Although 67% of companies have raised their cloud expenditures this year, a staggering 80% anticipate further increased spending in the coming year.
Infosys Ltd., a prominent technology player, has released its Infosys Cloud Radar 2023 research report. The report indicates that for enterprises, emphasizing the use of cloud for sophisticated solutions, growth, and transformation is three times more critical than solely employing it for storage and cost reduction.
The study underscores a significant shift in cloud utilization, moving away from mere storage and cost-cutting. Instead, companies are now harnessing the power of the cloud to access new technologies and capabilities, facilitate fresh revenue streams, and overhaul or upgrade existing systems.
The report also points out that despite companies' ongoing investments in the cloud due to its promising potential, they are not fully leveraging their existing cloud resources. According to the research, less than half of the allocated cloud budget is actually put to use. This issue may not be a short-term concern, but organizations failing to meet their cloud commitments could face increased expenses as cloud providers reevaluate contractual terms, as suggested by the study.
Conducted by the Infosys Knowledge Institute, this research encompassed a survey of more than 2,500 respondents hailing from companies in the United States, United Kingdom, France, Germany, Australia, New Zealand, and the Nordic countries. Drawing from interviews with subject matter experts and global business leaders, the report underscores the growing intricacy and sophistication of cloud technology, along with the resulting management challenges.
Here are some key findings extracted from the report:
Cloud Expenditure Remains Elevated: The research reveals that this year, 67% of the surveyed companies raised their cloud spending, with 80% planning to further increase their investments in the upcoming year. This data underscores that organizations are utilizing the cloud to achieve various objectives and have no intentions of reducing their cloud spending.
Lagging Cloud Utilization: Despite the boost in spending, companies have harnessed only 47% of their existing cloud commitments. A substantial sum of over $300 billion in corporate cloud commitments remains untapped. In the long term, companies failing to meet their cloud obligations are likely to incur financial losses. They may need to spend more to expedite migration or renegotiate with cloud providers from a position of vulnerability.
Cost Management Presents Challenges: Approximately half of the companies faced difficulties in effectively managing their cloud expenses. The research reveals that cloud executives lack confidence in their ability to oversee, optimize, and forecast cloud costs. Surprisingly, one-third of organizations permitted unilateral cloud decisions, despite the awareness that the cloud is most effective when approached as a collaborative effort between technology and business functions. Furthermore, approximately 40% grappled with issues related to cloud governance.
Cloud Complexity on the Rise: Nearly two-thirds of the respondents, amounting to 65%, reported using three or four cloud vendors, marking a 75% increase compared to the proportion of those employing three or four providers in 2021. Over the past two years, the number of companies relying on a single cloud provider has dwindled from 21% in 2021 to merely 7% in 2023.
Security Safeguards Deficient in Companies: Despite 84% of companies claiming to prioritize cloud security training, 43% admit to having ambiguous policies regarding who possesses the authority to deploy cloud resources. This lack of clarity can lead to the inadvertent deployment of shadow clouds.
Siloed Decision-Making for Cloud: Decisions related to cloud technology are often made in isolation. Approximately 45% of companies reported that either the IT department or business leaders themselves independently determine which cloud technologies to implement or how to handle cloud compliance. This segregated decision-making approach makes it challenging to effectively manage both finances and security.
Cloud Proves Its Worth, Spurring Enterprise Interest: Among the respondents, 73% expressed strong agreement that their cloud migration initiatives have proven highly effective in achieving their objectives. This success fuels growing enthusiasm and investment in cloud solutions by enterprises.
Pathways to Achieving Success
The report outlines three essential measures to assist enterprises in enhancing their utilization and control of cloud resources:
Proficiency in Monitoring and Forecasting: Enterprises should confront the significant challenges associated with cloud cost management and compliance by setting up governance and cost-related directives. This is particularly crucial as the cloud environment expands in both size and complexity, driven by the integration of technologies like generative artificial intelligence, the internet of things, data analytics, and other advancements.
Integrate Business Justification with Cloud Adoption: Companies frequently incorporate cloud solutions without a solid business rationale. A mere 21% of the survey participants indicated that they consistently have an approved business justification for implementing cloud, with only 24% establishing a direct connection between cloud deployment and the relevant business unit. Transitioning to the cloud should be harmonized with the overarching business strategy. Fostering a transparent, agile, and collaborative relationship between IT and the business sector promotes accountability and enhances return on investment.
Embrace a Value-Centric Cloud Operational Model: Modernizing the operational model will empower teams to trace the flow of value, foster alignment, and stimulate engagement around measurable objectives. The foundational principles of a value-centric cloud operational model encompass six key elements: value-oriented delivery, customer-centric perspective, diverse work methodologies, strategic alignment, an engineering mindset, and a commitment to innovation.
Anant Adya, the Executive Vice President of Infosys Cobalt, emphasized, "As the cloud landscape undergoes continuous evolution, it is vital for organizations to incorporate it as a strategic catalyst for their expansion and transformation. The utilization of multiple cloud providers enables organizations to enhance resource utilization, bolster resilience, and tap into specialized capabilities, resulting in increased operational efficiency and expedited growth."
