- Cost savings
- Competitive advantage
- Automatic software updates
“She’ll sting you one day”*Several researches have emerged in the past few months indicating that the cloud adoption alone doesn’t just not reduce costs or make the life of IT departments easier, but can sometimes even make it harder. For example, in their paper The Cloud Hangover, Sungard AS surveyed 400 organisations across Europe on their expectations of moving to the cloud and whether these expectations have been met. Top four expectations were: reduced IT costs, increased agility, improved IT team efficiency and reduced IT complexity. However, businesses turned out to be unprepared to face certain unforeseen cloud-related challenges that have presented themselves together with the cloud adoption. Or as Sungard AS put it: “[…] in this rush to join the party without interrogating the hype in regards to their own organisation’s reality, many have realised they have not truly thought about the cloud in the long-term.” According to the findings, a lot of organisations found themselves struggling with interoperability and unexpected costs at all phases of adoption, not least of all due to incompatibility of cloud solutions with each other and with existing company software. For one, about a third were “surprised” by the unexpected expenditure on systems integration. Another interesting report was presented this year at the Hamburger IT-Strategietage by Professor Peter Buxmann from the Technical University of Darmstadt. In his presentation Digitization: Reality Check, for which 40 interviews with C-level executives from Germany were analyzed, he showed that fast implementation and strategic flexibility are indeed among the benefits that businesses in question gained due to the cloud adoption. Yet the promised benefit of automatic updates was quite debatable, while in the area of the cost savings there turned out to be no benefit at all. Again, not least of all due to the unforeseen need for systems integration. Also, interestingly enough, security concerns turned out to be quite a pain point for many interviewees in Germany, either due to their own doubts or concerns of their customers.
Our own survey backs it upQuite interested by the findings, I decided to run our own modest survey asking our customers and contacts about the success of their cloud adoption strategy.** To start with, 56 percent of all respondents said that over 50 percent of all services, systems, applications, databases, etc. at their organisation are cloud-based. At the same time the quite remarkable 25 percent shared that their organisation has adopted only one cloud-based solution so far. The rest was somewhere in between. This, in itself, is indicative of the fact that most companies either are already on very friendly terms with the cloud or at least started making first steps towards this. In terms of how the general expectations have been met so far, 56 percent claimed they are satisfied. 25 percent even went this far and picked the answer “Absolutely, 100% or almost so met”, while 6 percent admitted they had expected much better results. It is interesting to note that another 6 percent said they are quite satisfied but already know this is going to be more expensive in the long run. Yet at the same time, it was somewhat a relief to see that no one said that moving to the cloud was a complete waste of time and money:-)
Expected benefits and the reality checkBased on the results of the survey, increased business agility was the top benefit expected from moving to the cloud — 63 percent of our respondents picked this point. The second place is shared between enabling innovation and reducing IT complexity (each was chosen by 56 percent of respondents). The third place was equally shared by improving IT team efficiency and reducing IT costs (36 percent each). The rest of the expected benefits was distributed as follows:
- Increased competitive advantage — 31 percent
- Less up-front costs — 6 percent
- All of the above — 6 percent
The road so far: Challenges encounteredNext we asked what challenges have been encountered so far, and this is where it’s getting really interesting. Here’s the complete overview: The results are very close to these of Sungard AS, and it seems like the unexpected costs could be the real deal-breaker when it comes to cloud adoption. The reasons are different – staff needs to be educated, applications must be integrated into the existing infrastructure, the increased use of cloud applications as shadow IT (which results in more uncontrollable purchases by non-IT departments), and so on. But the outcome is the same. When I think of it, though, it is quite ironic that while companies move to the cloud in order to save costs, what they really get is even more costs on their hands then before. At the same time, I believe the real benefit in terms of costs savings will be very palpable in the long run. Last but not least, we asked our respondents to share with us what they would have done differently if they had had a chance to start all over again. Equally important were the following points (each “scored” 29 percent of respondents):
- Would have developed a detailed plan for migration of existing software from their physical environment to the cloud
- Would have developed a solid strategy for managing multiple cloud vendors
- Would have ensured we have the right tools and technology for systems integration, e.g. an integration platform, in advance
Wisdom shared, or the words of adviceFinally, we asked some of our respondents to share a piece of advice off the top of their minds with those who are just starting their journey to the cloud. Here’s what they wrote:
“Don’t do it alone. Hire a company to assess your systems and build a plan to do it properly. It will cost more initially, but will save you boatloads in the future.” “Try several before choosing one. Not everything has to be in one platform, it is more important whether or not integration is possible.” “Change your requirements instead of upgrading.” “Plan how to make efficient user/group management in different clouds.” “Start small with one or two systems, work your way up.”
