“Cloud and edge computing” featured as a trend in McKinsey’s Technology Trends Outlook report published in July 2023. It was accompanied by rather nascent and soaring technologies such as generative AI, applied AI, space technologies, etc.

It makes sense that McKinsey featured these technologies owing to their prominence in the recent past and the tangible value that’s expected out of them. But why cloud and edge computing? Aren’t these technologies, as they are today, already ubiquitous in how industries go about managing their workloads?


Why the Emphasis on Cloud and Edge Computing?

Anyone who’s been in the cloud space knows that cloud adoption has grown by leaps and bounds over the past few years. In fact, in 2022. Gartner predicted that public cloud end-user spending will reach the $600 billion mark in 2023. From IaaS, PaaS, and SaaS to BPaas and DaaS, the consulting giant stressed that companies would increasingly look to the cloud to help them derive value and optimize their business processes.

The same is the case with edge computing. IDC has predicted that worldwide spending on edge computing solutions will reach $208 billion, which is a healthy 13.1% increase from 2022. Edge computing has, in fact, been exceptionally pervasive when we consider applications like predictive maintenance, autonomous driving, traffic management, digital twins, etc.

McKinsey, in its report, also labels them as “mainstream.” On a scale of 0 to 5, where 0 is “none,” and 5 is “mainstream”, McKinsey gave cloud and edge 4. Because of them being already mainstream, their penetration across industries like aerospace, automotive, manufacturing, information technology, electronics, pharmaceuticals, etc., is rather high.

So, they have been supporting various technologies that are transpiring as value additions across these industries. For example, the cloud is being used for high-performance compute and to support advanced AI/ML models. Likewise, the edge is being preferred as a solution to tackle cyber threats, support the adoption of 5G, roll out the edge-as-a-service (EaaS) model, and more.

This is one of the reasons why cloud and edge being “trends” is still a justifiable conclusion. After all, they are evolving and becoming more pervasive, which is exactly the intent of McKinsey in including them as trends. But there’s more to it, and that has something to do with the synergistic potential of these technologies.


The Synergistic Potential of Cloud and Edge Computing

“As companies move from a cloud-first to cloud-smart approach, they see edge as a complement to cloud and are getting more nuanced in how they approach the decision of where to host each workload,” says Bhargs Srivathsan, partner at McKinsey.

It’s noteworthy that edge computing is a distributed computing paradigm. It serves to bring computation and data storage closer to the end user. This can improve performance and reduce latency, especially for applications that require real-time processing. So, what we’re essentially looking at is a two-fold potential for cloud and edge together:

Their combination can allow enterprises to:

  • Pursue high-performance application goals that entail low- to no-latency
  • Optimize the economics of service delivery and back-end processing
  • Offer seamless experience to end users by placing the right workloads close to end-user devices
  • Leverage cloud’s ease of deployment as an opportunity to scale workloads and operations as need be

Overall, cloud and edge computing are complementary technologies that can be used together to improve the performance, security, and resilience of applications.

  • Improved performance: Cloud computing can be used to host the most demanding applications, while edge computing can be used to deliver those applications to end users with low latency.
  • Enhanced security: Edge computing can help collect and process sensitive data closer to the source, which can help to improve security.
  • Increased resilience: Edge computing can create a distributed network of applications that can withstand outages or disruptions.


The Value Accrued to Modern Enterprises

Cloud and edge computing saw a $84 billion equity investment in 2022, as per McKinsey. This bodes well when we consider that the balanced use of cloud and edge computing can enable businesses to:

  • Increase agility: Cloud and edge computing can help enterprises roll out new features and applications faster. They can become more agile and responsive to change.
  • Reduce costs: With a cloud-first approach, enterprises can optimize their costs and get off the legacy of expensive data center infrastructure.
  • Boost innovation: By placing the right workloads close to end-user devices with low latency, companies can improve their innovation pipeline and shorten development time.
  • Accelerate enterprise-wide digital transformation: By virtue of their inherent advantages, such as agility, reduced costs, and improved collaboration, cloud and edge can help companies make a successful shift toward digital transformation.

Across industries, such benefits could have a substantial impact. For example, manufacturers can better monitor their production lines. Healthcare organizations can improve their patient care and service delivery. Likewise, retailers can better guide decisions based on a nuanced understanding of customer behavior and regular purchase trends.


In a Nutshell

“Cloud and edge computing” retain their position on the McKinsey technology trends list in 2023 owing to their enduring significance in shaping the digital landscape. The symbiotic relationship between these paradigms continues to redefine how businesses deliver seamless user experiences and process data efficiently. While cloud computing offers scalability, edge computing ensures real-time processing and low latency. This combination proves vital as IoT, AI, and data analytics gain prominence.

Interested in exploring the potential for cloud and edge computing for your business? Get in touch with us today for guidance and a concrete roadmap about how to go about it.