MANAGING AND UNDERSTANDING ON-PREMISES AND CLOUD SPEND

Transcription

1 MANAGING AND UNDERSTANDING ON-PREMISES AND CLOUD SPEND MAY 2018

2 The adoption of cloud technologies has taken off. It is relied on by businesses across most industries and by companies of all sizes - from solo entrepreneurs to global enterprises. But, with the widespread adoption of the cloud comes new IT challenges. Companies are moving past the low-hanging fruit phase of the cloud, where the easy work has been completed. Now comes the hard part. New cloud technologies must be integrated with existing on-premises software and organizations must understand the benefits and challenges of each - before, during and after deployment. It also brings with it the urgent need to align the C-level and IT decision-makers on the maturity of their cloud programs and where these investments need to go next to reap the biggest returns. To better understand how and why companies are allocating their IT spend, SoftwareONE contracted Vanson Bourne to poll C-level executives and IT decision-makers on their IT spending habits and the motivations behind them. Unsurprisingly, the research shows that more than half (53 percent) of survey respondents use a hybrid approach to IT. And, 28 percent of respondents state that their organization s primary IT approach is in the cloud, while 19 percent report the same for on-premises. 53% Hybrid (a mix of cloud and on-premises) 28% In the cloud In this document we will look at the top takeaways from that survey, how the results tie into SoftwareONE s offerings and customer needs, and how they support or refute industry trends. 19% On-premises THE MYTH OF THE CLOUD In the midst of the rapid rise of the cloud, we ve heard all the arguments for and against its adoption, including that all the discussion around the cloud is mere hype. Is the cloud truly the IT savior it is made out to be, or is it the latest in a long line of overhyped technologies? As in most cases, the truth often lies somewhere in the middle. The bottom line is that there is much more to the cloud than what people see on the surface. The first cloud myth is that the cloud is cheaper and easier to manage. In fact, 37 percent of organizations feel one of the biggest pain points in managing cloud environments is unpredictable budget costs compared to 30 percent who cite lack of transparency and visibility by user and resource. MANAGING AND UNDERSTANDING ON-PREMISES AND CLOUD SPEND /01

3 Industry breakdown of those concerned about cloud budgets and unpredictable costs Top 3 Industries 49% IT, technology and telecoms 49% Public sector 39% Financial services 34% Retail, distribution and transport 34% Businesses and professional services 33% Manufacturing and production 32% Other 31% Construction and property 49% Public Sector 39% Financial services 49% IT, technology and telecoms The second biggest concern when using the cloud is high costs - with 43 percent of organizations feeling this way. Which of the following are/were the biggest concerns for your organization when using cloud? 43% High costs 41% System performance The vast majority of respondents organizations have concerns using the cloud 90% 39% Connecting legacy systems 21% A lack of a defined strategy Other pain points Cloud adoption remains high, but the reality of costs and managing hybrid environments are becoming more clear as wider enterprise adoption becomes the reality. It is easy for organizations to buy into the cloud because they see immediate returns on the investment, but they are often lulled into a false confidence that allows them to think they ve accomplished more than they truly have. The low-hanging fruit of the cloud (i.e. moving applications from on-premises to the cloud with little to no reconfiguration) is gone. The sense of accomplishment and mastery of the cloud is short-lived. The focus quickly shifts to integration with legacy applications and systems, and all the complexities that come with those actions. The false confidence that can be attributed to a successful first phase of cloud implementation is also contributing to the disconnect between C-level executives and IT decision-makers regarding the maturity of their cloud programs. The C-level tends to believe their programs are more advanced than they are, MANAGING AND UNDERSTANDING ON-PREMISES AND CLOUD SPEND /02

