With market volatility on the rise and economic headwinds gathering, CIOs are looking to rent cloud-based IT infrastructure and software on subscription-based models rather than placing big tech bets on lump-sum investments.
A recent Gartner report found cloud consulting and implementation and cloud managed services are expected to reach $255 billion this year, with spending on data center systems forecast to experience the strongest growth of all segments in 2022.
Cloud investments give CIOs an opportunity to reallocate budget traditionally earmarked for data center infrastructure (hardware, physical space, power, and cooling) and resources to support servers (ongoing maintenance and upgrades).
Reallocating resources means CIOs can focus on other programs in support of strategic business objectives: for example, digital workplace solutions aimed at improving employee and customer experiences.
“There has been a clear shift in how organizations conduct business, and they will continue to rely heavily on the cloud moving forward,” says Readworks Co-founder and CEO Paul Deur. “At the same time, cloud investments are not necessarily right for every business right now.”
CIOs Must Audit, Make Organizational Overview
To determine whether the organization should be further investing in the cloud, it’s important to get a full view of the business, the applications being used most frequently, and why and how those applications are being used.
“In some cases, employees going back into the office could completely shift what that picture looks like, while in other cases, not so much, so you need to plan accordingly,” Deur explains.
This is one instance when having a tool like a digital platform conductor (DPC) can prove to be vital for a CIO’s decision-making.
A DPC reduces the cost and risk of cloud migrations and connects to all the IT and business systems to collect and analyze information, identify missing or incorrect information, and automates the collection of additional information from users and stakeholders. It analyzes migration readiness for systems, applications, and users and then orchestrates all the workflows connected with cloud migrations and reports on status.
Deur says for many enterprises, moving to the cloud promised savings in terms of hardware, power, and maintenance, but now as digital transformation programs accelerate and more workloads are virtualized, costs are rising.
“Given that a full enterprise cloud transformation will be managed over multiple years, providing support for a hybrid environment of on-premises and cloud facilities will initially add to costs,” he explains. “But, as that journey progresses and on-premises costs reduce over time, teams need to be aware of the potential for cloud costs to become bloated if left unchecked.”
Keeping an Eye on Cloud Costs
Although investment in cloud tech is booming, CIOs should also be keeping a critical eye on managing cloud costs, which can quickly spiral out of control.
To ensure that cloud costs are properly controlled, it is important for CIOs to have tools that enable them to tightly monitor and act on unused resources — there are no cost benefits if these idle resources remain on the cloud balance sheet.
JupiterOne CISO Sounil Yu says the engineering team should shut down these resources soon after they become idle and rebuild the resources through automation when they are needed again.
“CIOs should enforce this routine because in addition to reducing costs, it improves the overall resiliency of the organization to unexpected failures since it forces engineers to practice rebuilding regularly,” he says.
Dennis Monner, chief commercial officer at Aryaka, agrees cloud investment is going up, and points out there are two parts of this.
“First, CIOs need to understand their true cloud costs versus bringing it back in-house, which also introduces risk and expenses,” he said. “This needs to be a true apples-to-apples comparison.”
Second, he says there are several companies that specialize in cloud cost containment and leveraging their services can be beneficial to ensure costs don’t get out of hand.
“Plan ahead and don’t introduce solutions that could lead one to a dead-end,” he advises. “If possible, look not only at the cloud providers (CSPs), but also what is needed to integrate cloud-based networking and security to enable a more complete and efficient solution.”
CIOs Must Invest Tactically
From Yu’s perspective, the public cloud is only cost efficient if it is used properly in the context of servicing uncertainty.
“If you are certain about what resources you persistently need, then cloud is not cost effective,” he says. “It’s like buying versus renting a home. If you know you are going to work and live in a particular location for at least five years and you know exactly how much space you need, then you are much better off buying a home.”
That means in times of economic and lifestyle uncertainty, renting might be a better option.
“This is why greenfield initiatives are perfect for the cloud,” he explains. “Because these initiatives are full of uncertainty, you want to minimize sunk costs so that you can pivot as quickly and as often as you need to.”
Monner adds cloud is almost a better investment now, as when capital becomes harder to come by, a SaaS-type expense is easier to budget.
“Additionally, the overall advantages of the cloud continue to shine — flexible capacity with no stranded investment, less in-house HW/SW procurement, training, and upgrades, insulation from supply chain issues, and multiple geographies to name a few,” he says.
Readworks’ Deur points out that any cloud transformation program requires a strategic plan, beginning with an audit of the environment to understand which workloads and applications can and should be moved, and what the organization can end support for.
“If managed the ‘lift and shift’ way, budget will be consumed very quickly,” he warns. “And if you don’t keep an eye on cloud usage, or what you are spending on, you could be paying for more than you need.”
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