6 factors driving the rise of industry clouds

It’s time to say goodbye to the era of one-size-fits-all enterprise cloud solutions. IT leaders are increasingly embracing industry-specific cloud platforms, purpose-built to meet the unique demands of sectors like healthcare, financial services, manufacturing and retail.

Industry cloud platforms (ICPs) combine public cloud services—software as a service (SaaS), platform as a service (PaaS) and infrastructure as a service (IaaS). These services are combined to deliver solutions that are designed to meet the specific business and technology needs of each industry without the need for separate infrastructure or maintenance.

These platforms provide both general cloud computing capabilities and niche features that are critical to industry-specific business operations, all in one cohesive system. Security measures are integrated at every platform layer to protect sensitive data and ensure compliance with industry-specific regulations and standards.

Several factors are driving this shift toward industry clouds, including the need for strict compliance in regulated industries. Other factors include the desire for prebuilt capabilities that accelerate time-to-value and a broader push to harness the scalability, agility and cost-efficiency of cloud solutions.

“Industry cloud is designed specifically for a particular industry, offering tailored solutions that address data models, compliance, security, performance and other unique industry-specific requirements,” says Krishna Ratakonda, IBM Fellow & CTO, IBM Industry Cloud.

In a Gartner survey, close to 39% of respondents said that they had started the adoption of industry cloud platforms, with another 14% in pilots. Gartner expects that by 2027, more than 70% of enterprises will use industry clouds to accelerate their business initiatives, up from less than 15% in 2023.¹

Along with increasing demand for customized solutions, advanced security measures, edge computing and IoT integration are also fueling the adoption of these platforms.²

Before cloud computing, industries depended on highly specialized, on-premises software solutions. For example, many relied on enterprise resource planning (ERP) systems like SAP, that required significant customization.

In the early 2000s, the rise of cloud computing began to reshape the software landscape. Salesforce was one of the pioneers of this shift, revolutionizing customer relationship management (CRM) by moving it to the cloud. Before Salesforce, CRM systems were also typically on-premises, requiring costly IT infrastructure managed by dedicated teams.

As cloud computing matured, cloud service providers (CSPs) began recognizing that not all industries had the same requirements, and many had concerns around data security, risk and compliance. This created a roadblock for highly regulated industries including healthcare and finance, which slowed cloud adoption.

In the 2010s, while cloud was still mainly a general-purpose IT resource, some providers began expanding their portfolios to offer more industry-driven solutions to address security and regulatory concerns. In 2012, SAP moved into the cloud industry with SAP Cloud Platform, which offered industry-specific modules such as SAP for Healthcare and SAP for Retail.

Major cloud service providers, including IBM Cloud®, began offering specialized solutions for industries such as finance, retail and government, including artificial intelligence (AI) and analytic capabilities built for those sectors. Today, IBM Cloud continues to innovate on its enterprise cloud platform, offering secure and compliant cloud solutions for regulated industries like government, healthcare and telco.

In 2020, IBM introduced the IBM Cloud for Financial Services® in collaboration with partner banks, including Bank of America and BNP Paribas, to help financial services organizations address their cybersecurity and regulatory requirements, while providing the benefits and flexibility of the cloud. The IBM Financial Services Cloud Council, a group of more than 130 technology partners and fintechs, works with IBM to validate their security and compliance stance. The group addresses third-and-fourth-party risk management, multicloud governance and data sovereignty concerns.

Industry cloud platforms (ICPs) provide cloud-based capabilities that address industry-specific needs and enhance overall digital and business transformation.

Here are six key factors driving the acceleration of industry clouds.

For highly regulated industries that handle sensitive data, such as finance and healthcare, cloud platforms must meet stringent compliance and security standards. These sectors are subject to complex industry-specific regulations, including the Health Insurance Portability and Accountability Act (HIPAA) and the Payment Card Industry Data Security Standard (PCI-DSS). As a result, cloud platforms serving these industries require comprehensive capabilities. These capabilities help ensure that they comply with data privacy laws, transaction security protocols and fraud prevention measures outlined by governing bodies such as the National Institute of Standards and Technology (NIST).

