Cloud For Growth, Transformation Is Thrice As Important As For Cost Optimisation: Infosys
While 67% of companies increased cloud spending this year, 80% forecast higher spending next year.
Technology major Infosys Ltd. has unveiled its Infosys Cloud Radar 2023 research report, which suggests that the utilisation of cloud for sophisticated solutions, growth, and transformation is three times more important to enterprises than using cloud merely for storage and cutting costs.
The research highlights the shift of cloud utilisation from beyond storage and cost-cutting to utilising cloud to gain access to new technology and capabilities, enable new revenue streams, and replace or update current systems.
It also indicates that even though companies will continue to invest in cloud because of the promise it holds, they are underutilising the cloud they have. Less than half of the committed spend is being utilised, the research finds. This may not be a short-term issue, but organisations that fail to meet their cloud contracts may face higher costs as cloud providers renegotiate contracts, the research suggests.
The research, carried out by the Infosys Knowledge Institute, surveyed over 2,500 respondents from companies across the U.S., U.K., France, Germany, Australia, New Zealand, and the Nordic countries. Based on interviews with subject matter experts and global business leaders, the report highlights the new sophistication and complexity of cloud, and the subsequent management challenges.
Key Insights
Below are some key findings from the report:
Cloud Spending Remains High: Two-third of the companies surveyed increased their cloud spending this year, and 80% said they intend to raise their spending in the year ahead. Research indicates that organisations are using cloud to fulfil multiple objectives and not planning to cut cloud spending.
Cloud Utilisation Not Keeping Pace: Despite the increase in spending, companies have utilised less than half (47%) of their current cloud commitments. Over $300 billion in corporate cloud commitments remain unutilised, and in the long term, companies that don’t meet their cloud contracts are likely to lose money, spend more to accelerate migration or renegotiate with cloud providers from a point of weakness.
Cost Is A Headache: Roughly 50% of companies struggled to manage their cloud costs. The research found that cloud executives aren’t confident about monitoring, optimising, and predicting cloud costs. One-third of the organisations allowed unilateral cloud decisions, despite the knowledge that cloud works best as a technology-business collaboration. Additionally, around 40% struggled with cloud governance.
Cloud Is Complex: Nearly two-third of the respondents (65%) used three or four cloud vendors, a 75% increase over the proportion who used three or four providers in 2021. Over the past two years, the proportion of companies using a single cloud provider has decreased from 21% in 2021 to 7% in 2023.
Companies Lack Security Safeguards: Although 84% of the companies said that their training focuses on cloud security, 43% report having unclear policies regarding who is authorised to deploy cloud resources, which can result in deployment of shadow clouds.
Cloud Decisions Are Siloed: Cloud decisions are often made in isolation. Around 45% of companies reported that either the IT department or the business leaders themselves decide which cloud technology to deploy or how to manage cloud compliance. As a result of this isolated decision-making, finances and security become difficult to manage.
Cloud Delivers, And Enterprises Want More: Of the respondents, 73% agreed that their cloud migration initiatives are extremely effective or very effective in meeting their objectives. This drives further cloud interest and investment by enterprises.
Strategies Of Success
The report suggests three steps to help enterprises better utilise and manage cloud:
Master Monitoring And Prediction: Enterprises must address critical challenges of cloud cost-management and compliance by establishing guidelines for governance and costs. This becomes all the more important as the cloud landscape grows more vast, complex and expensive with the addition of technologies such as generative artificial intelligence, internet of things, data analytics and more.
Embed The Business Case Into Cloud: Companies often add cloud without a business case. Only 21% of survey respondents said they always have an approved business case for adding cloud, and just 24% link cloud deployment to the relevant business unit. The move to the cloud must be aligned with business strategy. Forging a transparent, agile, and collaborative relationship between IT and business helps drive accountability and improve return on investment.
Adopt A Value-Centric Cloud Operating Model: An updated operating model will enable teams to track value flow, create alignment and encourage engagement around measurable goals. The guiding principles of a value-centric cloud operating model include six elements—value-based delivery, customer-centric outlook, diverse ways of working, strategy alignment, engineering mindset, and innovation.
Anant Adya, executive vice president, Infosys Cobalt, said, “As cloud continues to evolve, it is imperative for organisations to integrate it as a strategic enabler for their growth and transformation. Leveraging multiple cloud providers allows organisations to optimise resources, improve resilience, and access specialised capabilities, which lead to improved efficiency and accelerated growth.”
