U.S. Firms Look to Public Clouds for AI Scale, Intelligence

In This Article:

As GenAI beckons, hyperscale infrastructure gives enterprises affordable access to essential hardware and tools, ISG Provider Lens™ report says

STAMFORD, Conn., December 17, 2024--(BUSINESS WIRE)--Enterprise adoption of AI technologies is the main driver of growing U.S. demand for public cloud services over the past year, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2024 ISG Provider Lens™ Multi Public Cloud Services report for the U.S. finds that organizations recognize both the transformative potential of AI-based applications and the high cost and complexity of developing and deploying them. AI — especially generative AI — requires expensive hardware and software, such as graphics processors and large language models (LLMs) that are not economical for enterprises to build on their own. Many are turning to cloud platforms for scalable, on-demand computing power, storage, tools and AI-specific services.

"AI and cloud computing have a close symbiotic relationship," said Anay Nawathe, ISG cloud delivery lead for the Americas. "Increasing AI adoption in the coming years will create significant growth in the public cloud industry."

GenAI is gaining traction at U.S. enterprises, but companies are still exploring it cautiously, ISG says. Most GenAI deployments are proofs of concept to better understand the technology’s potential applications and broader implications. Enterprises are testing GenAI in several areas, including content creation and personalized marketing, but most customer-facing applications are not yet in production. Service providers are guiding clients through the early stages of this transformation.

As U.S. enterprises deploy more AI-related workloads, they seek immediate cost savings to balance the growing demands of digital transformation with tight budgets, the report says. While public cloud infrastructure gives companies greater flexibility, it often leads to complex billing structures and unexpected costs if not managed effectively.

FinOps practices and services are increasingly essential for properly allocating cloud resources within enterprises and minimizing underutilized assets. GreenOps models, which track both the cost and the carbon footprint of cloud infrastructure, are also growing in importance.

Demand for consulting and transformation services has grown steadily over the past year as enterprises modernize their IT environments, shifting from monolithic systems to flexible, scalable multi-cloud and cloud-native solutions, the report says. Most large companies are seeking industry-specific solutions that optimize existing workloads. Midsize enterprises prioritize affordability and rapid deployment of outcome-focused cloud transformations.