The rate of digital acceleration has accelerated in the last 18 months. According to a recent KPMG poll of company leaders, 67% have accelerated their digital transformation strategy and 63% have increased their investment in digital transformation plans since the pandemic began. With the technologies that enable digital transformation being so reliant on the cloud, it's unsurprising that IDC's latest findings forecast cloud infrastructure spending will increase 13% to $74.3 billion in 2021.
We do know, however, that historical cloud investments have not always delivered value and have in some cases actively contributed to wasted spending. According to some estimates, about a third of organizations' cloud investments are inefficient, amounting to approximately $25 billion in wasted money. This is mostly due to architecture inefficiency and value leakage. If these cloud infrastructure spending forecasts come true, this value difference will only widen.
What Is a Problem with Cloud Waste?
Many businesses are so focused on migration throughput that they overlook the value that the cloud will provide to their organization. This approach results in poor transformation quality and exacerbates architectural inefficiency and missing value. Cloud value needs more than simply transferring IT systems; it also requires an emphasis on business results, resilience, and regulatory controls, as it is difficult to retroactively implement controls or modify the architecture to accommodate these areas.
Inefficiency in architecture refers to the adoption of architectures that cost more than they should in the cloud. Perhaps they obstruct autoscaling and utilization, or they rely on older or more expensive instance types than necessary, or they fail to rework workloads when adopting Function as a Service (FaaS) and Platform as a Service (PaaS) capabilities. In other circumstances, they make poor use of cloud tooling.
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Value leakage occurs when expenditures are not directed directly toward the areas where the organization requires value from the cloud. It is critical to identify early on where the greatest value may be generated (whether through analytics, scaling cyber security, AI, or a mix thereof). Underinvesting in certain areas or spending excessively in undifferentiated areas results in waste.
Closing the Value Gap in the Cloud
CIOs are attempting to maintain or accelerate the speed of digital transformation, which is based on cloud infrastructure, and as such, they must maximize the value of every dollar spent. Fortunately, organizations can take various steps to assist in accomplishing this:
Determine the strategic reasons for your organization's cloud adoption
The organization can utilize the cloud for a variety of purposes. Commodity infrastructure is the fundamental feature since it offers data storage and processing power. At a more intermediate level, the cloud can be utilized to boost the agility, scalability, and speed of provisioning of technology products, hence accelerating their time to market. Cloud computing can be used for analytics and advanced technologies such as artificial intelligence and machine learning by the most inventive businesses. Some firms may utilize all of these features, while others may utilize only a few. Organizations must be laser-focused on the end goal of their cloud adoption. Without this approach, developers will simply design a slightly better cloud than the prior one, rather than developing an architecture that is focused on delivering value. By utilizing this technique you can successfully reduce Cloud Inefficiency.
Utilize a 'cloud value map' to quantify the impact.
After establishing the strategic rationale for cloud adoption, continuing usage should be mapped against key KPIs and the business capabilities they support. The simplest approach to accomplish this is to create a value map that connects these differentiated business services at the top of the pyramid to enabling capabilities in the middle layer and core architectural and operational levers at the bottom. Simply put, the enablers and foundations will be organized differently depending on the business services outcomes that must be delivered. For instance, a cloud designed for insight will organize data differently from a cloud designed for cost.
This enables companies to determine whether the cloud is enabling them to execute further up the stack, whether cloud-enabled business processes and systems are genuinely enabled, and whether cloud-enabled customer journeys and processes are impacted. Additionally, it is feasible to point to wasteful spending on functions that do not contribute to economic value. Cloud teams may ensure the cost-effectiveness of their cloud infrastructure by combining these techniques.
Not to be forgotten are engineering teams and risk management functions.
Having a cloud controls framework in place to demonstrate to the Board and regulators will instill confidence in them that cloud migrations and updates can be completed quickly, accurately, and with the least amount of risk. The approach takes into account operational, security, and resilience concerns associated with cloud migration and ongoing operations. Additionally, it assists in identifying, mitigating, and managing risks while adhering to applicable requirements.
Encourage collaboration
While cloud implementation is frequently done perfectly on paper, when business and technology operations are not properly integrated, it frequently misses positive opportunities. When business and IT teams collaborate, all parties are encouraged to evaluate current cloud utilization, bottlenecks, and strategies to accelerate progress. While CIOs often lead cloud adoption, they must collaborate with other departments to develop a plan and communicate how these decisions will affect cloud use and the rest of the business.
Utilize a smart cloud-based strategy
The advantage of the hybrid cloud is that it enables businesses to select the most appropriate infrastructure for the job at hand. One workload may benefit from a more prominent AI capability in one cloud, but another task may be entirely commodity and should be deployed in the most cost-effective location, cloud or on-premise. It will definitely help to minimize value leakage.
Without a question, cloud technology will be critical in assisting businesses in recovering from the economic impact of the epidemic. It will serve as a crucial differentiation for organizations that successfully apply it. IT teams that are quick to adopt a measured approach to maximizing value and minimizing cloud waste will secure their enterprise's long-term competitive advantage.
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