And during the pandemic the increased consumption of cloud services to boost business resiliency and transition to ecommerce models served as perhaps the best validations of the market for software provisioned over the internet.
Yet several challenges remain to implementing hybrid cloud environments, including the virtual sprawl that accompanies large migrations. The financial models of operating cloud environments present unique challenges, too, as IT leaders have found that poor governance can render running cloud software more expensive than operating compute services on premises. And don’t forget the difficulty of keeping up with the latest cloud services and architectures.
Even so, the upside of executing a cloud strategy at a high level is too great for most IT leaders to ignore. CIO.com looks at the top trends that will shape cloud strategies in 2021.
1. The business value struggle is real
First, an ugly truth: Most organizations struggle to maximize the value of their cloud investments.
Only 37% of 750 business and IT executives say they are achieving the value they expected on their cloud investments, according to research Accenture published in November. Moreover, just 29% are completely confident that their organization’s cloud migration initiatives will deliver the expected value at the expected time.
Failure to move quickly off of legacy systems and too much focus on migrating low-hanging fruit applications are among the hurdles, says Karthik Narain, global lead of Accenture’s Cloud First unit. Think a hospitality chain that opts to move expense management to the public cloud but retains its core reservation system in-house. When the core is ignored in favor of peripheral services, value creation is marginal.
Infrastructure-as-a-service (IaaS) has enjoyed its decade-plus of hypergrowth. 2021 will usher in more momentum for business services via platform-as-a-service (PaaS), microservices, and APIs, which will in turn fuel more ecosystems, says Joe Kinsella, vice president of VMware’s CloudHealth business unit, which sells software for helping companies manage cloud environments.
For instance, APIs make it possible for banks to partner with Uber, Lyft, and other gig economy players to entice consumers with frictionless commerce and discounts. Cloud 2.0 will also see less lift and shift and more reliance on cloud-native apps built with microservices, Kinsella says.
3. Cloud co-innovation on the rise
To further spur value creation, companies are partnering with cloud vendors and consultants to co-develop capabilities, Narain says.
For instance, Land O’Lakes and FedEx are co-creating products with Microsoft, while Takeda and Carrier are building technologies with AWS. If 2020 was the dip-a-toe-in-the-water moment for this trend, co-innovation between large enterprises and hyperscale cloud vendors will soar in 2021.
4. Cloud complexity sprawls onward
Keeping on top of new build and deploy models is already hard, but the challenge of managing these cloud environments will get more difficult as companies add more virtual servers and storage to support more applications, which will get connected to other services, spawning more interdependencies, Kinsella says.
Adding to that, AWS, Microsoft, and Google regularly launch new cloud services — serverless and functions-as-a-service, anyone? — that the tools required to use and govern these services can’t keep up. “Cloud is really complex,” Kinsella says. “The architecture landscape is changing all of the time.”
Generally, most organizations are not automating enough governance, security, and other functions, says Jeff Kukowski, CEO of CloudBolt, which offers self-service software for managing cloud environments. “Custom-coding anything is a challenge,” he adds.
5. Reining in cloud costs
The financial model to operate hybrid cloud systems in accordance with budgets remains a major stumbling block, with many organizations struggling to control their spending, says Kinsella, who as an early AWS adopter saw his bill double to $350,000 from code overrun. Some CIOs leverage FinOps, a combination of business management practices and analytics software that calculates the cost of consuming cloud. Even so, 49% of 750 FinOps practitioners report that they use little or no automation for managing cloud spend, constraining the discipline’s value, according to research from the FinOps Foundation.
6. M&A in the cloud market
In 2021, the market for cloud management services will continue to consolidate, says Kukowski, whose company last year acquired SovLabs for codeless integration with provisioning tools and Kumolus to help optimize AWS and Azure environments. Deals such as these continued the wild ride in the sector. In addition to VMware bagging CloudHealth, HPE acquired Cloud Cruiser, Flexera nabbed RightScale, and Apptio bought Cloudability over the past four years.
“The hybrid cloud, multi-cloud space is a Wild West and there are a lot of problems to solve,” Kukowski says.
7. Cloud is now a C-suite consideration
CIOs can breathe easier: They are no longer the only senior executives extolling the value of cloud. More CEOs and other C-suite executives are joining strategic discussions regarding the business benefits of migrating to cloud services, Narain says.
“Over the last 6 months, the number of cloud conversations I’ve been having with the C-suite — CEO included — has skyrocketed,” Narain says. In short, cloud has become a top-down endeavor.
The bottom line
When businesses lean more heavily on the cloud, outcomes improve: Forty-six percent of high adopters report fully achieving their expected cloud benefits, compared to 36% of moderate adopters and 28% of low adopters, says Narain.
There is no silver-bullet solution for improving these numbers; a lot of the challenges are bureaucratic in nature, not technical. But in 2021, Narain expects to see IT departments build more “cloud native” solutions to generate more business agility.
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