4 while the IT decision-makers take a more realistic view of where things stand. And IT feels the budget pinching more than the C-level. Those at the C-level believe annual budget is $6.3M compared to IT which place it at $5.05M ($1.25M difference). There is a clear disconnect around visibility issues with the cloud. The C-level has more belief in the cloud and what it can and is currently doing for the organization. The C-level believes 34 percent of current IT budget and 43 percent of 2018 IT budget will go toward the cloud, compared to IT which believes those numbers are closer to 24 percent for 2017 and 33 percent for MANAGEMENT REMAINS A PRIORITY AND A CHALLENGE The C-level and IT decision-maker budget disconnect Perceived Annual IT Budget $5.05M $6.3M This disconnect continues when looking at the percentage of IT budgets that go toward the cloud Perceived Average Percentage of IT Budget Dedicated to Cloud Services % 24% 33% 34% IT Decision-Maker C-Level IT Decision-Maker C-Level External and third-party cloud management software remains a critical component of most cloud deployments, as navigating everything from pricing models to daily usage monitoring requires technical knowledge and real-world experience. More than one-third (35 percent) of organizations prefer to partner with IT vendors to help identify and address their business and IT needs. Identifying IT needs is only half the battle. Unless properly managed, both cloud and on-premises deployments can turn into costly headaches, and organizations are struggling to handle everything in-house. In fact, 42 percent of organizations rely on external, third-party software solutions to manage cloud deployments. Considering most organizations work with an average of five cloud providers and 12 on-premises providers, management remains one of the toughest and most complex tasks in all of IT. When looking at the biggest pain points in managing on-premises environments, cost and complexity MANAGING AND UNDERSTANDING ON-PREMISES AND CLOUD SPEND /03

5 42% 35% 26% Rely on external, third-party software solutions to manage cloud deployments. Prefer to partner with IT vendors to help identify and address their business and IT needs. Believe that cloud pricing models were more complex than those of on-premises offerings. reign supreme. In addition, the lack of internal skills is an ongoing challenge, forcing many organizations to look outside of their walls to get the help they need. The study also compared the challenges of managing on-premises and cloud deployments, with more than half of respondents (56 percent) citing that both are equally complex and time-consuming to manage. What is more complex and time-consuming to manage? Both are equally complex and time-consuming 56% Which pricing models do you find more complex/confusing? Both are equally complex and confusing 38% Cloud deployment service level agreements (SLAs) and subscriptions 23% Licenses and subscriptions for on-premises software 11% Neither are very complex and time-consuming 9% Cloud Both are equally simple On-premises 10% 26% 24% It is interesting to note that pricing complexity is exacerbated in the cloud, with organizations claiming that SLAs and subscriptions for cloud deployments are more than twice as likely to be seen as more complex and time-consuming to manage than licenses and subscriptions for on-premises software. Twenty-six percent of organizations cited that cloud pricing models were more complex than those of on-premises offerings. This suggests that more support is needed by organizations in this area and demonstrated by the broad reliance on third-parties for help managing cloud deployments. Outside of security, the biggest barriers to moving to the cloud are lack of in-house skills and the need to focus on on-premises software. When it comes to software license mobility for moving workloads to the cloud, organizations have a lot to learn. This is especially true for IT decision makers given that C-level MANAGING AND UNDERSTANDING ON-PREMISES AND CLOUD SPEND /04

