Hybrid Cloud Spending likely to increase in 2016

hybrid cloud spendingWhen ESG started tracking the use of public cloud computing services as a measure for containing IT costs back in 2009, it ranked dead last among a list of nine potential strategies. In ESG's upcoming 2016 Spending Intentions survey, however, the use of public cloud computing services now ranks as the number one IT cost containment measure.

Why the big change?

The interest in using cloud computing services more extensively is motivated in part by reducing IT's costs, but it's also seen by many as a vehicle, quite frankly, for survival. With business disruption becoming the new normal, many in the executive suite realize that the old way of doing things could prove their undoing. In short, businesses are becoming increasingly more paranoid (and rightfully so) about getting blindsided by a more nimble competitor — and quite possibly, one they have never even heard of before.

One of the barriers to innovation is the IT budget — a whopping 62% of it goes towards just keeping the lights on. How in the world can you get really serious about changing the way you do things when the lions share of your budget goes to just keeping things the way they are. The short answer is you can't. Many CIO's are getting wise to the fact that the only way they can transform the way they do business is to start pushing more workloads (especially those that are not core to the business) into the public cloud so that they can focus on the really important stuff. Enter hybrid cloud.

In an upcoming ESG survey on Hybrid Cloud trends, nearly half of the IT respondents pointed to “taking advantage of better pricing” as the chief motivation for utilizing different public cloud services. The most cited cloud use cases include dev/test, DR and long-term data storage. These are all excellent workload candidates for the public cloud. They can help businesses reduce costs and in the case of dev/test, enhance business agility — a key tenant of the new IT dogma of business transformation. I recently published an ESG 360 video recapping this question:

Indeed, for many, dev/test in the cloud presents a significant opportunity to get the dual benefits of lower costs, by eliminating the need for dedicated onsite infrastructure to support dev/test environments and faster, more agile application development capabilities. These resources can be quickly spun up and spun down on-demand in the public cloud but the challenge is how do you seamlessly integrate virtualized private cloud workloads with resources in the public cloud? Nearly half of the respondents to the hybrid cloud survey indicated they want the flexibility to migrate newly developed applications back on-premise from the public cloud and vice-versa. This requires tight integration between virtualized infrastructure maintained in private clouds with like resources in the public cloud. And without adding complexity.

Most IT respondents (74%) indicated they believe it is either critically important or very important for the cloud service provider to use the same underlying technologies that exist in their private cloud environments (like VMware, Microsoft, Citrix, Oracle, etc.). This is a strong indication that solutions that can provide an "out-of-the-box" hybrid cloud experience, will likely fare best as businesses begin investing in hybrid cloud technologies.

Solutions like Microsoft's Azure Pack, VMware's vCloud Air and Oracle's hybrid cloud offerings could gain increased momentum as IT organizations open up their wallets to gain fast hybrid cloud capabilities. In fact, those converged (CI) and hyperconverged infrastructure (HCI) vendors that can provide an “out of the box” hybrid cloud experience, will likely fare best in the 2016 CI/HCI land grab.

Video Transcript

Announcer: The following is an ESG 360 video.

John: I'm here today with Colm Keegan, Senior Analyst for Cloud Computing at ESG. Welcome, Colm.

Colm: Thanks John, thanks for having me.

John: So Colm, you mentioned hybrid cloud models earlier, and certainly converged and hyper-converged solutions are a big part of enabling that hybrid cloud vision. What do you see in the future for hybrid cloud models over the next 12 months?

Colm: What I think we're going to see is that there is going to be more investment into technologies that enable hybrid cloud, specifically improving the ability of businesses to consume public cloud services. And the reason I say that is, as you know, we're finishing up our 2016 IT Spending Intentions Survey, and for the first time since we've been doing the survey, the cloud is now a numero uno, right, in terms of what organizations or their tactics are for reducing or containing IT costs is to use public cloud services.

And it kind of makes sense. The other thing I think we often talk about is 62% of budgets tend to go towards just keeping the lights on. Same old, same old.

John: That's right, ongoing maintenance support, yup.

Colm: And it's kind of tough to sort of fund new business innovation if 62% of your budget is just going towards present mode of operations. So if you can leverage the cloud to reduce some of those costs, so for example, let's say instead of having your...hosting your own development and test bed on premise, you hosted it in the cloud, and that's a perfect example where you can build these environments up, tear them down, basically pay by the drink, kind of a rental sort of model, or a rental lease, however you want to look at it, versus I have to lay out the money. I have to have operational people managing it. I've got to do all sorts of things for the care and feeding of that environment.

Other use cases for hybrid cloud: backup and archiving. So Jason Buffington covers that pretty extensively. The costs of cloud storage continue to drop, and again if you can find ways to attach into these environments seamlessly from your existing on-premise environment and segment data that you don't have to store yourself. Let's say, for example, it doesn't fall under regulatory compliance or some kind of corporate data governance but maybe it's images or something, something that you want to retain for maybe some business intelligence or big data project and boy, it's a lot less expensive putting it on some low-cost glacier archive or object storage archive sitting off in the public cloud, great use case and one thing that a lot of businesses want to take advantage of.

John: So the days of 100% on-premises infrastructure are long gone, the days of 100% in the cloud really never arrived, or not yet. So that leaves us with a big sweet spot of hybrid cloud.

Colm: Correct.

John: Well, great stuff, Colm, thanks for sharing some of your predictions for the coming year. To read Colm's research or his blog, you can visit ESG-Global.com.

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