When I speak with CIOs about their business priorities, cloud is never far from discussion. Their stories are similar: They want to keep up with the pace of business and to connect with new customers and new markets, all while reducing costs and driving efficiencies—and they’re turning to the cloud for these answers.
A recent survey shows just how important it is. “Increased use of cloud infrastructure” is the single most important priority for 35 percent of the respondents in a recent ESG Research Insights Paper, while an additional 46 percent say it’s one of their top five priorities.
“Accelerating Business in the Cloud,” commissioned by Sungard AS from the Enterprise Strategy Group (ESG), asked 430 IT and business professionals from private- and public-sector organizations in North America and Western Europe – United Kingdom, France, and Ireland specifically –about their thoughts and experiences with cloud computing and digital transformation. The size of the organizations ranged from 1,000 to more than 20,000 employees worldwide.
The findings reveal why and how companies are taking operations to the cloud and point to ways businesses can do so most successfully.
In my own conversations with enterprise customers, I’ve learned the adoption of cloud continues to accelerate. A considerable number of older iSeries, mainframes and Unix systems remain in the larger organizations, but cloud clearly has the mindshare. Developers are building new applications with the cloud as the target platform, and for all of the obvious reasons that are important to running a business profitably: cost efficiency, operational efficiency, ease of management, ease of portability, the ability to scale up and scale down, and more.
Unsurprisingly, when asked their highest priority business initiatives for the next 12 to 24 months, 45 percent said “reducing costs.” At the heart of this is a shift in the way companies are thinking about IT. They no longer want to be in the data center business. It could be because of the capital expenditure (CapEx), or they simply don’t have (or don’t want to have) the in-house operational capabilities or expertise.
Instead, companies want to consume these technologies as an operating expense (OpEx), giving up ownership and letting someone else manage the headaches of running the environment. The cloud may not necessarily be driving this shift in philosophy from CapEx to OpEx, but it fits this strategy perfectly.
The importance of infrastructure
Another compelling insight in the ESG study is what companies look for when picking a cloud provider; service levels, security, performance, cost savings, and CapEx to OpEx are all high on the list. They want disaster recovery and a highly resilient architecture. From what I’ve seen, they won’t settle for anything less than best-of-breed technology.
But the survey shows infrastructure is a major concern: 66 percent of respondents said it’s critical or very important that their cloud service provider uses the same cloud infrastructure technologies as those used in their on-premises private cloud/virtualized data centers.
Conventional wisdom holds that the service level agreements (SLAs) and the guarantees for security and performance are what drive purchase decisions. Those are certainly important, but the underlying reference architecture proves to IT decision-makers that the cloud provider can deliver on its promises.
This is especially important in hybrid IT environments. Companies are moving to the cloud en masse, but realistically, many will have a mix of on-premises systems with cloud storage. These situations require tremendous customization, and aligning cloud infrastructure with their pre-existing systems is extremely important.
Why not migrate everything to the cloud? Some companies are committed to keeping their high-performance applications on Unix or mainframe platforms, whether for compliance reasons or other business reasons, or they simply don’t see an opportunity for return on investment after the cost and pain of migrating a legacy application to the cloud.
More cloud integration, fewer silos
Cloud is an enabling technology, for bad and for good. The downside is Shadow IT: With so much more available through the cloud, departments may go around IT and deploy vulnerable or incompatible applications that leave security holes or data silos. As employees become more tech savvy, companies will have to anticipate this risk and monitor their environments closely.
However, with more visibility on the cost savings and flexibility the cloud can offer, business units are now taking far more responsibility for technology and how their organizations use it. Rather than just providing requirements and leaving IT to get it done, they’re now an integral part of the process, from beginning to end.
The survey uncovered that business leaders too, are much more involved in IT decisions. In fact, two-thirds of business decision-makers reported being more involved in technology purchase decisions than they were two years ago, putting further pressure on IT to support the acceleration of business initiatives through technology.
Historically, there is a tendency for business units to have siloed, if not antagonistic relationships with their IT departments, but these findings may prove otherwise. This is a step in the right direction. When IT professionals work more closely with the business unit, the two departments can better interact and respond to each other’s needs. The better these relationships become, the easier changes—and future technology upgrades—will be.