Companies Drastically Underachieving Cloud Potential

Companies want to put at least half of their infrastructures into the cloud. However, far fewer workloads are actually being migrated. Understanding the challenge of disruption and possible obstacles to adoption can help your company meet its virtual goals.

Two-Thirds of Cloud Unrealized
Disruption – Blessing & Curse
Obstacles to Cloudification
IaaS Trumps AWS

Two-Thirds of Cloud Unrealized

The vast majority of tech and line-of-business decision-makers understand why cloud is a wise choice: development proceeds more smoothly; the environments have greater agility and can scale seamlessly; and the budget can be cut for IT tools and resources. In other words, everyone knows how valuable cloud can be. Nonetheless, very few organizations are using cloud to its full advantage.

In a poll of almost 500 organizations, global management consultancy Bain & Company revealed big companies are generally prepared to go half-in with cloud service providers (CSP’s), saying that they would like to move 50% or more of IT tasks to a CSP. Although that’s the goal, the reality is that firms run a mere 18% of their IT through cloud VM’s. In other words, the reality of cloud is about 36% of its potential.

Although organizations have transferred sizable chunks of their IT to distributed servers, explained the Bain report, they are missing out on about two-thirds of the cloud benefits they would win if they met their own migration objectives.

Disruption – Blessing & Curse

It’s often said that cloud is incredibly disruptive. In fact, cloud’s level of disruption may be unprecedented.

“It seems the cloud is now disrupting every industry it touches,” argued digital innovation consultant Greg Satell. “The world’s most advanced technologies are not only available to large enterprises who can afford to maintain an expensive IT staff, but can be accessed by anybody with an internet connection.”

It may sound great that cloud has such incredible power to turn industry on its head. However, disruption doesn’t have an entirely positive connotation for a reason. It sounds chaotic. It sounds like someone standing up in a room and throwing things. No one wants things to get messy, so people aren’t going to immediately jump headfirst into the fray when a disruptive market element emerges. The chaos of disruption is a good reason to procrastinate.

However, that procrastination gradually makes an organization more vulnerable.

“[C]ompanies that delay this move will fall further behind in agility and innovation,” said Bain, “which may put them at greater security risk, hurt their business performance and make it harder to attract millennial talent who want to work at leading companies.”

4 Obstacles to Cloudification

Actually, the above statistics don’t just suggest that the cloud isn’t being used to its full potential. What they really mean is that people are having difficulty meeting the cloudification goals they’ve established. What are the biggest obstacles?

#1 – Indecision regarding the privacy model

Hybrid and private clouds have become more commonplace. Many companies think private cloud is best for their business. When a company has specific needs related to regulatory compliance, data safety, or IPs, the private model can make sense. However, the Bain researchers determined that public cloud has 200% more business benefit than does the private model.

Why is public so much more valuable? The first and obvious answer is that it saves you money. However, it also is simply “more cloud-like” because you are talking about a much larger number of servers:

More agile
Optimal scalability
More robust options and features

One study found that when companies moved to public cloud, they could increase the number of apps they develop and deploy by 80%, with time-to-market accelerated 70%.

“Other research has found that companies that moved development to IaaS and PaaS clouds from Amazon Web Services (AWS) reduced downtime by 72% and improved application availability by 3.9 hours per user per year,” reported Bain. (Oh yeah… That’s us.)

Decision-makers in many companies have been hesitant to switch their systems over to public cloud even with giants such as General Electric diving into the cloud so confidently. However, the incredible growth rate of public cloud for the last few years (private and hybrid have accelerated more recently) indicates that businesses are much more cloud-ready than they were in the past.

#2 – Confusion regarding service model

Infrastructure (IaaS), platform (PaaS), or software (SaaS) – which option is best? Choosing one that does not best meet your organization’s needs hurts cloud value as well.

Specifically, software-as-a-service is often not adopted in the most organized way that optimizes value for the business. “[F]or example,” offered Bain, value is lost by “allowing business units to make siloed decisions that result in dozens of instances of a SaaS app running across a company rather than standardizing one or just a few.”

Companies are best served by figuring out exactly what they need and how users can adopt a solution systematically. Many companies need to update their application catalogs as well so that cloud is brought completely under the fold of the company, from an organizational perspective.