While all IT departments have worked hard over the years to learn how to cope with continuous change, the current rate of acceleration presents the modern generation of CIOs with a seemingly impossible challenge.
Indeed, as third platform technologies such as cloud, big data analytics, social, and mobility continue to proliferate, they are increasingly being joined by a new breed of innovation accelerators such as robotics, the internet of things, artificial intelligence, and cognitive systems.
If they stick with traditional approaches, IT departments will be far too slow in meeting the needs of their line-of-business (LoB) colleagues, who typically require speed, agility, and continuous innovation in order to thrive. Technology is now integral to business success, which is why LoB executives are increasingly taking control of their own computing futures.
Business-focused departments are funding an increasing percentage of technology projects — and whether these projects happen with or without the participation of their IT leaders depends on where the organisation stands on the cloud maturity spectrum.
The reason for this is that virtually none of the other 3rd Platform technologies or major business-led digital transformation (DX) initiatives are possible — in scaled-up implementations — without cloud serving as the foundation.
This means that as we enter 2018, one thing is becoming crystal clear to most IT and business executives: the cloud services model is no longer something they just need to become competent at; they must learn to master it.
The rising tide of DX business initiatives are now CEO-level priorities, and this is driving a significant rise in third platform IT spending to support those DX initiatives. This reality means that over the next several years, enterprises — especially the accelerating number pursuing DX strategies — will dramatically scale up their adoption of cloud services.
By 2020, worldwide spending on cloud services, the hardware and software to support cloud services, and services for implementing and managing cloud services will exceed $500 billion — over three times what it is today.
The majority of hardware, and a larger majority of software, that IT vendors make and sell will be “cloud first”, with those enterprises that purchase “non-cloud” infrastructure or software being in a rapidly shrinking minority.
At the same time, more and more enterprises are embracing multi-cloud strategies and becoming more aggressive about deploying a wide range of development and production workloads onto cloud platforms.
And as more and more enterprise workloads are deployed onto some type of cloud, IT departments are being asked to help their organisations make better choices about which workload goes where.
Given that the majority of enterprises are committed to multi-cloud strategies, it is becoming mission-critical to be able to effectively evaluate the needs of individual workloads and consider the available cloud options in terms of cost, performance, security, and contractual agreements.
To this end, infrastructure consumers are increasingly seeing infrastructure as a service (IaaS) as a feasible alternative to traditional options, signalling the maturity and acceptance of IaaS for business-critical use cases.
Business-to-business (B2B) software as a service (SaaS), in particular, are well positioned to leverage the scalability and flexibility of being hosted on an IaaS platform. These offerings are already designed for shared tenancy hosting and are usually not restricted by regulatory or policy reasons from being deployed on public cloud IaaS.
In addition, B2B SaaS offerings tend to see higher gross margins and are not under constant cost pressures. This means that even for large-scale services with relatively stable infrastructure needs, the agility benefits of public cloud IaaS outweigh the potentially higher ongoing infrastructure cost of using a subscription model for infrastructure.
The ongoing shift to IaaS will reduce the usage of dedicated infrastructure and datacenters for B2B SaaS use cases. Combined with the growth of SaaS adoption by enterprises and the trend among software vendors to move to a “cloud-first” model, this development will further accelerate the shift in spending from traditional infrastructure hardware to subscription-based consumption.
This rapid shift of cloud services — from an “emerging” IT architecture to the preferred foundation for enterprise IT and digitally transformed businesses — has important implications for both IT and business leaders. And their ability to master the provision of cloud services will ultimately determine the success of their digital transformation efforts.
The columnist is group vice-president and regional managing director for the Middle East, Africa and Turkey at global ICT market intelligence and advisory firm International Data Corporation (IDC). He can be contacted via Twitter @JyotiIDC. Content for this week’s feature leverages global, regional, and local research studies undertaken by IDC.
