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What CIOs and CFOs need to know about multi-cloud costs




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Most enterprise IT organisations today are running multiple cloud environments. Some have a clear, coherent, business-wide strategy which guides their choice of different cloud platforms. For most however, multi-cloud has developed piecemeal, with IT departments and line of business leaders sanctioning cloud deployments on an ad-hoc basis.

Whether multi-cloud has emerged by accident or design, it represents a ‘best fit’ model of technology deployment. Line of business leaders seek out cloud solutions that best fit their immediate requirements and that offer innovation that is beyond the capability and resources of internal IT teams to deliver.

CIOs also embrace multi-cloud environments because they too recognise the need to deliver innovation to the business while, at the same time, ensuring the entire organisation’s technology base is efficient, cost effective, secure and compliant.

That means seeking out different Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS) solutions for different workloads and applications. It may also require some applications and data to be run on premises or in a private cloud infrastructure, while others are run in the public cloud.

Done right, multi-cloud offers organisations the chance to modernise application development, simplify data management, enhance security and governance and overcome perennial problems such as vendor lock-in and business downtime. Best of all, this can all be provided on a cost-effective, scalable pay-as-a-you-go, consumption-based IT model.

Done wrong however, enterprises risk repeating the application and data siloes that have held back so many enterprises, only this time in the cloud rather than their own data centres.

Identifying and migrating the most appropriate applications to the cloud and bringing order and coherence to multi-cloud environments that have grown by accident rather than design, are among the most important challenges facing business technology leaders today.

Fortunately CIOs, CFOs and their CEOs are starting from a good place. They are looking for direct business efficiency benefits and they are getting them.

On average, those surveyed by IDG are seeing positive returns with an estimate 39 percent average growth in revenue attributed solely to cloud spending and a 26 percent reduction in operating costs attributable to cloud deployments. For IT operations, benefits were reported across a range of activities from DevOps to Customer Experience.

The impact of cloud on operational objectives

  • Automation and Agile/DevOps transformation (85% ‘very successful’ or ‘successful’)
  • Cloud native new application development (81% ‘very successful’ or ‘successful’)
  • Maintaining a modern fleet of applications (79% ‘very successful’ or ‘successful’)
  • Improving customer/ end-user experiences (77% ‘very successful’ or ‘successful’)

Ensuring these benefits are sustainable and repeatable though remains a challenge. If multi-cloud deployments are not appropriately controlled and managed, then costs can spiral, security and compliance can be compromised, and competitive advantage can prove short-lived.

In the IDG-Dell Technologies cloud survey, cost management alongside integration were the most significant issues raised by participants, with the average cloud wastage put at 25 percent per organisation. With the growth of decentralised IT and with greater line of business involvement in technology purchasing, this level of waste is perhaps not surprising, and is probably not out of step with waste in traditional IT operations, but it is a significant drain on resources.

For Mike Van Vliet of Dell, says, getting a grip on cloud cost and operations, let alone data and security, can’t be separated from understanding how cloud fits into an overall business strategy.

‘Whenever I speak with C-level executives, their ultimate goal is competitive advantage through innovation. You can see that process in extreme form in Formula 1 racing, where innovation and competitive advantage must be delivered every other week.’

Dell Technologies sponsors the McLaren team. Its cars have 12,000 components and the engineering team has access to 20,000 components each race. The engineering team constantly analyses data on those 20,000 components, innovates on them, tests them and decides whether or not to use them the next race.

‘The job of the McLaren IT group is clear,’ says Van Vliet. ‘It is to give the engineers access to the data and the necessary software at all times, and that is what you should look for from your technology partners, particularly your cloud providers.’

Rather than seeing cloud as an end goal, CIOs should begin by focusing on capabilities, he suggests. For new applications this means either moving to new architectures that are based on micro services and containers or acquiring a SaaS alternative.

For existing applications this means starting a workload assessment to determine the cloud suitability of your applications portfolio and determining where each application should reside  whether it is Infrastructure as a Service, Container as a Service or Platform as a Service. These can be provided by public cloud vendors, a private cloud build or any appropriate mix.

‘Once you have decided which cloud service is most suitable for an application, you can start your re-platforming, rewriting, decommissioning or migration efforts,’ says Van Vliet.

The key elements of this process require the CIO, CFO and line of business leaders to be in complete accord. Application standardisation across the enterprise may meet internal resistance. However, it removes multiple flavours of the same functionality, freeing up internal resources and delivering cost savings by reducing licensing costs.

Automating the delivery of most IT services allows significant savings on labour intensive tasks and frees members of the IT team for more productive work.

Finally delivering self-service systems not only frees up internal resources, it also gives the business access to the data and software it needs, at the speed it is looking for.

This approach ensures the right applications reside on the right platforms and are available to the right people at the right time. It also allows the CIO and the wider C-suite the oversight they need to control costs and maintain security and compliance while also enabling ongoing innovation. Most important of all it provides the platform and resources to bring innovation and competitive advantage to their organisation.

Calibrate your cloud: Cloud Computing For EMEA

Cloud environments have the ability to increase efficiency and enable innovation within modern enterprises, but they are not without challenges.

A new IDG study consulted CxOs and senior IT leaders in large enterprises in EMEA to identify their cloud-based challenges.

View the infographic

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