Three steps to hit it off with the cloudIt was very interesting to see that the results of our small survey were indeed in many points consistent with the conclusions made in the Sungard’s paper and by Peter Buxmann. So, this is true that the cloud does bring some significant advantages to businesses, however, it is utterly important to have built a strong, solid and well-thought-out strategy for cloud adoption way in advance. In particular, based on the answers of our respondents and the recommendations by Sungard AS, I would like to highlight the following points that organisations should pay special attention to: 1Don’t go for the “all or nothing” approach Start small. Don’t rush to move as many applications to the cloud as possible within the shortest period of time, even if your organisation decided to go full speed ahead on digital innovation and cloud adoption. Not all applications and systems can be migrated into the cloud seamlessly, and in some cases you might even need help from an external specialist. First, get used to the thought that this process might take several months if not years — better slowly, but surely. And then work on a very detailed plan what should be migrated to the cloud, when and why! Make sure you take the technical requirements and interdependencies of the systems and applications into account at this step already. 2Get yourself an integration middleware It’s been repeated over and over again, and yet it seems that when it comes to cloud-based systems and applications, IT specialists tend to forget or dismiss the fact that these need to be somehow integrated with the existing on-premise software, systems, databases. Most even think that they can easily manage systems integration themselves, without any third-party middleware. Yet cloud-based systems and applications tend to require a completely new set of skills. Besides, cloud adoption is today only an intermediary step towards embracing projects related to IoT, Mobile and Big Data — the real drivers of digital innovation. Without a uniform integration platform that would be accessible across all departments, B2B partners and other key business parties, the one that would work well not only with the existing core systems, but also with other platforms, and would provide an overview of all integration flows down to the last detail, IT departments are bound to get buried under the amount of integration work. Which is hardly in accordance with the principles of digital innovation and digital transformation. 3Know where your money goes Right from the start, make yourself familiar with ways to manage multiple vendors. Hire a specialist or talk to other CIOs and CTOs at a conference how they tackle this issue. As much as you would love to get 90 percent of all solutions from one vendor and are really intending to — this is simply not going to happen, so be prepared for that. In addition to that, Sungard AS warns about being very attentive to Cloud Service Level Agreements and recommends nailing them down from the start. Here’s what they write: “Considering what elements are included in an SLA is essential in ensuring that your cloud deployment can meet those business and IT expectations right from the start”.
To be continuedWhile preparing this article, I luckily happened to talk to a person who has many years of experience in working in “cloud-free” organisations and is now running his own company, which is based entirely in the cloud. We talked about the differences between the two models, benefits and disadvantages of the cloud for him and even about security. Even if you cannot fully relate to the story because of the size of your organization or for some other reason, I still highly recommend it.
Wonder whether the elastic.io integration platform is a match for your cloud adoption strategy?
* (Brothers Grimm, The Queen Bee) ** 88 percent of all respondents are from the SMB (small and medium-sized business) sector, while the rest 12 percent come from very large enterprise. The respondents came from all over the world, with the majority of them being located in Europe Photo via Visual Hunt