Article (8 minute read)

Pandemic Realities: Five Drivers of Cloud Adoption

Pandemic necessity shattered most of the few remaining restraints on cloud adoption.

Peter Coffee / Salesforce

Pandemic necessity shattered most of the few remaining restraints on cloud adoption. Two decades of innovation and learning at scale have enabled, in just these past two quarters, swift and effective mobilization of distributed teams – and engagement with crisis-focused customers. As finance, commerce, government, healthcare, education and other sectors shift vital workloads to the cloud, leaders (both IT and other) are re-envisioning their infrastructure, network and application architectures – not merely for short-term incident response, but for an accelerated and enduring transformation to a “next normal.” Despite expected cuts to IT budgets overall, cloud spending is expected to increase in 2020.

Recent cloud adoption is more than a side-effect of solutions to the pandemic’s lockdowns and disruptions. It’s predicted by IDC that 2021 will be the year of multicloud — a transformative time for orchestration of multiple public clouds, along with other dedicated systems, as global pandemic disruption reaffirms critical need for business agility. Bandwidth demand will continue to grow, initially impelled by crisis response, but quickly becoming a higher baseline volume of ecommerce and telepresence. According to a McKinsey study, consumer use of services like curbside pickup, telemedicine and videoconferencing have increased due to the pandemic – and 40% of those users intend to continue using these services beyond the crisis.

Here are five observations about how COVID-19 is pushing more operations to the cloud.

1. Technology has become the key enabler of excellence

Once branded as a cost center, IT has shifted to the role of value creator: a multiplier for team effectiveness, a magnet for talent attraction and retention, a differentiator for customer experience and the primary source of future profitability.

In years past, attaining business and technology alignment meant that the business had to remind the IT shop what the company does for a living. Today, it’s IT that’s guiding and challenging the boardroom, reality-checking the top of the office tower on changes in customer behavior and competitive environment, and showing business leaders both the necessity and the means to innovate for their future.

Once branded as a cost center, IT has shifted to the role of value creator: a multiplier for team effectiveness, a magnet for talent attraction and retention, a differentiator for customer experience and the primary source of future profitability.

 

The COVID-19 crisis has spotlighted the value of IT in crafting and deploying quick and cost-effective solutions to keep things running. Further, the elasticity and configurability of cloud capability has enabled this at a speed that startles people who have painful decades of experience in old IT. This isn’t the familiar 20th century IT money pit of schedule slips, cost overruns and disappointing deliveries of solutions that are outdated before they go live. These are robust, accessible services that are already up and running at scale, in which a new application beams up into a first-class seat on an airplane already in flight.

With technical risk enormously reduced, and demand for scarce and costly infrastructure skills also lessened, the conversation can now be led by the business objectives and innovation opportunities. Rather than better tools for doing old things, the focus can become discovery of opportunity to do new things. Getting to the cloud is therefore no longer an IT cost reduction program, but a collaborative exploration with no upper limit.

2. Cloud costs are increasingly controllable

Both legacy IT and cloud portfolios are prone to give rise to hidden costs – but any effort to compare on-premises costs to cloud costs is difficult, because so many on-premises costs are not labeled as IT budget. Costs of electrical power, square footage and building maintenance may come out of entirely different pockets, with only the costs of hardware and software licenses and dedicated headcount (whether employees or contractors/partners) being viewed as “IT spending.”

When all of the indirect costs of owning and operating a data center are made visible, it’s common for companies to discover that on-premises costs with a typical five-year hardware refresh cycle can be more than twice as much as the all-in cost of the same compute capacity in the cloud. On the other hand, the fact that cloud services don’t show up as literal landmarks of cost (no buildings with signs that say “Technology Center” on the door) means that clouds’ hidden spending may arise and grow – perhaps in places where no one is looking. A recent 451 survey found that more IT spending happens outside of the IT department than businesses realize.

For more than a decade now, it’s been accurate to say that the company asserting, “We don’t use that newfangled cloud,” is probably as mistaken as the companies that used to say, “We don’t use that dangerous WiFi.” When technologies like these become readily discoverable, affordable and operable by mere mortals, there are only two roads that are likely to be followed: one that leads to governed and secure adoption, or one on which adoption takes place without permission or adult supervision. Increasing convenience on the supply side, and growing familiarity among non-technical business departments, help to pave a path of least resistance for self-service models that can lead to actual spending growth, even while prices of clearly labeled “IT budget” items are going down.

