IT Transformation Takes a Turn Toward Self-reflection

Where cloud fits amid ongoing datacenter transformation efforts is a question that repeatedly materializes in our research. Casual bystanders might assume public cloud services from Amazon Web Services (AWS), Microsoft Azure and others are a no-brainer solution to modernizing an organization’s IT ecosystem. There’s some truth behind this assumption, but transformation today is a little more complex at second glance.

Our 451 Alliance research found that 58.3% of surveyed organizations have a formal strategy for their datacenter assets and IT sites. Of those, 42.9% feel that cloud will help to lower costs. However, organizations that need higher amounts of IT transformation to satisfy business needs are less convinced of the cost-saving benefits of cloud: only 30% of firms that require high IT transformation levels perceive that cloud computing will reduce costs, compared with 51.2% of firms who require low levels of transformation.

Will cloud computing lower your IT costs?
Source: 451 Research, Voice of the Enterprise: Datacenter Transformation, Budgets and Outlook 2016

Smart organizations modify before shifting to cloud

This is an interesting dynamic, because it suggests that enterprises in need of transformation will typically look first to modify their own environments before shifting resources to public cloud services, including IaaS and SaaS. This is smart – regardless of the transformation requirement, most firms have room to spare in terms of compute capacity, particularly if they haven’t fully virtualized a large portion of their servers (and most have not). As such, the modernization aspects of cloud should not overly influence transformation decisions, at least not until existing infrastructure is fully optimized.

Consider also that firms needing high transformation levels are more likely than those needing low transformation to consider datacenter consolidation a high-priority project (40.8% for high-transformation firms versus just 12.5% for low-transformation firms). If you think – as we might – that public cloud migration is occurring in earnest here to enable that consolidation, it might be wise to think again. Those high-transformation organizations are more likely to exist in colocation services than those that require lower levels.

Cloud isn’t the only way to transform

The pattern that’s materializing here paints a strong picture of on-premises architecture changes (or at least moving owned architecture to a colocation environment) when transformation is important. In a previous blog post, I revealed evidence of widely extending sever lifecycles due in part to today’s better server performance. While cloud should absolutely be considered as part of any IT transformation initiative, don’t assume it’s the only way to transform. Saving costs and space is occurring in environments today simply through optimization of existing infrastructure.


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