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Let’s Talk IT Modernization and Cloud Expenses
There’s ongoing action to keep the IT organization and infrastructure modernized. Budget pressures, available and evolving solutions, prevent IT from becoming static and complacent. The cloud is one of those solutions for unified communications (UC) and contact center (CC) support. But costs must also be evaluated and monitored if that is the direction selected for modernizing IT.
To learn more about cloud cost containment strategies, I interviewed John O’Shaughnessy, infrastructure architect, and senior consultant at Insight Enterprises that provides technology solutions for a wide range of global organizations.
Here is an edited version of the interview.
G: Would you relate IT modernization and business transformation?
J: Organizations today recognize that IT plays a pivotal role in achieving their strategic business objectives. Increasing operational efficiencies, improving user experiences, or leveraging business data to identify new revenue opportunities. This can’t happen without an optimized IT environment that matches the organization’s specific needs, data, and business goals to the right platforms. Plus skill sets, cost controls, and more. In an IDG Research Services study of 200 executives recently commissioned by Insight Enterprises’ Cloud and Data Center Transformation solution area, 67% of respondents said they believe that business transformation efforts cannot proceed effectively without IT modernization.
G: Where do businesses currently stand in their IT modernization timeline?
J: According to the IDG survey, 56% of organizations have either achieved their initial IT modernization objectives or have made significant progress toward doing so. 19% have made moderate progress, and 26% are in the beginning stages. Modernization is a journey, and no organization has reached the finish line. Optimizing the IT environment to support the business and its goals must be done in stages. Continuous improvement is the name of the game.
G: What have been the results of OT modernization?
J: Even organizations in the earliest stages of the IT modernization journey see a measurable impact on their business operations, from improved quality of service (65%) and better customer experience or satisfaction (52%) to cost savings (50%), uptime (44%), and creation of new revenue-generating products and services (42%). Those who have made the most progress in IT modernization have seen even better results in all eight categories measured, notably including the ability to extract business value from data (56%).
G: What are the challenges companies face?
J: Four out of 10 survey respondents cited competing priorities, outdated processes, tools, and infrastructure as the top obstacles to executing IT modernization projects. Roughly one-third also named lack of in-house skills, insufficient budget, and operational limitations such as inadequate application development and IT operations (DevOps) teams.
G: Has the cloud benefited businesses during COVID–19?
J: Businesses with workloads in the cloud as COVID-19 spread across the globe met rapidly changing needs, as a huge influx of remote workers required increased capacity on many systems. One example is cloud-hosted virtual desktop computing environments (VDI). Many organizations size their VDI environments for a small subset of its office workers. With many additional workers needing VDI desktops, those with flexible cloud-based VDI solutions were able to quickly get remote workers up and running to meet the demand.
G: Do more workloads exist in the cloud?
J: The number of workloads in the public cloud rapidly continues to grow. While some organizations have fully transitioned to public cloud infrastructure, many others are very early in their cloud journey. Organizations are performing workload assessments across their existing on-premises estate to determine the level of effort required to move their workloads to the public cloud. The workloads that are less complex migrate quickly and allow an organization to increase its cloud competencies before migrating larger, more complex workloads.
G: How well have cloud budgets faired recently?
J: As cloud utilization increases, budget utilization has increased as well. Organizations that have been able to re-architect their workloads to take advantage of resource elasticity have been better able to control costs than those that haven’t yet right-sized their workloads.
G: Where are the unexpected cost increases?
J: More than two-thirds of the IDG survey respondents reported that public cloud costs exceeded their expectations, with cost overruns for roughly half that group ranging from 51-100%. Most of the cases cited can be traced to inadequate due diligence, governance, or cloud optimization efforts. Examples include unexpected data egress charges, oversubscription of cloud services, failure to accurately estimate cloud costs and take advantage of vendor volume discounts, and failure to align workloads with performance and usage requirements.
Cloud expenses are like other IT expenses. You need to verify what you paid for, monitor usage, question unexpected costs, and hold your cloud providers responsible.