When the cloud was first introduced back in the 1990s, it was a strange and unknown entity feared by organizations. Some consider the real start of the cloud to be when AWS released Amazon Elastic Compute Cloud (EC2) in 2006. It took a lot of convincing to get companies comfortable enough to begin adopting cloud computing. Some 30 years later, the cloud isn't just another way of using computer technology – it is the business standard.
Treating the cloud as just another IT topic is to ignore its power to transform business. It has been our experience that most companies are barely scratching the surface of the cloud's potential. If organizations and their IT teams can get past the surface, vast opportunities open up.
One can look at the global cloud environment as a spectrum. Organizations fall at various places on that spectrum depending on where they are in terms of cloud adoption. Where is your organization on the spectrum?
No Longer in Emerging Technology
Organizations still hanging around the edges of the cloud should take note that it is no longer an emerging technology. ISG Index data suggests that, though growth for the big three cloud providers slowed in 2023, the wider cloud services market is still growing. ISG Research shows the total market for cloud-related managed service contracts alone is worth billions. Many companies that have gone all-in on the cloud are now maturing and focusing on FinOps and hybrid cloud strategies.
The question for each organization is where it finds itself on the cloud adoption spectrum. As we see it, the spectrum is divided into five major classifications. Organizations can fall in one of these classifications or in a space of transition from one to another.
Minimal adoption: A surprising number of organizations do not use cloud computing above and beyond basic functions. Larger organizations maintain their own data centers while their smaller counterparts rely on internal networks and locally hosted software. Driving their decisions to keep the cloud at bay are security fears, misconceptions about regulatory requirements and a lack of understanding of just what the cloud offers.
Early migration: Many enterprises that have made the leap into cloud computing find themselves in the early migration stage. Their IT departments have been given the task of bringing as much of the cloud as possible into the current environment in hopes of reducing costs and increasing efficiency. Unfortunately, enterprises in the early migration phase tend to suffer from poor execution.
Post-IT migration: As early migration begins to lose its luster, organizations genuinely wanting to embrace the cloud often find themselves heading toward post-IT migration. This is a scenario in which the IT team begins earnest collaboration with business teams to figure out how the cloud can best be adopted and utilized. Their collaborative efforts accelerate cloud adoption, often through trial and error.
Optimize cloud footprint after migration: Once a company has migrated substantial work to the cloud, there are clear steps it can take to tidy up and make the most of the investment. One is in the form of FinOps – a financial management practice that involves teams across finance, technology and business domains to consolidate billing and licensing data. It’s one of the most powerful ways to increase transparency and control cloud costs.
- Value creation: The fourth classification on the cloud spectrum is value creation. Enterprises that reach this stage have a deeper understanding of the cloud's power and ability to add value. They are using cloud software and infrastructure to optimize everything from customer interaction to cost optimization. In addition, such enterprises are continually looking for ways to improve cloud utilization.
Cloud adoption is no longer a luxury. It is a necessity for competing in a modern world that relies heavily on the cloud. ISG is here to help you leverage the cloud to be a more competitive organization.
