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Cloud requires critical mass to achieve cost-savings: Info-Tech

The analyst firm says companies that move some processes into the cloud find they need to go deeper to generate real cost-savings

Many companies find once they’re into cloud computing, they keep getting pulled deeper as they try to achieve the critical mass necessary to reach the promised cost savings vendors have assured the cloud could deliver.

That was among the messages delivered by the London, Ont.-based Info-Tech Research Group at the analyst firm’s recent technology trends and predictions event in Toronto. Rob Dreyer, vice-president of research with Info-Tech, said it can be hard to get to that critical mass necessary to achieve real infrastructure savings by moving to the cloud. Most organizations dip their toes into the cloud strategically, moving certain processes or functions, but that’s often not enough to allow them to start retiring on-premise servers.

“In a way, cloud encourages us to commit to more cloud,” said Dreyer. “You need to commit to more cloud to get that infrastructure critical mass savings.”

Companies shouldn’t think of cost-savings as a key driver for moving to the cloud anyway, said Dreyer, noting most organizations that dive into the cloud with cost-savings as their key motivator end up disappointed in some way.

“Cloud offers a low cost of entry when provisioning new services, but that’s not the same as low total cost of ownership (TCO),” said Dreyer. “For the first two years a cloud solution can offer better economic value than trying to build it yourself, but over time it (evens out).”

Moving to the cloud isn’t really about cost said Davin Juusola, Info-Tech’s vice-president of research and development. It’s about capabilities such as greater speed to market and flexibility as a business and an IT organization.

“You won’t save as much as you expect, so don’t oversell cost-savings,” said Juusola.

And with 72 per cent of organizations not yet in the cloud, there’s an untapped channel opportunity to help businesses evaluate how the cloud could work for them, and help them get there. Juusola recommends starting with infrastructure as a service or platform as a service to start, as these tend to be less disruptive to the business.

Cloud computing is just one of five key trends identified by Info-Tech as changing the face of IT. The other key trends are mobility, security, social media and big data.

The consumerization and bring your own device trends play into mobility, and Juusola said burying your head in the sand on this front isn’t an option. Users will be using personal devices anyway, and ignoring the situation will be 24 per cent more costly than offering even limited support, according to Info-Tech’s research.

“People with titles that are beyond the standards are going to come to you for support, so you should really get out in front of it,” said Juusola.

There are a number of device management platforms on the market, and organizations should develop policies after performing a risk assessment, tailoring access to business need. But it’s about more than just managing the devices, said Juusola. Mobility is fuelling the rise of the business developer, and moving mobile applications out of the IT department.

“Now virtually anyone in the organization can design a mobile application,” said Juusola. Problem is, they may not always consider factors IT would, such as security, which is why IT must develop a trusted relationship with the business side and be seen as a partner and an enabler to its application dreams, rather than a hindrance. And it’s set to be a growth area. While only 18 per cent of organizations have launched a mobile application, 15 per cent have one in development and 55 per cent are in the evaluation phase.

Around social media, Juussola said a major shift is taking place in the way we search. In 2008, indexed search such as Google was dominant, accounting for over 90 per cent of Web searches. Today that figure has dropped to 50 per cent, and continues to trend down.

“We’ve gotten so inundated with junk, it’s hard to find the good information you want,” said Juussola. “Google stripped-out all the personalization for a standard approach, and it’s not that great an experience on a smartphone.”

What’s taking its place? Social-based search. People are turning to Facebook, Twitter and other social platforms for more and more searches. Instead of searching Google for Thai restaurants in Toronto, for example, they’ll leverage their social networks for recommendations.

“Consequently for organizations, investing all your time in search engine optimization doesn’t make sense anymore,” said Juusola “You need a social media monitoring platform.”

The combination of social and mobility is leading to a huge increase in the unstructured data an organization has to deal with, leading to the final major trend: big data. Legal and regulatory requirements mean much of that data has to be held onto for a period of time, and Juusola said tools such as predictive analytics can help organizations drive better business decisions by leveraging that data.

Follow Jeff Jedras on Twitter: @JeffJedrasCDN.