Despite the challenges and uncertainties that surround committing to digital transformation, the consensus in Germany about cloud readiness and willingness is undeniable, and can serve as a model for enterprises around the world.
Despite digital transformation being a highly effective way to further develop the long-term business model, it can be a very drawn-out and arduous process. But the majority of companies in Germany, in particular, rely on the cloud in its various facets, and have now achieved a certain level of maturity when it comes to migrating workloads.
Maturity means, on one hand, that users have not only gained experience with individual dedicated cloud services, but in many cases are now also modernizing and outsourcing core applications. It also means some individual cloud projects fail, there’s been a change of provider, or there’s some disillusionment regarding costs of new cloud operating models.
Here’s a summary of some key results of a recent cloud transformation study, published by the Custom Research Team of CIO, CSO and Computerwoche in collaboration with T-Systems, plusserver, Fortinet, and SPIRIT/21.
Focus on automation and flexibility
According to the study, around 37% of respondents believe their company is well or very well positioned for the future in terms of digitization, but some still see a clear need for action in further modernizing their tools, processes, and workflows. The topics of process automation and the availability and flexibility of applications are particularly important to those responsible for IT and business.
The pressure to modernize IT and business processes has now clearly led to most cloud transformation projects being planned and implemented. More than half of users surveyed initially take stock of their existing IT infrastructure. Around a third do this on their own, but the vast majority also secure the support of a dedicated cloud or service provider.
The motives for this approach are also revealing. Two thirds of those surveyed see the consolidation and standardization of their application landscape and platforms as prerequisite for being able to successfully outsource workloads to the cloud. For almost half of employees, taking stock and formulating a cloud roadmap is also an opportunity to redefine the responsibilities and areas of responsibility within the company.
On the rise: the cloud center of excellence
It’s particularly exciting to see how companies organize themselves when it comes to the cloud, and how they implement appropriate cloud governance. In many cases, this leads to an increase in the importance of the group’s own IT service provider — if there is one. From time to time, dedicated project teams are set up in which all important stakeholders and know-how holders are bundled. In some places, this body is also called the cloud center of excellence (CCoE). The decisive factors are responsibility for the transformation, mostly locating centrally the downstream management of the new IT operating models, and the inclusion of important departments such as legal, compliance and risk management.
The fundamental attitude of companies to the question of cloud or on-premises is also important. Around 13% of users say they’ll pursue a rigid cloud-only strategy in the future. More than half, however, are committed to a cloud-first approach, or the preferred use of cloud services over on-premises hosted applications.
More than a third favor the private cloud approach, or hosting cloudified applications in an external provider’s data center. And almost a quarter opt for the hybrid variant, or running applications in parallel in the cloud or in their own data center in a legacy variant.
Security remains a core requirement
Security is naturally an essential consideration for IT and business managers when migrating workloads to the cloud. Cloud providers are probably the companies most affected by cyberattacks because their size alone makes them an interesting target, but their security precautions are considered to be particularly robust.
This somewhat dialectical attitude is also reflected in the users. For more than 70% of those surveyed, cloud security plays an important or even decisive role, but while many companies expect a higher level of protection from outsourcing workloads to an external provider because they lack the necessary internal resources and skills, a comparable number fear that moving applications to different cloud domains will lead to technical friction and, above all, increased security risks.
AI becomes the dominant factor
So, what experiences have users had with their cloud migration projects, and what technical and strategic organizational challenges have they encountered? Not surprisingly, AI is playing an increasingly important role. In the study, more than half of companies use AI tools for data migration, and more than 44% say they use it to create analyses. AI also plays a significant role in the modernization or adaptation of workloads for cloud environments and code refactoring in connection with cloud migrations. But according to IT and business managers, the modernization of application platforms is still anything but a sure-fire success when it comes to transforming workloads into the cloud. Old legacy applications and proprietary software silos are still seen as major obstacles. The same applies to processing large amounts of data that’s necessary in the context of many cloud projects, not to mention the integration of cloud services into the existing IT landscape.
Results of the study also provide an interesting insight into the users’ perspective on the strategic and organizational challenges of cloud migration. More than 40% of respondents are particularly concerned about the complexity of the task. It’s also revealing that companies always cite an inappropriate or completely unsuitable company culture as a handicap. A lack of skills and resources in the workforce and the feared length of a migration process also play key roles. And more than 22% of respondents are still asking themselves about the benefits or ROI after they’ve started their cloud journey.
Cloud migration often leads to redesign of processes
Once a cloud migration gets green lit, the roadmap is worked through step by step with all risks assessed in advance, special requirements for change management defined, system dependencies and data affinities specified, and — at least in large companies — a migration dashboard set up for corresponding managers.
In addition to the design of the transformation process, carrying out a dedicated cloud migration project is often not enough to achieve the necessary digital change. Even more important is the question of whether the shift of workloads to the cloud also leads to a redesign of business processes. Almost a third of the users surveyed confirm this by reporting on transformation phases that immediately follow a cloud project.
Another aspect in the context of cloud migration is vendor lock-in, or the perceived risk of becoming too dependent on a single provider once you’ve decided to move to the cloud. Often, it’s assumed that changing providers will then be almost impossible due to the immense technological and financial costs involved.
The study at least partially refutes such fears. More than 40% of companies have already carried out one or more cloud-to-cloud migration projects, or relocated workloads from one provider to another without having to temporarily store data on internal servers. A further 28% are specifically planning such a project this year.
Change in the user-provider relationship
The relationship between users and cloud providers has certainly changed. More than ever, their expertise and resources are being consulted when developing a roadmap, as well as planning and implementing a transformation process. At the same time, it’s been possible to avoid excessive dependencies by building up or strengthening internal vendor management capacities. This is also supported by the fact that rolling back, or bringing applications back from the cloud, is now common practice among almost a third of study participants.
In general, the study conveys a positive sentiment among companies regarding the advantages of the cloud, and the role of the cloud as the central instrument for modernization and digitization is largely confirmed. In particular, cloud transformation is seen as a decisive lever for creating more performant and efficient business processes.
There’s only one point where respondents are rather disappointed: only 21% of users say they have fully achieved their cost-cutting goals, while another two thirds say desired results have only been partially achieved.
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