Clearing the Air: The Current and Projected State of Public Cloud Computing Adoption - Tokara Solutions

Posted by | July 20, 2016 | CRM Consulting | No Comments

071116_TS_BLOG_CLOUDVSONPREMISE_COSTOver the last few weeks, we’ve taken a look at several of the key differentiators that distinguish on-premise CRM systems from their cloud-based counterparts, delving into some of the major elements—including infrastructure, scaling, and cost requirements—characterizing each scenario, helping executives drive more informed decision-making before making a final investment.

While there are concrete advantages to moving operations to the cloud—opportunities leveraged by some of the top brands around the world—there is also significant hesitation to pull software applications completely away from legacy data centers and onto a public cloud computing model, where they’re managed by a third-party cloud provider. Indicative of this reluctance, a recent Morgan Stanley survey of 100 chief information officers revealed that more than half of those surveyed (53 percent) said their companies did not leverage any public cloud infrastructure at all, a number they expect to drop significantly lower—to only 9 percent—in the next three years.

Conversely, IT teams directly responsible for driving and implementing cloud solutions across the enterprise are recognizing a steady and substantial increase in adoption rates as more and more companies capitalize on the flexibility and agility afforded by such solutions—adding to the confusion and complexity around the true acceptance of public cloud computing and its place in the dynamic and transformative landscape of application management.

Leading the Pack: How Top Industry Players Adopt the Cloud

While substantial concerns around security and data control are keeping some C-suites from embracing total cloud confidence—especially leaders in industries such finance in which strict records management is both required and regulated—many top global companies are indeed making the shift, with a majority moving their data onto public cloud infrastructure—also known as Infrastructure as a Service (IaaS)—platforms.

Key players in this space include Amazon Web Services, Microsoft, and Google, all of which provide improved flexibility over on-premise systems for organizations who require agility and scalability to meet a variety of market demands. For instance, pharmaceutical leader Johnson & Johnson is moving operations to the cloud at a breakneck pace—turning off its mainframe computer in 2015 with plans to have 85 percent of all its applications in cloud systems by 2018, already spreading 500 terabytes of data across platforms provided by Amazon, Microsoft, and NTT Communications—and shutting 40 percent of its existing software applications down to reduce technology spend and better streamline operations across the supply chain.

While Johnson & Johnson’s massive cloud adoption can be attributed primarily to a need for robust research functionality, with unique and wide-reaching requirements ranging from genome-sequencing capabilities to disease pathway analyses and new medical device development, other companies requiring a similarity flexible deployment environment—where additional servers can be added and leveraged to scale support with demand, facilitating even the most computer-intensive tasks—are realizing the power of cloud computing as well, with the Broad Institute in Cambridge, Massachusetts leveraging it to perform cancer research. Before the advent of the cloud, supporting such use case scenarios—characterized by frequent surges in demand followed by periods of relative downtime—would mean requesting and reserving a timeslot on a government supercomputer, or—for companies with access to a greater cash flow—developing and designing a personal computing cluster that often went unused throughout the year.

Consider the Source: Costing Concerns Prevent Total Cloud Adoption

Though the industry-specific applications and use case scenarios illustrated by Johnson and Johnson and the Broad Institute speak to the incredible power of the cloud to transform and facilitate costly, high-stakes, mission-critical data management—not everyone is fully convinced the short-term financial benefits afforded by such scalability indeed result in long-term cost savings.

While some industries such as healthcare research are well-suited for cloud adoption due to a consistently “spiky” environment characterized by frequent bursts of user activity occurring on a relatively steady basis—necessitating the need for a cloud-based computing model over an in-house data center that may only be utilized to its full capacity once or twice a year—companies whose business models are characteristically more even can easily accrue additional costs as they move data in and out of the cloud. To this end, many are opting to support a “private cloud” model, maintaining a majority of data—especially more sensitive information—on internal servers, which they allow departments to access in much the same way as a cloud-computing model would function, paying for their own server usage amounts and ramping up or slowing down access as required.

Another scenario in which moving entirely to the cloud may be cost prohibitive is when substantial amounts of data require migration, storage, and support—reaching levels that the “pay-as-you-go” or “price-per-seat” pricing structures typically associated with cloud computing can prove financially draining. In fact, in early 2016, Dropbox acknowledged migrating 90 percent of its operations back onto its internal data systems and away from its previously deployed Amazon cloud platform.

Taking Note: The Future of Cloud-Based Adoption

Making the move to a cloud-based infrastructure is an enterprise-wide decision that requires careful thought at multiple leadership levels—total cost of ownership, workflow disruption, infrastructure capacity, and other considerations should be top of mind when evaluating this model against on-site environments. While executive approval may have a way to go before it fully catches up with IT support, the reality remains that for many industries, the cloud offers unparalleled support and scalability, and though wavering adoption numbers make it difficult to fully analyze concrete patterns and trends around long-term sustainability, it’s clear the clouds aren’t parting any time soon.

Source:

Barb Darrow, “Lies, Damned Lies, and Cloud Adoption Numbers,” Fortune, July 6, 2016, http://fortune.com/2016/07/06/cloud-adoption-numbers/.