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The Wall Street Publication > Blog > Tech > Tech Spending Pressures Fuel Demand for Specialized Industry Clouds
Tech

Tech Spending Pressures Fuel Demand for Specialized Industry Clouds

Editorial Board Published December 20, 2022
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Tech Spending Pressures Fuel Demand for Specialized Industry Clouds
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Corporate technology leaders looking to cut costs are turning to industry-specific cloud platforms, which are outfitted with tailor-made capabilities for running hospitals, banks, stores or other businesses.

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Chad Brisendine, vice president and CIO at St. Luke’s University Health Network.Newsletter Sign-upWSJ | CIO JournalMicrosoft has developed industry clouds for retail, financial services, manufacturing, sustainability and nonprofit businesses.

Chad Brisendine, vice president and chief information officer at St. Luke’s University Health Network in Bethlehem, Pa., said a healthcare industry cloud deployed last year enabled him to pay for only the infrastructure the network was using, among other benefits.

The system, built by Microsoft Corp. , helped St. Luke’s develop a healthcare-specific data system needed to integrate IT platforms and capabilities across its network of a dozen hospitals and more than 300 outpatient sites, Mr. Brisendine said. 

Unlike general-purpose cloud systems, which tend to come with bundles of generic enterprise apps and functions that need to be customized for industry-specific tasks, so-called industry clouds provide purpose-built digital tools for companies in a given industry. 

Chad Brisendine, vice president and CIO at St. Luke’s University Health Network.

Photo: St. Luke’s University Health Network

Designed to more easily integrate specialized data from one end of a business to another, industry clouds are especially useful for financial-services firms in areas like regulatory compliance, or healthcare providers sharing secure lab results and diagnosis and treatment data across different departments. 

With companies facing murky business conditions in the year ahead, demand is picking up as CIOs and other enterprise technology chiefs re-examine their cloud spending bills. 

Industry clouds offer the promise of cost-saving efficiencies as more services are delivered in ways that align with common industry data collection and analysis as well as with workflows and interactions with supply chains, customers and business partners, according to analysts.

“Executives will likely start investing in tech that helps them [to] sustain business growth while optimizing costs,” said Nadia Ballard, a cloud research manager at industry research firm International Data Corp. “This is what industry clouds were designed to do.”

Gartner Inc., an IT research and consulting firm, expects companies worldwide to run more than half of their critical business technology in an industry cloud within the next four years, up from less than 10% in 2021.

For large enterprise cloud vendors like Microsoft, Oracle Corp. , International Business Machines Corp. and Salesforce Inc., rising demand for industry-specific clouds may offer a path for renewed growth as soaring cloud sales begin to falter. 

“Cloud providers see industry clouds as strategic as they battle for every last dollar of revenue,” said Lee Sustar, a principal analyst at Forrester Research Inc., an IT research and advisory firm. But he cautioned that industry clouds are a relatively new product in the enterprise cloud market, and not all industry-cloud technology is mature enough to achieve all of the benefits touted by large cloud providers.


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Most industry clouds began to hit the market early last year, in part sparked by demand for better healthcare data systems during the Covid-19 outbreak in 2020. 

Oracle currently has more than 100,000 enterprise customers using industry clouds, developed for sectors spanning healthcare, retail, financial services, hospitality, food and beverage and other areas, said Mike Sicilia, an executive vice president at Oracle. He said Oracle began developing industry cloud tools long before the pandemic. 

“Technology built for industries generally is better than one-size fits all,” Mr. Sicilia said. “What a major pharmaceutical company needs to bring new treatments to market isn’t the same as what a telco needs to deliver text messages—or what a restaurant needs to shift to a hybrid takeout, dine-in model.”

Last week, Oracle’s stronger-than-expected earnings for its second quarter—with revenue reaching $12.3 billion, up 18% year over year—was boosted in part by sales of its healthcare industry cloud, the company said. The system includes new services from Cerner Corp., a cloud-based electronic-medical-records developer that Oracle acquired this year for $28 billion. 

Though Oracle doesn’t break out revenue from industry cloud sales, its industry cloud offerings are a “multibillion-dollar business,” Mr. Sicilia said. 

Microsoft last year rolled out industry clouds for retail, financial services, manufacturing, sustainability and nonprofit businesses, according to Kees Hertogh, Microsoft’s general manager for global industry product marketing. 

Microsoft has developed industry clouds for retail, financial services, manufacturing, sustainability and nonprofit businesses.

Photo: lucy nicholson/Reuters

“Customers were telling us that the cloud services we offer must support the specific needs and challenges of their industry,” Mr. Hertogh said, citing rising demand for capabilities that help monitor patients remotely, facilitate the lending process online or help roll out curbside pickup services.

A Microsoft-developed industry cloud helped Schenectady, N.Y.-based MVP Health Care implement a system to streamline its healthcare data, according to CIO Michael Della Villa. Customizing a standard cloud-based data warehouse for the unique security needs of confidential patient data would have been a longer, more costly project, he said.

By improving and integrating data capabilities, the industry-specific platform helped “break down silos of care” and use data more efficiently to address patients’ physical, behavioral and social-health conditions, Mr. Della Villa said. 

CaixaBank Chief Technology Officer Alberto Rosa said that, unlike typical cloud systems, the financial-services cloud developed by IBM allows the bank “to meet the stringent requirements faced by a highly regulated business.” CaixaBank, based in Valencia, Spain, operates more than 5,300 banks and 14,400 ATMs across the southern European country, serving some 20 million customers, the bank said.

Write to Angus Loten at [email protected]

Corrections & Amplifications
MVP Health Care is based in Schenectady, N.Y. An earlier version of this article incorrectly said it is based in Tarrytown, N.Y. (Corrected on Dec. 20)

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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