Cloud computing has become common in enterprise IT, and the hype around it remains as adoption soars. Research by IDG shows that 70 percent of enterprises currently use at least one cloud application, and in 2018, organizations with cloud-only IT infrastructure will become the majority.
The global market for cloud services was worth $148 billion in 2016, according to Synergy Research Group, and it is growing by 25 percent annually. Amazon Web Services (AWS) alone reached $3.23 billion in revenue in the third quarter of 2016, while Microsoft Azure, the second-largest cloud provider, announced Thursday that revenue has nearly doubled in the past year, giving it an annual run rate of $14 billion.
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Matching the hype to the earnings of these hyperscale providers is relatively easy because their brands are widely known. Their earnings information is also shared because their stock is publicly traded. The numbers also make great headlines. They hardly tell the full story, however.
Over a third of enterprises find that cloud implementations fail to live up to the hype, and half say they deliver only some of their expected benefits, according to a survey of CIOs by Vanson Bourne. What is the reason for the disappointing results?
According to more than three out of four (77 percent), the difficulty is in finding and deploying a service that is the right fit.
Failure to find and deploy the right environment contributes to costly unused cloud resources, which are experienced by 39 percent of enterprises, according to a 2015 report by Forrester.
Further, a survey by Enterprise Management Associates found that unsuccessful cloud implementations (PDF) with major cloud providers are common, with over half of attempts with AWS stalling or failing.
For many organizations, a ready-made premium cloud environment is a better fit than hyperscale providers that offer a huge range of tools for organizations to use in crafting their own.
Cloud benefits in theory vs. practice
Different organizations with different applications and workloads get the best results with different cloud environments carefully tailored to their specialized needs. Service providers more specialized than AWS or Azure have met business goals for organizations with carefully crafted enterprise cloud solutions.
Cloud platforms are being architected to comply with HIPAA or designed for ultra-low latency access to financial markets to address the needs of specific industries and application types. For example, self-service public cloud computing service CloudShare specializes in environments for learning and research for uses such as virtual training labs, virtual classroom platforms, global IT training and cybersecurity testing. The company’s blog offers a comprehensive list of questions to ask before choosing cloud. It says:
"Business groups across the enterprise are competing for, or lack access to, IT lab resources customized for their specific objectives. For application development and software testing groups especially, access to IT resources and expertise is a major challenge."
The revenues of companies that have advanced cloud operations with formal and organized approaches to cloud management tend to grow significantly faster than those struggling to adopt the technology piecemeal. The experiences of early-adopting enterprises has led to a more nuanced approach, including steep increases in the use of hybrid and multi-cloud environments.
That is because with unused resources and slow migrations come losses of efficiency that make much-hyped “cloud price wars” basically a red herring for enterprises that experience them. Reducing the cost of an idle instance represents a reduction of loss, not a “cost saving” as such.
Along with baseline price comparisons, cybersecurity is a poor criteria for most enterprises choosing a cloud provider.
The reason is that any provider reliable enough to be counted on to deliver your applications from the cloud will meet a minimum security standard and offer, or at least work with, the necessary security add-ons. Specialized cloud providers build networks fully isolated by firewalls, which make them secure enough to serve heavily regulated industries, such as health care and payment, and provide assurance for sensitive processes, including security training. Major causes of breaches include negligent or malicious employee activity (PDF) and failure to patch vulnerabilities. The former is the enterprise's responsibility. The latter is, too, unless it is paying for a managed cloud service.
Taken together this means enterprise cloud selection priorities should be reoriented towards flexibility and fit.
How to identify the cloud that fits your needs
Choosing the right cloud provider begins with asking: What are the business objectives of the cloud migration?
Companies seeking to take advantage of the cloud for global IT training can realize the benefits of remote learning as soon as it works. Recoding applications to work in the cloud can be time consuming. Compared to paying for a premium turnkey service, taking time to architect the right environment may cost more in opportunity cost and delay, even if the implementation is successful.
Enterprises leveraging a hyperscale provider to create a virtual training environment will inevitably have to integrate and manage not just the infrastructure, operating system and application, but also elements such as access management and load balancing.
Running virtual training from a server closet in your office is inefficient in many ways, but the disappointing results above are a caution against assuming one cloud fits all business needs. You can build classroom features with AWS, but is building virtual classroom features what your company is really about?
Netflix uses AWS. It needs a hyperscale provider because it delivers zetabits of traffic to a millions of end users in different time zones. Most enterprises do not share its needs.
Real advances in cloud computing
Cloud technology is advancing so quickly that it has kicked up an enormous cloud of hype. Advanced artificial intelligence (AI), serverless computing and other cutting-edge technologies sound cool, and they have potential that is just now being imagined. For most businesses, cloud represents real and easily achievable benefits based on established best practices.
In contrast with the above example of building a virtual training environment, an enterprise that decides to leverage the cloud to build the skill set of its employees can launch the training program the same day a final decision is made to invest in a ready-made solution, rather than just the resources.
Cloud computing for the enterprise can be about the number of regions or the sheer number of features available. For most, however, truly achieving low-cost, consistent ubiquitous service delivery and flexibility are a function of selecting the best fit.
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