To the extent that a global crisis such as the present COVID-19 pandemic creates political capital for many urgent efforts, it can also offer an opportunity to coordinate and streamline such unmanaged adoption models. When aligned and refined, cloud migrations consistently deliver cost savings as well as improved operations performance – but instead of focusing on cutting IT budgets, businesses should look at using cloud resources to get more business value out of their IT spend. Cost-optimized clouds offer this leverage to the business without lack of crucial visibility and governance.

3. COVID-19 intensifies pains of silos

Organizations, and their customers and stakeholders, have been tolerating silos of data and process for too long. As COVID-19 has impelled people to work in dispersed environments, walking down the hall to solve a silo-induced issue has become no longer possible. The crisis has forced many fragile, inefficient and risky processes out of their shadows of familiarity and habit.

The crisis has forced many fragile, inefficient and risky processes out of their shadows of familiarity and habit.

 

Businesses that could formerly tolerate siloed inconvenience now realize that they need a more unified team strategy, elevated by new levels of process automation and capable of both elasticity and scale. Though we tend to think of silos in relation to data, silos often also exist in the protective and connective tissues of security and collaboration. Companies often find that they have adopted different solutions within each silo, perhaps creating costly overlap, or perhaps leaving gaps that cost more while providing less than a comprehensive solution that more broadly meets business needs. New ways of working and communicating require shared-truth, coherently connected resources that can be securely accessed anywhere.

4. CIOs have moved beyond crisis response into transformation roles

In IDG's 2020 State of the CIO report, two of the five largest time commitments CIOs face are aligning IT initiatives with business goals and driving business innovation. Today, seven out of 10 of IT leaders say that they’re communicating with the board of directors more than ever before. Communication becomes a crucial skill in this role: the ability of the CIO to articulate IT strategy in terms that other C-suite executives can understand is critical for success. Many businesses are finding value in CIOs who come from diverse disciplines, and who can readily frame the business objective as both context and criterion for a technology solution.

The best of today’s CIOs may well understand the necessary future of their business better than their CEO. The modern CIO defines success by business objectives met and innovations accelerated, not just uptime and throughput and the IT lights being on. These CIOs see IT as the supply chain for experiences that can be wrapped around the products sold and the services performed: the refrigerator that supports automatic re-ordering as supplies are used up, the appliance that makes its own appointments for preventive maintenance even before a telemetry blip turns into a visible symptom.

As the urgency of unexpected events creates new license to experiment, by offering innovative products and services that soon become expected amenities, these business-savvy CIOs will build new bridges between customers and technology.

5. The new normal is not yet fully defined

The essence of this pandemic crisis, for every kind of organization, is that formerly long-term projects with leisurely timelines have been accelerated and intensified. Projects that had a target time of five years need to be built in five weeks and be operating at scale in five months.

This pressure can too easily lead to haphazard adoption of insecure, unscalable, and unmaintainable stopgaps. Without a solid strategy built on strong partnerships between visionary business leaders and proven cloud providers, this once-in-a-career opportunity could leave a business saddled by long-lasting difficulties in taking advantage of the efficiencies and functionality of cloud resources.

IT shops will do well to invest in flexible infrastructure that can adapt on the fly to take advantage of opportunities that are certain to emerge, even if their specifics cannot yet be known. Cloud operators can take some of these burdens off the shoulders of business technology leaders: their robust and continually innovating services provide both an agile foundation for crisis response, and a rising platform for adaptation to whatever comes next.

IT’s contribution is no longer measured in data center square footage, quantity of software licenses, technical headcounts and lines of code. The frontier of IT now is advanced by value created: today’s and tomorrow’s true measure of an IT department.

 

IT’s contribution is no longer measured in data center square footage, quantity of software licenses, technical headcounts and lines of code. The frontier of IT now is advanced by value created: today’s and tomorrow’s true measure of an IT department.

As the next normal comes into focus, businesses that once thought of cloud as a temporary fix to get through a crisis will have to make complex but potentially profitable decisions. The winners will be those whose IT strategy, budgets and staffing adjust to avoid taking inefficient, unproductive “old normal” practices into a future that in many ways is already here.

 

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About the Author

VP for Strategic ResearchPeter Coffee

Peter Coffee, VP for Strategic Research at Salesforce, has been with the company for thirteen years. He works with the company's customers and partners in areas including connected customer engagement, new data models and methods, trust...

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