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Cloud Computing: What It Is and Why It's No Longer Optional for Companies

Ten years ago, the question at many Latin American companies was whether moving to the cloud made sense. Today that question no longer exists: 94% of companies worldwide use cloud services in some form, and Gartner projects that by 2028 cloud computing will stop being a competitive advantage and become a basic requirement of operation. Whoever arrives late will not lose ground—they will be shut out of the market.

But between understanding that the cloud matters and knowing what it takes to adopt it in a way that creates real value, there is a considerable distance. This post aims to cover that distance in practical terms.

What cloud computing really is

The technical definition is well known: on-demand access, over the internet, to shared computing resources—servers, storage, databases, networks, software—with pay-per-use. But the definition that matters to a business executive is a different one: cloud computing is the ability to scale your company's technology at the pace the market demands, without being limited by the infrastructure installed in your building.

There are three service models, and the differences are worth understanding:

  • IaaS (Infrastructure as a Service): The company rents servers, storage, and networking in the cloud. It controls the operating system and everything running on top of it. This is the option with the most control and the most technical responsibility. AWS, Azure, and Google Cloud are the major providers in this space.
  • PaaS (Platform as a Service): The company rents a complete platform to build and deploy applications, without managing the underlying infrastructure. Ideal for development teams that want to focus on the product, not the servers.
  • SaaS (Software as a Service): Software is delivered as a subscription service. The user only needs a browser. It is the most widely adopted model: SaaS accounts for 53.6% of the entire cloud market in 2025 (Grand View Research). CRM, ERP, corporate email, collaboration—all of it already runs on this model at most companies.

Deployment models matter too: public cloud (shared infrastructure managed by a provider), private cloud (dedicated infrastructure), and hybrid (a combination of both). 90% of organizations will operate a hybrid model by 2027 (Gartner), and 89% already use multiple cloud providers simultaneously (Flexera 2024).

The size of the market says something important

The global cloud computing market surpassed $912 billion in 2025 (Precedence Research), up from $156 billion in 2020. End-user spending on public cloud services grew 21.5% year over year, reaching $723 billion (Gartner 2025). By 2027, that spending will exceed $1 trillion.

The IaaS segment—cloud infrastructure—grew 22.5% in 2024, reaching $171.8 billion (Gartner), with AWS leading at 37.7% of the market, followed by Microsoft Azure at 23.9% and Google Cloud at 9%. Three providers hold more than 70% of the global market.

For Latin America, the cloud market is growing at a 22.9% CAGR through 2033—one of the highest rates in the world for this technology.

Why companies migrate, and why some fall behind

The reasons to migrate to the cloud are well documented: flexibility to scale, reduced capital costs, access to advanced technologies like AI and analytics, and stronger business continuity. More than 85% of organizations already have a cloud-first strategy (Gartner), and 95% of new digital workloads will run on cloud-native platforms in 2025.

The reasons to fall behind are also familiar: security concerns, migration complexity, cultural resistance, data privacy worries, and—the most honest of all—a lack of clarity on where to start. 52% of organizations cite security as their biggest concern when migrating to the cloud (Gitnux).

But one data point puts those concerns in perspective: the cost of not moving keeps rising. Companies running legacy on-premises infrastructure have slower update cycles, less capacity to respond to the market, and maintenance spending that consumes budget that should go to innovation. 51% of IT spending has already shifted from traditional systems to cloud solutions in 2025—that is the inflection point.

The most common mistake in cloud adoption

It is not choosing the wrong provider. It is doing a lift-and-shift without a strategy: moving applications and workloads to the cloud exactly as they are, without redesigning them to take advantage of the environment's capabilities. The result is that the company pays for cloud but operates as if it were still in the data center. And on top of that, it frequently spends more: 32% of the average cloud budget goes to idle resources, and only 30% of companies can accurately track their cloud costs (Gartner 2024).

Cloud adoption that creates real value is not an infrastructure project. It is a transformation of how the company designs, deploys, and operates its applications—with cloud-native principles as the foundation: elasticity, automation, resilience, and continuous cost optimization.

Where to start if you're in the early stages

The first step is an honest inventory of your current applications and workloads. Not all of them are ideal candidates to migrate to the cloud at the same time or with the same strategy. Some applications benefit enormously from cloud-native; others require more planning before moving.

The second is defining what you want to achieve with the migration. Reduce data center spending? Improve availability? Enable remote work? Accelerate the development of new services? The objectives determine how deep the transformation should be and which provider and architecture make the most sense.

And the third—often underestimated—is the human component. The cloud requires new capabilities on your team: cloud cost management, security in distributed environments, DevOps, cloud-native architecture. Investing in those capabilities is not a secondary expense. It is part of what determines whether the migration creates value or creates frustration.

Sources: Gartner (2025), IDC, Precedence Research, Grand View Research, Flexera 2024, McKinsey Global Institute

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Andrés Lozada
Executive Director, SUMāTO Group · Cloud · Infrastructure · Cybersecurity · Digital Transformation
linkedin.com/in/andreslozada/

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