The cloud is no longer a nice to have, but increasingly a necessity.
Traditionally enterprises have been reluctant to embrace cloud technologies, especially on security grounds. But now, enterprises are moving past their fears about security and regulatory risks and embracing the business agility of public cloud services.
The wave of Fintech startups, digital challengers and tech giants presents a threat to all the big enterprises that is unlikely to go away any time soon. Cloud computing can help these enterprises to respond more effectively to these challenges by driving down costs, enabling innovation and creating the flexibility needed to respond to change.
The main reasons to start embracing the cloud are:
1. Not Your Core Competence
Managing infrastructure is not your core competence. Banking, insurance, pharmaceutical, automotive etc. enterprises need to focus on their core products that are giving them competitive advantage and differentiating them from the others. Managing data centers is not a differentiator, rather a supporting service. Having your own power plant to produce electricity won’t engage your customers and make them buy more products from you, unless tou are in the electricity business.
Technological advances these days are very hard to keep up with. This fact puts additional pressure on your IT operations stuff to deliver faster than ever before. The problem is that your IT operation guys are probably already under the water trying to keep up with existing demand from the business. It’s not enough anymore just to provide a server and wire it up with the rest of the network. Your IT operations need to be able to handle modern requirements and deploy applications packaged in Docker containers on a highly virtualized environments that can auto-scale up and down based on the demand. They need to be able to setup fully automated continuous integration and deployment pipelines so that your enterprise can deliver new products to the market faster than ever. They might need to support new PaaS environments so that your self-operated data center could seamlessly be expanded to a hybrid cloud one day.
When (or better if) IT folks finally bring their internal shop in order, the time will come to refresh the whole hardware/software infrastructure and to rationalize application inventory, which will just put more pressure on them. And yes, all of that needs to be done while still cutting down IT operational costs.
Businesses cannot wait for IT operations to keep up while more technologies are being thrown on them. What often happens is that the businesses eventually gives up and forms a shadow IT organization that can fulfil their demands. That’s usually the beginning of the end for your IT organizations.
Operating modern data centers is job for top-notch engineers. Top-notch engineers typically want to work for Infrastructure and Platform specialist companies, not banks, insurance, pharmaceuticals and similar companies.
Unless your hands are tied up with existing contracts, there is no reason why you should continue trying to do “the plumbing” that cloud providers are doing way better than you. Especially when this is not your core competence.
2. Cost Optimization
Cloud computing means enterprises no longer have to invest heavily in dedicated hardware, software and manpower. By using cloud, they can scale up vast amounts of technology infrastructure on demand and pay only for what they use. Capacity management should no longer be in the glossary of terms for enterprises.
Having such vast compute capacity available on demand is extremely important in industries where milliseconds can mean millions in profit. But even if you are not in such industries, possibility to pay-as-you go model that cloud vendors are offering is more than appealing. What’s the point keeping your Dev, Test, UAT and other non-production environments still up and running after 6pm when everybody is gone home? You can just switch them off and save cost. Switch them back on at 9am the next day when people come back to work.
GE Oil & Gas says that on average, applications moved into the cloud had a 52% reduced cost of ownership compared to on-premises applications.
FINRA, one of the largest independent securities regulators in the United States, has now moved about 75% of its operations to the cloud. It estimates it will save up to $20 million annually by using cloud instead of a physical data center infrastructure.
3. Boost Innovation
For most businesses, innovation means first gaining an understanding of product offerings or key processes, then what to change to get a better result. The implementation of the innovation almost always becomes an IT project. In other words, the last mile of most innovation that makes a difference goes through IT.
The real gold mine in any enterprise is the data that is buried in numerous databases throughout the company. Making sense out of this valuable information to generate new business prospects is the area where big data analytics gains more traction everyday. However, setting the full big data analytics cluster in your data center is not an easy task. It requires large number of machines as well as skills to set them up and operate. While IT teams are spending months to deploy Hadoop clusters, the business is losing valuable time and the value if data is deteriorating each day.
Adopting cloud-based IT can eliminate the usual IT roadblocks to innovation. Business users and developers can scale resources up and down as needed, freeing IT to spend more time creating and less time configuring. In the cloud, the new IT paradigm is simplicity and flexibility.
Which cloud vendor to choose?
According to Gartner, there are 14 cloud vendors out there. The big players are Amazon Web Services (AWS), Microsoft Azure and Google Cloud.
AWS and Azure are true enterprise players while Google is still paving its way through. Google has traditionally been the platform of choice for startups, academy and researchers, but lately Google is investing a lot of effort in getting bigger enterprise customers.
I would recommend to go with AWS as the primary cloud provider with Azure as the backup solution. Modern application packaging solutions (such as Docker) provide vendor neutrality that enables your applications to seamlessly run on any cloud provider.
AWS is the definite market leader, as some statistical numbers are saying:
- 37% of all Internet traffic goes via Amazon cloud
- $8 billion in revenue last year
- All 14 other cloud providers combined have 1/5th the aggregate capacity of AWS
- Serving 1 million private customers and 600 government agencies
- 11 AWS regions worldwide and more than 30 data centers.
- Big names already using AWS: WorldBank, Capitol One, Salesforce, J.P. Morgan Chase, Nasdaq, FINRA, PacificLife Insurance, Unilever, Philips, Novartis, Siemens, AON, Tesco Bank, RSA Insurance, AirBnB, Netflix etc.
So, what’s your excuse for not embracing the cloud right now?