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Cost Of Not Going Hybrid Or Multi Cloud

I was reading this fascinating article on True Cost of Cloud. It summarizes what I have been hearing from many customers over the last few years very well. More importantly it illustrates it with data and facts, and highlights the scale of the issue.

There is no doubt cloud has revolutionized IT in the last decade and made many enterprises agile in their application delivery. But it has also come at a cost for enterprises – which is perhaps more evident now as one can assess some real impact over time.

The key data that stands out from the article from my perspective

  • $100B market value is lost by top 50 companies due to cloud impact on margins, and if extended to broader public companies, the impact is potentially greater than $500B
  • Dropbox gross margins increased from 33% to 67% from 2015 to 2017 due to infrastructure optimization
  • Cloud spend is a large percentage of Cost of Revenue for most enterprises. Depending on type of the organization, it ranges from 30%-40% on lower end to even 75%-80% on the higher end

This data is staggering. It is worthwhile for companies small and large to take a closer look at what this means to their business in the medium to long term.

If we understand why cloud has dominated IT, the answer is simple. The cloud providers have created a modern architecture to consume IT as a service with SLAs that are otherwise hard to replicate.

It’s easy for a young company to swipe a credit card and get IT and application infrastructure set up. It initially starts with consuming compute and storage instances as IaaS, but companies constantly make short-term tradeoffs at every step and consume DBaaS, PaaS etc. due to the ease of use. Before they realize, they become more dependent on a particular provider. It’s almost like a quicksand.

I come from networking industry and a decade ago, Cisco vendor lock-in was indicated as a deterrent for new products and services to be adopted by customers. It was said, “no IT admin would be fired for choosing Cisco”.  A generation before that, it was IBM lock-in. I think the same analogy would work for the dominant vendors in other market verticals – be it storage, databases, security etc.

It was hard to disrupt this dominance by new entrants, but cloud providers were able disrupt this across the infrastructure and application stack (from compute, storage, networking, databases, security) as the cloud providers provided entire application infrastructure together as a service.

However over time, this has now created a cloud vendor lock-in challenge for most companies.

What is the way out of this? What are the options?

  1. Repatriation from cloud to private datacenter – this requires replication of capabilities of a cloud provider in a private datacenter. Requires breadth of expertise, which most companies don’t have today. A partial repatriation (hybrid-cloud) may be more practical, even for the large enterprises
  2. Multi-cloud – choice of cloud providers exist and this market will eventually become an oligopoly of small number of providers instead of a monopoly. While not all clouds are made equal w.r.t capabilities and user experience, top 3-5 cloud providers now have services that meet the needs for a large percentage of enterprises. This may work for more enterprises so long as their application infrastructure is portable

Regardless of which choices the enterprises may want to adopt, it is important to create a roadmap to make their applications to be designed to be portable across cloud and datacenter environments.

As we have seen in this article earlier, cost is an important driver for choosing multi-cloud or hybrid-cloud. In addition to cost, the other drivers include data locality, compliance and proximity (latency), or just to reduce reliance on a single provider.

No matter what the reasons are, distributing applications across clouds, datacenters and edges can be hard. The complexity and the unknowns often becomes a deterrent for most organizations.

How can help was started with the vision to create your own secure private cloud that spans across multiple clouds, datacenters and edge environments. Cloud provides the experience of a single unified cloud that spans across these disparate environments – with consistent application orchestration, connectivity, security, observability and data collection infrastructure built-in.

Learn about the use cases can enable

  1. Expand your app to new cloud, datacenter or edge – if you are looking to expand your services to a new geography or if you are looking at multi-cloud / hybrid-cloud for DR purposes
  2. App bursting for scale – if you need temporary (and maybe periodic) capacity due to demand spikes and need to burst your app from edge-to-cloud or cloud-to-cloud
  3. Manage distributed app across cloud and edges – if you are looking at adopting AI/ML at edge for real-time analytics, decision making or if you are looking at IoT use cases
  4. Application replication across clouds – if you are looking to replicate app environments across different environments due to security, compliance or cost

There are perhaps other reasons for you to distribute your application and Cloud can help.

Schedule a demo to see Cloud in action.

Pramodh Mallipatna
Founder and CEO

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