infrastructure for the NHS, Crown Marketplace (an online platform used by government departments to buy common goods and services) and the Ministry of Justice.

Hybrid multi-cloud environments in the UK

Nutanix is an American cloud computing company that sells software for both data centres and hybrid multi-cloud environments. Its sixth annual Enterprise Cloud Index (ECI) survey tells us a lot about cloud adoption in the UK and beyond.

The first stat is unlikely to come as a surprise. Eighty-four percent of businesses in the UK are adopting a "cloud-smart" stance, meaning a focus on cloud migration and flexibility with regard to the environments used.

Hybrid multi-clouds are already on the up and are forecast to jump from 19% at the time of writing to 26% by 2027. Furthermore, the use of multiple public clouds is predicted to go up by 35% in the same time frame, exceeding the global average by 20% in the process.

In 2024, sustainability is never far from the business world's lips. This is reflected in Nutanix's findings that 92% of UK organisations consider it to be a priority and 67% say their investment is set to increase.

How are UK organisations deciding on their cloud infrastructure? It seems that performance and cost are the key drivers, with data sovereignty and privacy third.

Does the cloud have a competition problem?

Since 2012, the Competition and Markets Authority (CMA) has been responsible for strengthening business competition and tackling anti-competitive behaviours in the UK. It has taken on cases as diverse as veterinary care and online GIFs – and in October 2023, it turned its hawk eyes to anti-competitive behaviours in the cloud market.

Its first interim paper confirms something that many in the cloud tech industry have long known – that Amazon Web Services (AWS) and Microsoft Azure are dominating the market, with Google taking the third spot.

The report points out that egress fees play a large part in stopping businesses from migrating their workloads to smaller, independent cloud providers. However, both AWS and Google Cloud have announced that they will remove egress fees.

AWS and Azure also have a monopoly because crucial bits of cloud architecture like interfaces and authentication aren't yet interoperable. This makes it hard for many businesses to adopt multi-cloud solutions.

The report also found that switching didn't only bring in high egress fees. It also dumped a huge amount of work on IT teams who struggled to keep up with core tasks. This is one area where a third-party consultant can help.

Conclusion

Despite the country's economic troubles, the cloud in the UK is in rude health. Uptake and data centre capacity are both expected to grow as more and more essential services are moved to the cloud.

Nevertheless, some roadblocks exist in the form of energy capacity and anti-competitive behaviours from big-name providers. These aren't unique to the UK but could potentially affect the country's overall global standing in the cloud sector.

Whatever happens next, we'll let you know!

Are you looking for a cloud migration partner? Ascend Cloud Solutions is a cloud consulting company based in Cork, Ireland. Together, our team has handled more than 400 migrations – and counting. Get in touch for a free no-obligation consultation.

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