Industry clouds provide the specialized security and regulatory features needed to address the unique risk profiles of these highly regulated sectors. For instance, IBM Cloud Framework for Financial Services is a controls framework designed to help financial institutions automate their security and compliance posture. This makes it easier for them and their digital supply chain partners to simplify their risk management and demonstrate their regulatory compliance.

Enterprise organizations—not just highly regulated ones—continue moving further away from custom in-house development where they build their own IT capabilities as they move toward cloud as a utility-like service.

“Within the context of industry clouds, standardized data models and interfaces—typically governed by consortia and implemented by ISVs—are increasingly serving as a driving force promoting interoperability and reuse,” says Ratakonda.

Standard cloud computing capabilities are baked into industry clouds. Take basic functions such as email and web conferencing, which were once managed by custom-built systems like Lotus and are now handled by cloud service providers like Google and Microsoft. Similarly, tools like Slack and Microsoft Teams have become essential in many industries, offering standardized cloud-based solutions for tasks such as messaging, file sharing and video conferencing. These tools help companies streamline communication and improve collaboration across teams.

Industry cloud platforms offer prebuilt, industry-specific capabilities and integrations from a wide ecosystem of industry-specific vendors (ISVs). This approach allows businesses to leverage specialized tools, data models and analytics without needing to develop them in-house.

For example, a platform designed for banking might include preconfigured fraud detection models, automated compliance workflows and risk management features, enabling banks to quickly implement advanced capabilities. When these tools are integrated into existing systems, they provide a comprehensive, industry-specific solution.

Looking at an enterprise insurance company in the property and casualty space, a basic workflow tool alone isn’t enough. The solution needs specialized capabilities like AI-driven chatbots, automated claims processing and built-in compliance checks.

“The reality is that many organizations will still need custom solutions, but as their tech stack evolves and business demands grow, they’ll increasingly turn to software offerings rather than building everything from scratch,” says Ratakonda.  

Industry cloud platforms (ICPs) also provide packaged, end-to-end solutions that bring together multiple capabilities in one unified offering. These solutions simplify complex processes by bundling together the necessary tools and services.

A finance cloud platform that offers “check as a service” integrates payment processing, security features, compliance tools and reporting into one comprehensive package, allowing businesses to adopt the complete solution with minimal effort. Similarly, a telecommunications platform can bundle billing, customer management, service provisioning and analytics into a single solution, simplifying operations and improving customer satisfaction.

Industry-specific cloud platforms have built-in features to ensure the secure deployment of AI and generative AI technologies. These platforms integrate encryption for sensitive data, strong access controls with role-based authentication and comprehensive audit trails to track and monitor activity.

Furthermore, cloud solutions tailored to specific industries implement advanced security measures for AI models, such as data anonymization techniques and regularization methods, which help safeguard against potential biases and vulnerabilities. With these safeguards in place, organizations can protect sensitive business data, make more reliable decisions and confidently collaborate on generative AI projects.

Industry-specific cloud platforms enable businesses to harness emerging technologies that drive innovation and efficiency. Technologies such as artificial intelligence, machine learning (ML) and IoT, when integrated into an ICP, can help streamline operations, enhance customer experiences and improve decision-making. For example, IoT-enabled industry clouds in manufacturing can offer real-time monitoring of assembly and production lines, predicting maintenance needs and reducing downtime.

The industry cloud platforms (ICP) market is poised for significant growth, with a compound annual growth rate of 17% from 2022–2027, reaching an estimated USD 260.9 billion by the end of the period.³

With specialized offerings and greater alignment of business and technology goals, industry cloud platforms are helping even the most risk-averse businesses in highly regulated industries have the assurance they need to shape their cloud-driven futures.