Five Ways Organizations are Optimizing Cloud Usage

Aaron Rallo is CEO of TSO Logic.

Those of us that live and breathe IT, know one truth: When it comes to cloud and data center trends, there is no status quo. Things don’t change year-to-year, or month-to-month, they seem to change minute-to-minute.

One statistic I came across recently drove this home. According to Technology Business Research (TBR), the size of the public cloud computing market was about $20 billion in 2010. By 2020, that number is expected to reach almost $170 billion. This stunning growth has been driven by many trends, and isn’t going to let up anytime soon. However, the drivers of this growth are shifting.

As the market matures, organizations continue to find new ways to utilize the cloud to improve their business. Based on what we’re hearing from customers, here are some of the new developments and changes the cloud and data center market will likely see over the next year.

The Fight Against Overprovisioning

Most enterprises accept that their on-premise resources are overprovisioned to some extent, but they may not fully realize the impact. In fact, recent TSO Logic research found that more than 80 percent of workloads were overprovisioned by at least 30 percent.

In traditional data centers and within a majority of enterprises, organizations still use capacity-based models. They try to predict how much capacity they’ll need a few years down the road – predictions that are often inaccurate. New tools can provide a clearer picture of real-world consumption and drive more accurate predictions, but why gamble on capital investments in the first place? Among the biggest benefits of cloud is the flexibility of consumption-based pricing: pay for only what you need right now, then just scale up when you need more.

Expect organizations to identify and move applications that are a fit for cloud today, and then modernize applications to take advantage of more cloud native services.

Cloud Costs Will Continue to Decline

You likely already know that cloud price/performance ratios get better every year. You may not realize, however, just how much more you can now get for your money.

What’s driving that steady decline in cloud pricing? A perfect storm of better technologies, better efficiencies and better economies of scale—all of which create a virtuous circle for large-scale cloud providers and their customers.

First, consider the ongoing advances in hardware processing power and efficiency. In the simplest terms, an Intel single-core processor circa 2018 may be able to handle workloads that required dual-core processors just a couple years ago. Of course, there’s nothing stopping any enterprise from deploying the latest hardware on-premise, but it’s a major undertaking that most only attempt every few years. Large cloud providers refresh hardware constantly and always have the latest and greatest technology. In many cases, they’re working directly with chip manufacturers to create custom templates to do exactly what they need, in the most efficient way possible.

License Portability Drives Additional Savings

One of the enduring myths about migrating to public cloud is that you can’t take your existing licenses with you. You’ll need to get new ones for any instances you’re migrating—and leave behind any discounts or special enterprise agreement pricing you received for your current license agreements.

That may have been the case in the past, but in the modern public cloud, many software licenses are very much portable and can make a significant difference in your total cost of ownership projections for cloud migration. When you do have portable licenses and discounts, and they aren’t factored into your calculations, you may be missing out on significant potential savings. In some cases, bringing your own licenses to the cloud can be 80% less expensive than rebuying a license from the cloud provider.

Application Optimization Drives Changes

As quickly as cloud adoption has grown, the biggest change for traditional enterprises has been mostly limited to where infrastructure lives. After all, the vast majority of cloud use cases are still basic infrastructure-as-a-service (IaaS). In 2018, look for organizations to seek out more ways to capitalize on cloud, and more adoption of platform-as-a-service (PaaS) solutions.

When it comes to writing and managing applications, most enterprises are still doing things the same way they have for years. Just as enterprises have grown more comfortable handing off most of their day-to-day infrastructure tasks to cloud providers, they will soon hand off day-to-day application maintenance as well. With PaaS solutions, companies will start to shift away from things like on-premise SQL Server for their applications, and instead use cloud database-as-a-service (DaaS) platforms like RDS or Aurora. When you’re no longer responsible for managing a full-scale database infrastructure, the operational savings are significant.

Cloud Services Get a Lot Stickier

The shift just described—organizations “outsourcing” more capabilities and application components to cloud providers—will likely have an important side effect: cloud services will become “stickier” than they are today.

If you’re using public cloud as a basic IaaS play, shifting from one provider to another won’t make that much difference—organizations can choose a provider (or switch from one to another) based largely on pricing. When you’re architecting your applications to take advantage of a given provider’s unique compute capabilities or native platforms, the cost of pulling up stakes and moving becomes higher but the tradeoff is that you can build, scale and manage faster

The savings to be realized from more advanced cloud services are still likely too significant to ignore.

Redefining the IT Value Proposition

If there’s one thing that today’s fastest-growing global enterprises have in common, it’s their focus on driving unique value—spending their time and money on the things that differentiate them from anyone else. This year, expect to see more enterprises examining where they truly drive value, and realigning resources towards those activities and away from everything else.

In the past, even if you weren’t a “tech” company—even if your core business wasn’t about operating and maintaining a large-scale server infrastructure—you didn’t really have a choice. Today, that’s no longer the case. Many IT tasks that companies spend millions on can now be handled more efficiently and at a lower cost by large-scale cloud providers.

Cloud Migration is Not a One-and-done Event

This year, expect more enterprises to realize that cloud migration is not a one-time project. Cloud capabilities, technology and pricing are incredibly dynamic. What’s true today may not be true tomorrow, and the best choice for a given workload in February may be the third-, fourth- or fifth-best choice by June.

If you’re only analyzing your cloud options once every few years, you’re likely leaving substantial savings on the table. Especially as financial stakeholders become involved in cloud decision-making within the enterprise, expect more organizations to begin regarding cloud analysis as an ongoing activity.

This represents a non-trivial change in the way that organizations understand and invest in their IT footprint. But like the other cloud trends we expect to see in the coming year, it’s a sound strategic move for most enterprises, and the ongoing savings will more than justify the effort. 

Opinions expressed in the article above do not necessarily reflect the opinions of Data Center Knowledge and Informa.

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