Serverless computing refers to applications and services that run on a third-party vendor’s off-site server platform (such as Amazon Web Services’ [AWS] Lambda Platform). Serverless computing distinguishes itself from physical in-house servers and cloud computing based on how it handles scaling or meeting variations in demand. With physical servers, scaling up entails buying and maintaining new hardware, while with cloud computing, it requires renting more resources. In contrast, serverless computing allows automatic, real-time scaling of server resources based on actual usage.
Serverless computing is an evolution of cloud computing, a Function-as-a-service (FaaS), with which it is often treated synonymously, since serverless platforms handle the function of running the applications.
Serverless computing is commonly used across various industries, with the consumer discretionary and communications sectors being the most prominent. Specifically, this includes the diversified consumer services subsegment for consumer discretionary, as well as media and entertainment under communications.
The adoption levels for software infrastructure management are relatively high, as serverless functions platforms enable enterprises to automatically scale server resources for applications in real time, based on actual usage. Moreover, analytics and integration solutions have been commonly used to help enterprises query large databases and streamline data processing for applications.
We have identified key serverless computing use cases below:
Cloud computing giants such as Amazon (AWS Lambda), Google (Google Cloud Functions), Microsoft (Azure Functions), and IBM (IBM Cloud Functions) handle serverless computing platforms and the core service of providing server capacity.
The startups in the industry mainly function as service providers bridging serverless computing vendors with end users. Key among such support services are those that provide cybersecurity, support and consulting, open source codes, and analytics and integrations. In addition to these common categories, startups offer services such as database management, which leading company Fauna offers.
Three cloud computing giants dominate the core serverless computing market, according to a 2018 survey that highlighted most respondents, 58%, used Amazon’s AWS Lambda, 23% used Google Cloud Functions (GCF), and 10% used Microsoft Azure Functions.
In addition to serverless platform resources, these three leaders offer a range of support services and tools, including DevOps (which combines the development and operations of functions) and developer tools, application programming interface (APIs, which facilitate interactions between software intermediaries) management, AI, machine learning and Internet of Things (IoT) algorithms, among others, to help optimize their use. These offerings can vary among incumbents, and offer a value-add beyond the common disruptor offerings of open source and analytics, which incumbents tend to offer as well.