Cloud is ubiquitous: according to Gartner, spending on public cloud services is predicted to reach $396 billion in 2021 and grow 21.7% to $482 billion in 2022. And by 2026, Gartner predicts public cloud spending will exceed 45% of all enterprise IT spending, up from less than 17% in 2021.
But how much do companies fully understand the potential benefits of the cloud—and possible limitations—as they race to migrate? In an evolving, complex landscape, the current offerings by major cloud players may not allow for the important combination of flexibility and control that today’s organizations expect. At the same time, as companies go down the path toward digital transformation, the number of enterprise applications they use is growing across every department.
That means that companies may need to reconsider and reevaluate common cloud strategy assumptions as well as rethink some of their investment decisions. For example, enterprises increasingly may not want to be locked into using one company’s software, and are more and more likely to use open source software. A rising number of cloud software services with open source expertise are offering competitive alternatives to the proprietary portfolios of public cloud infrastructure companies.
As a result, the shape of cloud services—and the issues organizations need to consider—is changing. Here, we address common assumptions around cloud strategy and what organizations should consider to fully reap the benefits of cloud.
Assumption: Migrating to the cloud will lower costs and boost security
Two of the biggest arguments for migrating to the cloud are the opportunity to reduce overall IT spend and to take advantage of better security controls. However, while there is potential for cost savings, in many cases, organizations are paying extra for convenience, and costs can pile up. For example, out-of-the-box cloud services are typically more expensive than self-hosted, on-premises infrastructure if they are managed like legacy IT infrastructure. In the cloud, companies pay for the flexibility to rapidly provision, deprovision, and scale, and have the opportunity to use that flexibility to reduce costs.
That has led to cloud repatriation: in 2019, IDC predicted that up to 50% of public cloud workloads would be repatriated to on-premises infrastructure or private cloud in order to leverage the best option for specific workloads.
As far as security, the cloud may have more sophisticated controls that are easier to implement than on-premises infrastructure. However, the decentralized nature of public cloud may open a more complex security posture—one over which the organization may not have sufficient control. A recent IDC survey found that nearly every company has experienced some kind of cloud data breach. That means enterprises need to consider and assess the goals of their IT security environment in every area of the cloud stack.
Assumption: Sticking to one cloud provider is best for business
While it may be convenient, many enterprise-level organizations find that the standard box model of one major cloud provider does not meet its flexibility needs. Sophisticated IT organizations can find opportunities to optimize both cost and time-to-market by flexibly moving workloads between cloud providers, and between the cloud and on-premises.
It’s also important to understand that “cloud provider” isn’t limited to the big three cloud infrastructure vendors—over time more and more ISVs are becoming cloud providers in their own right. For example, an advanced database user might rely on high performance, sophisticated behavior, and advanced configurations not available in the cloud provider’s managed offerings. In addition, if that advanced database user uses an open source database such as PostgreSQL, they will likely want that area of their stack serviced by a provider that is a database company at the core, not an infrastructure company that handles hundreds of other applications and services. Today, thanks to a trend toward unbundling cloud services, organizations can regain more control over their database deployment in the cloud.
Finally, while hybrid architectures can mitigate costs and increase flexibility, the data-centric nature of enterprises today presents additional challenges. It is difficult and time-consuming to move data and databases, and it can be particularly challenging to unwind and pull back from proprietary cloud data services. Independent cloud vendors can facilitate cost savings by unbundling cloud provider services, which provides the freedom and flexibility afforded through a cloud-agnostic approach.
Assumption: Cloud is a mature landscape that won’t change
Cloud is one of the fastest-growing areas of IT spend across industries. But while studies show that 92% of IT environments are already at least partly in the cloud, enterprise cloud adoption remains in the early stages of what will be a profound transformation for all enterprises. Far from a mature, static landscape, cloud technology is constantly evolving.
One significant technology shift in cloud over the past decade has been the continued, dramatic reduction of the cost of compute and infrastructure. Making development tools and using programming languages has also become easier, which has allowed development tools to move out of the sole purview of IT specialists, expanding to the rest of the organization.
Finally, as organizations prioritize taking back control over the convenience of a single public cloud, technical cloud expertise in different areas has spread among different service vendors. These providers are getting more creative with how to build a cloud service offering—such as database as a service—that is unbundled from public cloud infrastructure and changes the definition of managed service.
Cloud’s evolution: A balancing act
While there is incredible growth and a tremendous amount of energy and discussion about cloud, it is still relatively early in cloud’s evolution. What is changing as organizations emerge from early stages of cloud adoption is that companies want to reclaim higher orders of control, rather than remain beholden to a single cloud vendor. That is leading to a multi-cloud approach that includes deploying more dynamically between traditional on-premises and public cloud: according to Gartner’s 2020 cloud end-user buying behavior study, 76% of respondents reported using more than one cloud provider.
New independent software vendors are stepping into this emerging, evolving landscape, changing the shape of managed services to reflect customer needs and to offer more expertise in specific cloud areas and open source platforms. Ultimately, as cloud services go through this unbundling process and move away from monolithic architecture, cloud strategy efforts will become a balancing act between control and convenience. Companies need to think strategically about which services to use from major cloud vendors and which services independent cloud providers can offer with the required expertise.
This article was produced by Insights, the custom content arm of MIT Technology Review. It was not written by MIT Technology Review’s editorial staff.
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