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The new realities of cloud computing in 2018

IBF Entrepreneur Online –

June 18th, 2018

Over the past five years, cloud services have moved from being perceived as a risky solution suited for non-critical services to prevalence in the vast majority of enterprises impacting the vast majority of business functions.

Cloud services have reliably addressed the false promises of inflated expectations, myopic forays into disjointed and non-critical solutions, the steady assault of misleading claims from legacy vendors cloudwashing legacy solutions, challenges from frivolous new entrants who trivialize the concept of cloud, and legitimate concerns about security, privacy, and sovereignty. For cloud services to become ubiquitous across enterprises and business functions in the face of these challenges is a testament to the steep change in utility costs that cloud delivers, the acceleration in innovation that cloud enables, and the potential for discontinuous business value that cloud makes possible.

This success has been accompanied by exponential increases in the criticality of business functions which leverage the cloud, the diversity of technology and service delivery models delivering cloud services, and the complexity of management and governance models for cloud services. As cloud services have matured beyond the confines of peripheral and experimental solutions into the core of the enterprise, these enterprises need to integrate cloud into transformation strategies, leverage cloud for enterprise-scale solutions, and manage cloud as a strategic imperative.

This new breed of enterprise cloud services is already the foundation of enterprise transformation. Whether it can be the catalyst for the next wave of technology-driven innovation depends on how enterprises shape the direction of transformation and harness the power of enterprise cloud.

The new realities of cloud computing

Based on the experience of hundreds of major enterprises defining and executing enterprise cloud strategies, there are several new realities that all partners in the enterprise cloud ecosystems – clients, cloud platforms, integrators, service providers, consultants – need to recognize and address. The data presented below is taken from Avasant Research’s online survey of over 1,500 global technology executives from January to May 2018.

1. The future is now

Even at the height of the last of the luddites holding on to their legacy technology bastions, cloud adoption had already crossed 50 per cent as early as 2012. Since then, the conversation has shifted from “never cloud” to more subtle, or passive-aggressive, “not time yet.” Despite the oft-heard narrative that cloud adoption is always a moving target of two to five years away, over 90 per cent of North American enterprises are already leveraging some form or another of cloud services, with the penetration of cloud services expected to reach almost 100 per cent by 2020.

Cloud services have also matured to support complex and mission-critical functions, penetrating far beyond early-stage forays into non-critical and peripheral workloads. Of enterprises in 2017:

  • Over 80 per cent use cloud services for early-adoption functions such as workplace productivity, sales & marketing, customer management, portals, content management, and analytics & reporting.
  • Between 70 per cent and 80 per cent use cloud services for core back-office functions such as finance & accounting, human resources, and procurement.
  • Over 55 per cent have adopted cloud services even for mission-critical supply chain and R&D functions, with even the most intransigent services related to manufacturing have 45 per cent cloud adoption.

By 2020, cloud adoption for the early-adoption functions will range from 90 per cent to 97 per cent, and be in the 85 per cent range for core back office functions. Over 75 per cent of supply chain and R&D functions will leverage cloud services, and even manufacturing will see adoption levels close to two-thirds.

2. Unity in diversity

In addition to the broad adoption of enterprise cloud services, there is a proliferation of technology and service delivery models. Enterprise cloud is no longer a choice between virtualized cloudwashed solutions from legacy providers and one-size-fits-all hyperscale solutions, but present a wide range of viable choices for each business function:

  • Software as a Service, based on a combination of software solutions available on hyperscale solutions, on-demand solutions provided directly by software vendors, or on-demand services provided as integrated solutions by industry-specific specialized integrators.
  • Public infrastructure or Platform as a Service, based on hyperscale solutions providing platforms for enterprise applications in a multi-tenant model.
  • Private infrastructure or Platform as a Service, based on on-demand delivery models in a dedicated environment with hyperscale vendors, major integrators, or even in their own premises.

3. Beyond fear, uncertainty and doubt (FUD)

As enterprise cloud services have become more prevalent, more embedded in core operations, and more diverse, the key challenges have shifted from the hygiene factors such as security, privacy, and sovereignty, to more complex needs related to service performance and end-to-end process orchestration.

Following an evolution not dissimilar to Maslow’s hierarchy of needs, the traditional existential challenges which lent themselves to unfounded hysteria based on fear, uncertainty and doubt (FUD) have largely been addressed, and have been replaced with new challenges which go to the heart of enterprise cloud services operating as a core part of enterprise business processes, with even newer challenges related to business value realization beginning to emerge as enterprises start measuring the business impact of cloud services.

Over the last five years, the key risks related to security, privacy, and data sovereignty have largely been addressed, as there is only a small minority of enterprise (10 per cent or less) that continue to see issues with these critical risks not being readily addressable in the market. The erstwhile #1 concern, market availability, has essentially become a non-issue as more enterprises believe there are readily-available solutions than perceive market availability as an issue.

The primary focus of enterprises has shifted to ensuring that enterprise cloud services can meet the needs of mission-critical operations, with issues such as functional fit, service availability, incident restoration, and monitoring & alerts being perceived as a key risk by between 80 per cent and 95 per cent of enterprises, and over 20 per cent continuing to see these risks as not readily addressable in the market. Disaster recovery, as part of broader resilience and continuity concerns, remains the most critical issue, with over 40 per cent of enterprises not seeing readily-available solutions in the market to address this risk. Together, these operational concerns represent the most important obstacles to enterprise cloud adoption.

As enterprises gain more experience in implementing and managing Enterprise Cloud solutions, issues that were previously ignored have started emerging as key considerations. Technology issues such as network architecture, data integration, and enterprise integration are being better understood, and are a key concern of 50 per cent of enterprises, with between 20 per cent and 25 per cent of enterprises failing to see readily-available solutions. The ability to ensure end-to-end performance management and accountability is the most significant of these concerns, with over 30 per cent of enterprise not seeing readily-available solutions. These technology and integration issues are rapidly becoming as important as the operational concerns, and require a concerted effort to address before they become the next generation of obstacles to the adoption of enterprise cloud.

As the first generation of enterprises are beginning to mature in their leveraging of enterprise cloud services, there is a growing concern related to business impacts which were taken for granted in the early days of cloud adoption. Perversely, as the previous risk issues are largely acknowledged as being addressed, enterprises are increasingly questioning the very premise of Enterprise Cloud as a driver of business value. Issues related to the realization of cost savings, the delivery of greater business agility and the ability to support greater innovation are still nascent, with less than 35 per cent of enterprises perceiving these as concerns.

These unseen issues are however early signs of concern, with 10 per cent of enterprises, (or one-third to 40 per cent of those perceiving concerns) not seeing readily-available solutions to these concerns. Proportionately, this gap is higher than that for the key operational concerns, and as the business value of enterprise cloud becomes more of a focus as cloud adoption matures, the gap will widen unless proactively addressed by enterprises.

Source: IT World Canada

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