The great Cloud frustration: Navigating demands, budget constraints, and new technologies in 2023

Many conversations between business leaders and IT teams start with a seemingly simple question: When can we start using Generative AI at scale?

In response, IT leaders might be tempted to shoot back a simple answer: When we get the budget and staff allocations!

But, if we’re being completely honest, the real answer is a bit more nuanced. The truth is many IT leaders find their functions in disarray after their carefully planned Cloud migration strategies veered off course over the past three years. Many of the Cloud initiatives executed under duress during the pandemic are under-performing while costs are soaring. Significant commitments to hyperscalers are dominating IT spend. And a new set of critical challenges, like economic uncertainty, inflation and rising commodity costs, are making the current landscape even more challenging than the COVID era.

So what does that mean for new technologies like generative AI? In most cases, it means that pursuing a new technology initiative is ill-advised – perhaps even futile – unless the organization gets their current Cloud programs under control and redefines their Cloud strategy so that it can meet new demands without stumbling into the same pitfalls. In this post, I outline three key actions companies can take to reassess and rebuild their Cloud strategy so that it can better serve the evolving needs of the business.

Action 1: Reassess and reset the foundation to enable Cloud transformation at scale.

For companies that have withstood the shock of the pandemic and are now grappling with mounting costs and new demands, the instinct of some IT leaders may be to muscle through the challenges and address the pain points later. Unfortunately, that thinking is precisely what got some teams into trouble during the pandemic – continuing to follow that course will only compound issues like runaway costs, time constraints and misaligned goals over time.

Instead of powering through, companies need to hit pause. They should take the time to conduct a comprehensive health check on the Cloud strategy and reevaluate the needs of the business in light of the current landscape. As part of this process, companies should also consider not just how they are moving to the Cloud, but why they are doing so. The goal should be to enhance the business's efficiency and performance, requiring IT teams to be intentional about selecting a migration approach that promises a solid return on their investment, be it through reduced costs, enhanced productivity or new capabilities.

So how is it possible for companies to craft a Cloud strategy that addresses past programs, current needs and future demands quickly and cost-effectively? I recommend two key steps: 1. ?Standardizing the migration process; and 2. Clarifying migration costs and ROI.?

Action 2: Develop a strategy for continuous operational improvement and efficiency gains.

One element of the Cloud strategy often overlooked is the need to continuously adapt and optimize programs to reduce costs and enable efficiencies. This is especially true of initiatives executed during COVID-19, many of which lacked clear parameters around cost, performance and ROI in the first place.

To rectify this, organizations need to build an “evolution” element into their Cloud strategy. ?As part of this process, IT teams must develop specific protocols for continuously evaluating and updating the operating model itself, formalizing the ongoing evaluation of both new and existing platform features, establishing a clear on-ramp to deploy "newer" services offered by Cloud platforms, and identifying the use of legacy technologies that may increase overhead and complexity.

For example, when it comes to infrastructure and application monitoring, many companies that shift to Cloud carry forward legacy technologies and tools even though similar capabilities exist in the Cloud. Their reasoning is understandable: They want to maintain a single view of the environment and keep complexity to a minimum. But that creates a bit of a Catch-22 because not introducing a new process or tool means carrying forward the old. Over time, maintaining those traditional technologies adds significant cost and complexity into IT environment. In other words, it’s the same issue, albeit in a slightly different form.

As companies move to Cloud, they need to be willing to make the changes that will unlock the efficiency gains and cost savings the Cloud promises. While that may seem to increase costs and complexity in the short term, companies need to think about the bigger picture. For example, new licensing fees or application costs can be offset by the lower cost of operating in the Cloud. As for complexity, companies need to remember that change can create complexity but so can not changing. Both are equally difficult to manage and companies need to “pick their hard,” as they say.

For companies to successfully evolve in a continuous way, they need to have a strong Digital foundation in place. In other words, they need to embrace the concepts in the first section around planning, calculating costs, tracking performance, and measuring ROI. These are the controls that will enable teams to identify areas for improvement and begin to evaluate how to change in the most effective and cost-efficient way.

Action 3: Design the strategy to adapt and scale emerging technologies.

Historically, most enterprise Cloud strategies, even sophisticated ones, focused on using the Cloud to make it easier to host and develop applications, not necessarily unlock new functionalities. This is particularly true for IaaS and PaaS, where enterprises have taken a “lift and shift” approach, moving applications or infrastructure from data centers to reduce their tech burden and costs. But by taking this simplistic approach, organizations barely scratch the surface of the capabilities and benefits of the Cloud.

For example, if you look at Amazon's usage patterns, an estimated 70-80% of use comes from virtual machines (VMs) and storage, which are arguably the most fundamental IaaS services. Meanwhile, there are hundreds upon hundreds of high value services that have very little utilization. Companies are missing out on many of the most valuable Cloud features that will allow them to optimize costs, reduce their administrative overhead, or lower environmental complexity.

To harness the Cloud's potential to create a competitive edge, companies need to view the Cloud as a way to enable large-scale transformation and identify instances where existing capabilities require reconsideration. For example, companies may have been using the same application to run their customer targeting and segmentation for the last five or 10 years. That app could be rewritten today to leverage new data capabilities that may not have existed five years ago. Perhaps the organization could utilize the native capabilities that are built into one of the hyperscale platforms or even leverage generative AI to modernize customer support chatbots. [We already see platforms like Salesforce building this capability into their CRM solution with the introduction of Einstein GPT.]

Long story short, if companies want to leverage emerging technologies and be in a position to scale them quickly, then they need to have the Cloud capabilities in place that will allow them to do so. First and foremost, this means that teams need to be able to dedicate the time and resources to those efforts; it also means that they follow best practices around budget estimates, performance tracking and evolution to ensure that such programs are introduced, operated and evolved in a way that drives continuous value.

Adapting the Cloud strategy to compete in the era of generative AI and beyond

The unfortunate truth is that IT leaders are not going to be able to escape pointed conversations about generative AI or other emerging technologies. Neither are they going to be able to satisfy business leaders with simplistic answers about needing more money or staff. Instead, they need to take a hard look at the core challenges and issues – many of which originated during a time of extreme need during the pandemic – and course correct to solve those problems and prevent them in the future.?

Given the high-stakes nature of today’s environment, it's crucial to pause, reevaluate, and understand how to fine-tune processes to expedite transformation. This embodies the 'go slow to go fast' philosophy, underscoring the need to lay a robust foundation for every Cloud journey.

My next article will focus on this topic, exploring how IT teams can build a strong foundation amidst tight budget constraints, a challenging economic environment, and mounting demands – so that the great Cloud frustration starts to feel more like a great Cloud transformation.

What do you think? I’d love to hear from you below, or offline, to understand how Cloud is working for your enterprise and what else we can all do to make it more effective.

And as always, please don’t hesitate to reach out if there’s anything I, or we at 高知特 Cognizant , can do to help you on your journey.