Adopting IT-as-a-service to drive better business outcomes

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There are no absolutes in IT, and nowhere is this more apparent than in today’s dynamic technology environment. While cloud adoption and as-a-service models can significantly boost digital transformation, CIOs must ensure when adopting this approach that they don’t encounter a bunch of new, but equally challenging, issues to deal with.

Move to cloud in Australia and New Zealand

IDC research manager, Asia Pacific cloud services, Prabhitha Dcruz says although many organisations in Australia and New Zealand continue to have large numbers of IT assets under capital expenditure, “these IT assets will exist as part of hybrid architectures in the near term.”

“In the longer term, as cloud models gain prominence within an organisation, they expect that their capital expenditure will decrease significantly. We have seen that a lot of organisations are moving towards flexible consumption models as part of their cash preservation strategies,” she says.

Her observation is echoed by Dell Technologies, ANZ senior director of technology, Adrian Iannessa, who points out that most organisations are still working with either capital expenditure models or leasing models. He too is seeing a shift towards as-a-service models that ensure the company only pays for what it uses, thereby freeing up capital for major investments outside of the IT domain.

“Organisations are prioritising capital expenditure for their business investments,” Iannessa says, citing the example of the mining industry where the preference is now for capital investment in mining equipment rather than IT infrastructure.

Dcruz says that in terms of overall cloud adoption, local organisations are ahead of their counterparts in other parts of Asia Pacific and have deployed more production applications in the cloud. This shift is being accelerated by the global pandemic, she says.

“While the ups and downs of economic cycles are inevitable, we have seen that recent events have forced organisations to be more agile and resilient. Cloud technologies enable this transition and help respond to changing market dynamics at a pace faster than on-premise technology.”

However, an IDG survey of Australian and New Zealand organisations shows that on-premise remains the prevailing option, with just 20% to 40% of survey respondents moving their workloads to public clouds. In addition, it notes that while compute workloads are set to increase over the next 12 months, storage in public cloud

Challenges in adoption of cloud models

While the move to cloud continues at pace, CIOs perceive a number of issues in its adoption. The IDG survey found that high upfront costs, limited control over the infrastructure and complexity in managing infrastructure are the top three concerns. In addition, flexibility is an issue with regards to cloud infrastructure and procurement, with public and private cloud options often forcing sub-optimum trade-offs, while one in 20 respondents find public cloud storage too complex.

This chimes with IDC’s findings in the market. Dcruz says that without the right cloud management processes in place, having predictable costs is challenging for CIOs. In addition, “hybrid/multi cloud architectures increase the complexity of workloads as the level of interdependencies between different workloads also increases,” she says.

Dcruz also notes that robust data management and end-to-end governance must be paramount when moving to the cloud. “As multi/hybrid cloud architectures become the norm, compliance and security requirement need to be carefully understood across different environments,” she says. In the IDG survey, 45% of respondents cited security and lack of automation across clouds as being challenging, and 40% viewed ‘cloud sprawl’ as an area of concern.

Iannessa says these findings show that IT leaders are looking for managed services models that tackle high upfront costs, reduce complexity, and put the CIO and their teams in control.

“There is a huge case to made here for as-a-service models which embrace the hybrid cloud approach, because they can provide more cost certainty, and be far simpler to deploy quickly and efficiently,” he says.

Applications key to product differentiation

Hybrid cloud and as-as-service models enable organisations to create applications that differentiate their product or service in a way that is faster and more responsive than if they used traditional models, Iannessa says.

This can be critical in today’s business environment where start-ups and disruptors are challenging established players in every industry, as Dcruz points out: “Cloud vendors are continually expanding their offerings to include more cases across different industries. For organisations that want to succeed in the digital age, cloud provides access to this latest innovation technology.”

The IDG survey found that the top three benefits that respondents anticipate when moving to managed services models are: ‘develop new products and services’, ‘be able to do digital transformation’ and ‘be more innovative’.

Iannessa says this result shows that CIOs understand the power of the as-a-service models to deliver innovation in every sector. This includes customer-facing apps that help enable organisations to retain and grow their customer base. “Customers just expect a seamless digital experience at every touch point – from product discovery through to fulfilment,” he says.

CEO, not CIO, making more IT decisions

Iannessa points out that such is the importance of IT roadmaps to retaining a competitive edge in business, IT decisions are increasingly being made at CEO and board level.

“Where before they might have left IT procurement and infrastructure decisions to the CIO, now they see tech as providing a huge differentiator in their market,” he says.

In the IDG survey, over one third (35%) of respondents reported that their CEO was responsible for the decision to move to an as-a-service model for infrastructure. This is well ahead of the CIO or head of IT as the lead decision maker in just one in four organisations.

“Innovation is critical to be able to survive and thrive in today’s business environment, so it’s no surprise CEOs are taking a more hands-on approach to IT,” says Iannessa.

“Increasingly the as-a-service model, especially for compute and storage is becoming the preferred option. This is because it presents a huge opportunity for CIOs and IT leaders working with their senior colleagues to drive the company’s direction in a way they haven’t been able to before.”

If you are in Australia, click here to find out more.

If you are in New Zealand, click here to find out more.

This brand post is part of the series "Key considerations when moving to an as-a-service model". See the other posts in the series here.

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