By Kevin Falhon, Head of Cloud at Alcatel-Lucent Enterprise. ALE were winners of the ‘Best Use of Telephony / Unified Communications in Cloud Computing‘ award at The 2024/25 Cloud Awards.

Over the last 10-15 years, public cloud migration has been growing steadily, driven largely by the promise of cost savings, greater scalability and improved efficiencies.

However, the global economic and geopolitical uncertainty of recent years is leading some IT directors to re-evaluate their enterprise use of public cloud and in some cases revert to on-premises cloud. Is the tide turning on public cloud?

The growth of public cloud

Public cloud services first came to market in 2006 with the launch of Amazon web services. This innovative means of ‘renting’ servers, storage, networking, and applications on a ‘pay as you go’ basis was initially popular with startups and developers, offering low-cost, on-demand infrastructure.  Public cloud slowly began to gain credibility and traction within enterprises across sectors. By 2020, with security and compliance concerns largely overcome, cloud computing began to take off. Just in time for the pandemic, cloud computing provided an optimum IT setup and ultimately played a fundamental role in minimizing disruption and enabling businesses and organizations to operate amid worldwide lockdowns.

Today, the use of public cloud continues to grow; Gartner predicts that spending on public cloud services will hit $723.4 billion this year, up from $595.7 billion in 2024. There are many advantages of using public cloud. Firstly, for many businesses it is a cost-effective solution. This is because there is no need for large upfront investments in hardware, software, and IT infrastructure and all management and maintenance costs (including updates and security) are covered by the public cloud provider. Secondly, public cloud provides a fully-flexible and scalable solution. Businesses can quickly scale their computing power, storage, and other resources up or down as needed, accommodating fluctuating demands and unexpected spikes in traffic.

Data sovereignty concerns

But, while public cloud works for many enterprises, for others it presents challenges. Some critical infrastructure industries including government and healthcare still have security concerns and prefer to house their data on-premises. For others, particularly companies that have already invested in their IT and networking infrastructure, or if they wish to limit operational costs, the ongoing costs of subscribing to the ‘as a service’ may not represent a cost-effective investment.

In addition, in light of sustained geopolitical uncertainties and conflicts and the escalating fear of cyberattack, some organizations feel uncomfortable leaving their data in hosted data centers and losing control over their mission-critical information. Data sovereignty and compliance with strict data regulations such as General Data Protection Regulation (GDPR) and the Data Protection Act 2018 are also key concerns for enterprises toying with implementing public cloud.

However, in response to these concerns, providers have brought in new services that guarantee that European data is kept within European data centers. As a French company, Alcatel-Lucent Enterprise partners with European datacenter solution providers, therefore ALE is not affected by the Patriot Act or the Cloud Act and is fully compliant with the European General Data Protection Regulation (GDPR), guaranteeing data security.

Increased adoption of private cloud

Private cloud works in a similar way to public cloud, offering the same advantages including flexibility and scalability but through a proprietary architecture. Private cloud serves the individual needs and goals of a single organization whereas public cloud services deliver services to multiple organizations.

As previously mentioned, private cloud is seeing increased demand from enterprises and organizations concerned about their data security and sovereignty (e.g. military, government, finance & healthcare) and those which wish to keep operational expenditure to a minimum. Another factor that is seeing increasing use of private cloud is the advent of Artificial Intelligence (AI). While public clouds can handle AI workloads, for compute-intensive AI applications, they can rack up very high costs on a subscription model. As a result, some companies are opting to develop AI systems in-house. IDC anticipates a 10% increase in hardware infrastructure sales this year, fueled by the growing demand for AI solutions.

However, for companies with limited IT resources or for those without existing private cloud infrastructure the upfront costs involved in an on-premises cloud infrastructure (hardware, software and data centers) together with the ongoing operational costs of running the systems and the need for cloud expertise, private cloud is rarely the preferred option.

Hybrid cloud – the best of both worlds?

As an alternative approach, and as a way of reaping the flexibility and freedom that public cloud allows while keeping certain confidential data sets safely ‘in-house, some customers in mid-large segments are looking to connect existing on-premises assets to Cloud services delivered from public data centres. This hybrid approach allows enterprises to leverage previous investments and keep the most confidential data and critical assets on premises while still optimizing the many benefits of public cloud, including scalability and flexibility for their less mission-critical data and applications.

Indeed, the lure of hybrid cloud is widely recognized; Gartner envisages that 90 percent of organizations will continue adopting hybrid cloud up until 2027, while a recent report from Research and Markets predicts that the global hybrid cloud market is expected to reach US$329.72 billion by 2030, growing at a CAGR of almost 17 percent between 2025-2030.

In conclusion, while current geopolitical uncertainties and ongoing cybersecurity threats have made public cloud a less appealing approach than other cloud variants for some large organisations, cloud computing – in all its forms – is seeing unprecedented growth. Public, private and hybrid cloud undeniably bring an array of benefits to enterprises enabling seamless data sharing across teams and geographies and enhanced operational performance and efficiency.

While private cloud will appeal more to larger organizations within sectors that require the most secure possible set up and which have existing infrastructure, public remains the most popular cloud option for the majority of businesses and organizations and the adoption of hybrid is gathering remarkable pace. Ultimately the choice of cloud is entirely down to each individual organization’s specific preferences, which is why applications and technology platforms, if they are to appeal to customers across segments and industry sectors, must be ‘cloud-agnostic’; adaptable to every type of cloud set up.