What is Infrastructure as a Service (IaaS)?
Infrastructure as a Service (IaaS) comes as a major breakthrough in the cloud computing environment, in which essential computing, storage and networking resources through the creation of a virtual machine. Businesses can rent these resources whenever they need, without having to purchase & maintain their own hardware.
Infrastructure as a Service (IaaS) Explained
IaaS comes with a huge number of advantages for its users. The first major improvement is the cost savings a business can discover. Since one would only rent the resources they need, when they need them, you can save money on purchasing extra hardware, software and IT infrastructure maintenance costs. Another advantage is the ease in scalability; businesses can add and remove resources as they please, making it ideal for anyone with a large fluctuation in workloads.
There are numerous uses for IaaS solutions depending on the size of your business. One can use IaaS to host a website or email server, run a customer relationship management system and e-commerce platforms, or in the case of large companies, utilise IaaS to run the entire IT infrastructure, including servers, storage and networking.
Infrastructure as a Service (IaaS) is one of four types of cloud computing solutions, alongside software as a service, platform as a service and serverless.
Global IaaS Market
Precedence Research valued the global Infrastructure as a Service (IaaS) industry at USD 53.7 billion in 2021, with the expectation of reaching USD 485.1 billion by 2030. It is experiencing a compound annual growth rate of 27.7%[i], with the North America region taking in the majority of revenues, with the largest market share of around 46%.
Demand for Infrastructure as a Service (IaaS) be easily attributed to the increasing want for serverless computing, cloud computing and the increase in internet usage/penetration. The cost saving component of IaaS plays another huge factor in the demand increase, where customers pay only for what they use. There are also many industries looking to harness the power of IaaS, namely financial services, healthcare, retail, manufacturing, media & entertainment and telecommunications & ICT. Basically, any company that works with data, wanting to decrease their capital expenditure or increase support for disaster recovery is inclined to utilise the power of Infrastructure as a Service (IaaS). Another demand driver can be assigned to the shift to remote working following the Coronavirus pandemic, with IaaS products including team video chat alongside project management softwares.
Like any industry, IaaS does face some challenges. As this is a cloud computing service, the major issue companies face is a heightened security threat. IaaS solutions can be prone to hacking, and extended security service implementation can raise the cost of deployment, slowing down the process of adoption amongst companies. Another drawback for the IaaS industry is the lack of IT infrastructure within underdeveloped economies. According to the WEF, regions such as the Asia-Pacific, Latin America, Middle East and Africa, alongside countries such as Mexico, Chile, Egypt and Thailand disallow a more pure, rapid growth of the sector due to their lack of technologically advanced frameworks.
These challenges, however, are offset from the growth opportunities surrounding IaaS, especially in more developed countries. SMEs have been adopting not just IaaS, but cloud computing in general for the attributed mass benefits; increased reliability, enhanced IT services, operational speed and increased flexibility are all key items driving their cost-effective business models.
“Infrastructure as a Service (IaaS) is the second largest segment of the global Public Cloud market. This segment is expected to continue to grow at a high rate during the upcoming years. The development of increasing investments is driven by cost optimization and the resilience of business processes enabled by IaaS. Additional growth impetus will be given by the increasing demand for new technologies regarding the Internet of Things and Artificial Intelligence, which require the adoption of a cloud infrastructure. IaaS makes a significant contribution to the automation of IT processes, which is in high demand in a digital and highly dynamic world to scale up new business models”.
Global IaaS Companies
The most popular companies using IaaS include Amazon Web Services, Microsoft and Google. Amazon Web Services (AWS) accounts for roughly 46.6% of market share, Microsoft 26.4% and Google 6.4%[iii].
AWS is one of the most prominent users & providers of cloud computing services, especially IaaS. The range of services Amazon provides include Amazon Elastic Compute Cloud (EC2), Amazon Simple Storage Service (S3), Amazon Relational Database Service (RDS), and Amazon Virtual Private Cloud (VPC). EC2 provides virtual machines for companies to run specific applications; S3 provides storage space for images, videos and any documents; RDS manages relational databases to run applications; finally, VPC enables businesses to create a private network server in the cloud, giving businesses more control over network security.
