In today’s digital economy, enterprises are using cloud technology not just to underpin and streamline their processes, but also as a competitive differentiator against rivals. Cloud-based infrastructure is crucial to delivering flexible, scalable services that adapt to changing business priorities, all whilst reducing the risk of wasted resources.
Digital transformation has been one of the buzzwords of the decade, so much so that the term itself is almost passé. Yet, despite extensive recognition of the term, and global spending on digital transformation technologies stretching into the trillions, there are still businesses and sectors which are yet to fully embrace the potential of migrating processes to the cloud.
Businesses need to be agile, and cloud is at the forefront of making that happen. Those businesses who are still on the digital transformation fence risk being left behind. For some industries like financial services, we’ve reached a ‘now or never’ scenario as digital-first challengers continue to disrupt the market.
Why then, are there still businesses reluctant to fully digitally transform? What are the hurdles that still need to be cleared? And where are we heading next?
Normalising the cloud
When thinking about the future of cloud, it’s important to first understand each stage of adoption.
The first stage was very much about end-users within companies adopting cloud-based services, borne from frustration with previously slow IT deployments and inefficient business processes. We’re now deeply into the second stage, with the IT department formalising take up and usage of cloud within the organisation, transforming and migrating applications, and aligning cloud services with corporate security and regulatory obligations.
The third stage will be the ‘normalisation of cloud’ within the enterprise IT environment. Put simply, this will involve cloud-based services becoming a staple part of an enterprise’s IT infrastructure. However, there are many challenges to overcome before this will become a reality. Many IT organisations are under heavy constraints, as the adoption of and migration to the cloud remains an expensive and resource-intensive exercise. Some cloud service providers have also been slow to fully anticipate how complex enterprise obligations are; including legacy system integrations and regulations to comply with. This is without taking into account the difficulty of meeting customer expectations, which were shaped in the first phase of adoption.
The tiered approach
When it comes to sectors such as healthcare, government, and financial services, there are particular challenges due to their highly regulated nature of these industries and the consequences of mishandling data.
These heavily regulated sectors are inherently and understandably cautious, and the prospect of migrating all of their workloads to a public cloud at once is uncomfortable. But equally, keeping everything on-premise and building or maintaining a private cloud can be expensive and take a lot of physical space.
But these sectors know that, in an environment full of challengers and an ever-increasing digitally literate customer base, they need to find a cloud solution that works for them. Enterprises have traditionally viewed cloud migration as one or the other; fully on-premise or full-public cloud. This has led to disillusionment about the benefits of cloud technologies to the extent that some businesses have retreated back and pulled workloads from the cloud altogether.
However, organisations are now appreciating that colocation datacentres allow them to adopt a tiered, ‘hybrid’ model, which offers both the security and control of a dedicated on-premises infrastructure or private cloud, with the flexibility and scalability of the public cloud. Through this tiered approach, businesses can also capitalise on ‘intra-cloud’ connectivity, granting them access to multiple public cloud connectivity points and accelerating their cloud adoption journey by better aligning their strategy. This transition to a tiered approach has seen a resurgent realisation of the cost, scalability and efficiency advantages the cloud can deliver.
The level of flexibility afforded through hybrid cloud is increasingly sought after by companies looking to keep pace with an ever-changing digital landscape. Use cases for cloud applications have been touted for some time, but now we’re finally seeing industries open themselves up to the technology through the hybrid model and begin to retire legacy on-premise systems and migrate to cloud-based, pay-as-you-use platforms for critical processes.
By utilising a hybrid cloud model with the support of a colocated data centre, businesses can free up capacity to focus on customer service, operating competitively, scaling up and down as they need to, and offering an agile, ultra-secure service that’s easy to manage.
Looking ahead in the clouds
The hybrid model may be the key to greater cloud adoption, and the flexibility of hybrid will become more and more crucial over time.
Traditionally, it has made sense to hold cloud storage in one central place per market. However, with the rise of the Internet of Things (IoT) and the development of 5G, it may be that cloud storage will need to be dispersed with on-premise deployments at the edge of the network. It’ll be interesting to see, when 5G is fully rolled out, how players in this space will alter their business models to deploy into this environment.
In the next five years, we expect to see more standalone and sector-specific services emerge. At present, cloud services are often a generic computing and storage capability. However, there are industries that have very different requirements, which necessitates an alternative type of cloud.
For example, the aerospace industry will have specific requirements for high performance computing which are quite different to those of the digital media sector. As cloud becomes more and more widespread, there will be more niches that open for specialised services, and these will need flexible solutions.
We’ll also see more enterprises fully using multiple clouds. Although many enterprises consume more than one cloud today, they tend to be mainly focused on just one. The practicalities of managing and integrating different services from different providers in a synchronised way will be a focus for many enterprises and IT service providers, and we expected these businesses to look to colocation as a means of accessing multi-cloud easily.
Ten years out is always hard to predict in technology, because you can almost be certain there will be a major innovation of some sort in that time. What is certain, however, is that enterprises will continue to invest in cloud initiatives, focusing on technologies that transform the cloud from a storage location into a solution that enables new, more agile ways of working.
Jan-Pieter Nentwig, Director of Enterprise, Interxion