Cloud Computing adoption continues to gain momentum. Recent forecasts predict public Cloud computing revenue at $3 Billion in 2016. Our January post suggested looking beyond cost savings when moving to the Cloud. Since that post, we’re now convinced organizations can no longer afford to ignore the benefits of Cloud computing. We’ve conducted significant research on current trends in Cloud Computing, met with our Cloud Alliance Partners, Third Party software providers and other consulting firms (in a coopetition mode.) A staggering 75% of Public and Private organizations do not have a viable Cloud Strategy. Here are five reasons organizations without an optimized Cloud Strategy should consider before taking any further steps to integrate Cloud computing.
Reason #1. Lack of Resources and Qualified Staff is the #1 reason inhibiting Cloud adoption
While security is still a key concern, lack of resources and qualified staff is the new #1 Cloud adoption inhibitor. Moving workload and applications to the Cloud impacts the business, operations, security, compliance, people and process. Delegating Cloud Strategy to your CIO/VP-IT without key stakeholders and experienced staff creates unnecessary risk to your organization’s Cloud adoption. Before starting a Cloud strategy initiative, be realistic in assessing internal staff availability and skill sets to identify gaps. Considering augmenting staff with experienced consultants.
Reason #2. Secure your organization’s IT: 86% of Cloud applications in use are unsanctioned
Shadow IT is generally considered a threat to an organizations IT security. In addition to security concerns, unsanctioned applications can obscure the true cost of IT. CFO’s allocating budget to a LOB without approved IT spend could potentially be misreporting actual costs as a result. Recent articles in IT industry publications suggest organizations should be embracing shadow IT to facilitate organization’s Cloud acceptance. We (and most likely your CSO) disagree. A comprehensive Cloud Strategy can easily bring unsanctioned applications into the light to improve IT security, financial reporting accuracy and enable Cloud vendor consolidation.
Reason #3. Allocate IT budgets to New Projects
Typical cost savings for existing applications moving from on premise or data center to the Cloud can be significant. Building new applications “Cloud ready” can also provide additional savings that can be used for new project investment. Reallocating IT budgets to new projects is the #1 expectation across all industry sectors (Public and Private) when implementing Cloud computing. A Cloud Strategy with a time-phased roadmap allows organizations to methodically target cloud workloads that will lower or eliminate certain capital expenses (CAPEX) and reallocation of operating expenses (OPEX) to new projects.
Reason #4. Cloud and non-Cloud Budget Allocations
An emerging trend we are seeing with increased frequency is Boards and Executive teams allocating Cloud and “non-Cloud IT” budgets. We view this trend as corporate leadership’s recognition of the potential benefits to the bottom line derived from moving IT workloads to the Cloud. To prepare accurate budget estimates, a Cloud Strategy combined with TCO is a necessity when categorizing Cloud vs. non-Cloud IT budget workloads.
Reason #5. A Fragmented Approach to Cloud Adoption May Increase Total Migration Costs
While we support a Think Big, Start Small, Move Fast approach, organizations without a Cloud Strategy may find reaching a financial breakeven point takes longer than expected. Organizations with an ad hoc or no Cloud Strategy at all may incur unplanned costs during migration including may include labor, training, consultants, running duplicate environments, third party tools to aid migration, penalties for early contract terminations (e.g. facilities, software, outsourced data center support, etc.) and recommissioning or scrapping hardware. Having an established Cloud Strategy with TCO in place ahead of Cloud migrations is an important factor for unplanned cost avoidance.
Rate of Change, Commitment and Approach
These five reasons are just a few of the many reasons to consider when establishing a Cloud Strategy for your organization. The rapid pace of change in both technology and business requires advance planning and flexibility. Establish an overarching cloud strategy and manage the plan tactically to retain organizational agility. Through the addition of various clouds workloads on an opportunistic or ad hoc basis, many organizations find themselves with a Hybrid Cloud by default. Without a strategy and road map to guide the organization, the frequent outcome may include added operational complexity and increased costs with new requirements for monitoring, managing and even reconciling billings from multiple cloud service providers. Be committed to a strategic approach and maximize the benefits of cloud computing.
Small Investment, Big Return on Investment
Investment in creating and managing a Cloud Strategy is small in comparison to the potentially large (and quick) ROI. A Cloud assessment involving business and IT stakeholders identifying three “easy to move” applications as a first step is the optimum departure point for long term enterprise migration planning. This approach allows Executive sponsors to gain internal support with early success and demonstrate the benefits Cloud computing can offer an organization.
The Time to Act is Now!
There are an estimated 64% of organizations implementing cloud ad hoc or without any Cloud Strategy. Failing to take advantage of the innovation and reinvestment opportunities offered by Cloud computing can impair your organization’s potential for growth. Your competitors may already have started their Cloud transition enjoying increased revenues, lower prices to gain market share and faster product launch. The time to act is now - before you fall behind the pack.