Rising Cloud Costs Lead to Mixed Infrastructure Demand

  • Sammy Zoghlami, SVP EMEA at Nutanix

  • 23.03.2023 09:45 am
  • #cloud

Over 80% of organisations are concerned about managing the costs of their cloud computing estate. With rising data levels, demands for increased digitisation and an economic backdrop that is challenging, over a quarter of business technology leaders are very concerned about cloud costs in relation to their IT budget in the coming year, the 5th Annual Enterprise Cloud Index (ECI) report finds. In addition to budgetary pressures, CIOs and CTOs tell the ECI report that sustainability, cybersecurity and talent pressures are increasing, too. 

Over half (55%) of business technology leaders state that gaining better visibility of their cloud consumption and costs is a strategic imperative for the coming year, and 52% plan to minimise cloud waste. A similar number (51%) of organisations will move applications to different public cloud providers in order to reduce costs. “They are trying to find the simplest way to provide functionality or employee productivity,” says Sammy Zoghlami, SVP EMEA of Nutanix. Not only does the ECI report find that loop organisations are considering alternative cloud providers, but 46% of those surveyed also plan to repatriate some applications to on-premises data centres in order to mitigate cloud costs. “Customers are balancing the investments they are making against the investments they have already made,” Zoghlami says of how CIOs are trying to keep up the pace of digital transformation whilst managing costs. 

Zoghlami’s point about continuing the digital transformation agenda is borne out by the findings of the ECI study. Respondents are expected to deliver a rising number of new applications over the next five years, all of which will generate more data. As a result, CIOs and CTOs are looking for the most efficient ways to host these new applications and the data they create. 

Rising data demands are impacting infrastructure decisions as organisations prioritise data security, data recovery, sovereignty and distribution. The ECI report finds that 38% of business technology leaders are prioritising data security in their infrastructure decisions, whilst recovery is a priority for 32% and sovereignty for 30%. For the technology leaders themselves, data visibility is a challenge; only 40% of those responding to the survey report have complete visibility of where their data resides, yet 94% say full visibility is important. Interestingly, and perhaps driven by the compliance demands of the General Data Protection Regulation (GDPR), respondents in Europe, the Middle East and Africa (EMEA) were more confident of their data visibility levels across diverse technology environments, just ahead of their peers in the Americas. 

Sustainability importance 

The fifth Annual Enterprise Cloud Index report finds that the climate emergency has significantly impacted this year’s results, with 92% of respondents agreeing that sustainability was more important to their organisation than it was one year ago. Respondents said this was due to increases in Environment, Social and Governance (ESG) plans for 63% of businesses, disruptions to the global supply chain for 59%, and 48% said they were responding to demands from customers. 

With the increased number of ESG initiatives within organisations, it is not surprising that 86% of technology leaders report that meeting corporate sustainability goals is challenging, with 36% admitting it to be a significant challenge. Interestingly, despite the high energy prices and rising inflation, less than half (46%) of organisations state energy costs as a driver for their sustainability initiative, and only 35% cite regulatory demands. 

Security and talent

“The growing level of diversity in cloud deployments creates enormous complexity in managing data in heterogeneous cloud environments at a time when IT skills are in short supply,” the ECI report finds. Business technology leaders in all geographies are struggling with a global skills shortage, which is a potential obstacle to organisations being able to effectively manage their cloud estate. Over 40% of respondents are finding operating high-performance workloads such as data analytics a challenge. 

Over 80% of the respondents (88%) said data compliance, privacy and security was a difficulty for the organisation’s current IT infrastructure, and 42% said protecting the business from ransomware and malware was a challenge. Protecting the business and its data was instrumental in why 46% of respondents moved from one infrastructure provider to another. 

Cybersecurity remains a major concern for business technology leaders; 93% report that their organisation needs enhanced protection from ransomware and malware. This is a recurring trend: “Data security and related backup, compliance, governance, and sovereignty functions have been among the top IT infrastructure investment drivers and greatest IT management challenges for the five years that ECI research has been conducted.” 

Impact 1 - Mixed infrastructure

Faced with rising costs, security, talent and sustainability demands, business technology leaders are undergoing a significant change in attitude towards the provision and use of cloud infrastructure. Despite citing cost and complexity issues, 99% of respondents have moved at least one application to a different infrastructure in the last year. The ECI report finds a notable increase in the use of on-premises, hosted, edge and public cloud environments. Over half (60%) of IT departments are using a mixed set of infrastructure providers, and this mix is forecast to grow to 74%. Yet 86% of CIOs agree that moving applications has cost and complexity risks. 

On-premises data centre reliance remains low, with just 24% of respondents, while just 22% rely on a mix of on-premises and hosted data centres. “While hybrid multi-cloud, or the use of private cloud along with multiple public clouds, is used by 12% of respondents today, the number is expected to jump to more than a third (38%) in as little as one year,” the report finds. 

When choosing the right mix of cloud infrastructure for the organisation, business technology leaders tell the ECI report cyber security, data recovery and data sovereignty are their leading decision criteria. “Being able to easily move applications to the public cloud, however, played a moderately larger role in decision-making than application requirements and cost when respondents were asked to rank their top three infrastructure criteria.” 

Impact 2 - Application portability

“When pressed to select a single overriding decision criteria, however, the ability to easily move existing applications to the public cloud became more prominent,” the report finds as CIOs desire agility in the face of the challenges detailed above. Zoghlami at Nutanix agrees: “I am moving workloads from cloud to cloud, and I am consuming a mixed infrastructure.” Asked to respond to the findings of the ECI report, Zoghlami says: “What we see is a continued desire to move workloads, whether that is due to cost, cyber or data sovereignty concerns.” 

Positively the ECI report finds that interoperability is improving, with just 8% of respondents citing interoperability limitations to their plans. Over half of organisations have now deployed Hyper Converged infrastructure (HCI).  

A greater demand for workload portability is leading to 94% of responding organisations stating they would benefit from a single and unified place to manage applications and data across clouds. 

The cost of cloud computing is a growing concern. In order to manage costs, business technology leaders need to be able to view and manage cloud usage within the organisation. A simplified way to manage the cloud estate will enable business technology leaders to see the opportunities to reduce costs, increase sustainability and deliver a secure and responsive technology service. 

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