6 respondents are much more likely to report that they have a full understanding of software license mobility (83 percent compared to 56 percent). ON-PREMISES IS HERE TO STAY While organizations are migrating applications to the cloud, it is not the tidal wave of change that was expected. Many organizations still rely on on-premises software to store vast amounts of data. There is a natural assumption that on-premises is easier to manage and set-up than the cloud. While the cloud is only more difficult because of the newness of it all. Surprisingly, nearly half of organizations (45 percent) are either investing more on-premises in the next 12 months or keeping on-premises investments the same. Twenty-four percent of organizations are investing more in on-premises and 21 percent are keeping cloud and on-premises spending the same. And, just over one in four organizations (28 percent) describe their primary approach to IT being in the cloud. 45% 28% Organizations either investing more in on-premises in the next 12 months or keeping on-premises investments the same. Organizations that describe their primary approach to IT being in the cloud. 45% Organizations that build their own solutions to manage their cloud deployments 54% Organizations that feel they can more accurately measure usage in the cloud 42% Organizations that rely on external, third-party software solutions to manage their cloud deployments 42% Organizations that still feel this is true for on-premises software usage Outside of storage (65 percent) and database (61 percent), the majority of enterprise applications (i.e., business analytics, security, development, etc.) are still located on-premises. Regardless of a preference for the cloud or on-premises software, there is one constant - the ongoing disconnect between the C-level and IT decision-makers. Fifty-six percent of C-level executives believe that their organizations have migrated security workloads to the cloud compared to only 35 percent of IT that believes the same. Despite the hype around cloud tracking and control, 45 percent of organizations still feel it s easier to track and manage utilization in on-prem software applications and data. MANAGING AND UNDERSTANDING ON-PREMISES AND CLOUD SPEND /05

7 One area the cloud does come out ahead of on-premises software is measuring usage. More than half of organizations (54 percent) feel they can more accurately measure usage in the cloud, while 42 percent of organizations still feel this is true for on-premises software usage. A HYBRID APPROACH There are four phases to cloud implementation - retire, retain, rehost, and re-platform - refactor and rearchitect. The hybrid approach is introduced and justified early on in the migration process. Some applications need to be retired due to low utilization across the organization or are part of a decommissioning program. Organizations need to be proactive in retiring these applications as they could provide significant cost savings for the on-premises environment. The second phase, retain, is where organizations determine which applications to keep on-premises and which to move to the cloud. It does not make sense to move some applications to the cloud due to compatibility, cost and security reasons. The business justification does not exist to migrate these legacy applications to the cloud. In the rehost phase, the fastest tie to value to realize the benefits of the cloud is to take the consumption-based approach. These applications are highly utilized across the organization and are compatible, cost effective and secure in the cloud. A consumption-based shift will guarantee the best utilization from day one. Last is the replatform, refactor and rearchitect phase. Longer-term strategy which requires skills, investment and time to realize the true benefits of the cloud comes into play. Companies need to look at the architecture of their applications and see how all aspects of the cloud can be used to finely engineer the on-premises applications to realize the maximum benefits of the cloud. CONCLUSION While the cloud may not exactly be eating the world as the hype has led us to believe, it is certainly becoming a large part of most organizations overall IT strategy. However, challenges remain in migrating high-availability applications to the cloud, and hybrid and multi-cloud deployments are only adding to that complexity. Organizations succeeding with the cloud are conducting full, purpose-built migrations and relying on third-party tools to better manage and fully utilize their investments in the cloud. Organizations must have a clear vision and strategy for governing, managing and optimizing their IT investments - on-premises and in the cloud - especially as they embrace the Hybrid Cloud. To fully reap the benefits of the Hybrid Cloud, organizations must have complete transparency from on-premises to the cloud in order to maximize the value of their IT investments. MANAGING AND UNDERSTANDING ON-PREMISES AND CLOUD SPEND /06

8 SURVEY DEMOGRAPHICS 300 C-Level and IT decision-maker respondents from North America were interviewed in November 2017, split in the following ways By Organization Size employees 75 1,000-2,999 employees 76 3,000-4,999 employees 80 5,000 or more employees 69 Figure D1: How many employees does your organization have globally?, asked to all respondents (300) By Organization Sector IT, technology and telecoms 43 Manufacturing and production 42 Financial services 38 Retail, distribution and transport 35 Business and professional services 32 Energy, oil/gas and utilities 20 Construction and property 16 Other commercial sector Public sector Figure D2: Within which sector is your organization?, asked to all respondents (300) By Respondent Type ITDM respondents C-level respondents Figure D3: Analysis of respondent type, all respondents (300) MANAGING AND UNDERSTANDING ON-PREMISES AND CLOUD SPEND /07