In 2022, the AWS division of Amazon accounted for ~17% of total revenues[iv]:
UK IaaS Industry Analysis
While the UK is no leader in the global industry, it is host to the largest cloud market in all of Europe, and we still see huge growth across the years pertaining to IaaS. From Statista, total revenues generated by British cloud computing companies were expected to reach USD 3.11 billion in 2023, growing at a CAGR of 15.7%, expected to reach a market volume of USD 5.57 billion by 2027[v]. Of course, not as large as a lot of sectors, but this is a very niche market so do not be deterred by its great opportunity for growth!
Home to London, the second most connected place for technology (closely lagging Silicon Valley), Britain is home to over 100,000 software companies. It is the number one nation for top scaling technology and number one spot for US ICT businesses in Europe, often serving as the EMEA headquarters. Even in the midst of the Covid pandemic, venture capital tech investment in the UK is third in the world, right after the US and China, with investments hitting a record high of USD 21 billion in 2020[vi].
Mintel valued the UK cloud market at GBP 41 billion in 2022, with forecasts expecting the value to reach GBP 59 billion in 2024[vii], an amazing 45% increase in market value over just two years.
Top 4 Promising Growth Firms
At JCinus Partners, we have identified four startup businesses aiming to provide extensive, secure IaaS solutions to any company looking to improve their operations and internal systems.
Company E
A series A business based in London, with the aim of eliminating your work chaos. Company E’s work hub opens up a whole new world of collaboration, with features such as team chat, project management and automation, to name a few. While only being founded in mid-2019, the business has gone on to achieve USD 18.5 million in funding from 18 investors.
Company G
This Brummie, AI-inspired company provides an HR and Compliance Management software solution to its clients, enabling them to modernise their workforce. One can use Company G’s offerings to screen potential hirings, check criminal records and DBS, employers’ references, track time & attendance, systemise rotas and many more. Clearly an incredible, all-encompassing, centralised platform for your HR & compliance needs. The services they offer are in line with UK legislation, such as the Human Rights Act, Data Protection Act, SMCR and Rehabilitation of Offenders Act. As a seed company, the company has just raised GBP 500,000 in one round of funding.
Company L
This seed company helps its customers proactively manage & monitor its infrastructure for cloud computing, servers, containers and websites. The service can help clients identify problems before they occur, before customers are affected and before they become legal incidents. Since its inception in 2009, the company has managed to raise USD 2.1 million across 4 funding rounds.
Company N
Company N, a London-based seed company, offers a wide array of services, typically for freelancers, the self-employed and SMEs. Some of their product’s features include webhosting, AI hosting, IaaS, SaaS, PaaS, assisted web design and an overall marketplace for startups. Company N is useful for those looking to automate repetitive, time-consuming tasks and processes of business using the internet and online stores.
Appendix
- [i] https://www.precedenceresearch.com/infrastructure-as-a-service-market#:~:text=The%20global%20infrastructure%20as%20a,27.7%25%20from%202022%20to%202030.
- [ii] https://www.statista.com/outlook/tmo/public-cloud/infrastructure-as-a-service/united-kingdom#key-players
- [iii] https://www.statista.com/outlook/tmo/public-cloud/infrastructure-as-a-service/united-kingdom#key-players
- [iv] https://www.statista.com/statistics/672747/amazons-consolidated-net-revenue-by-segment/
- [v] https://www.statista.com/outlook/tmo/public-cloud/infrastructure-as-a-service/united-kingdom
- [vi] https://www.trade.gov/market-intelligence/united-kingdom-cloud-services-market
- [vii] https://store.mintel.com/report/uk-cloud-computing-market-report#:~:text=UK%20cloud%20computing%20market%20size%3A%20The%20market%20size%20is%20estimated,to%20a%20hybrid%20cloud%20strategy.
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