Cloud computing: More costly, complicated and frustrating than expected - but still essential

A new report by Capita shows that UK businesses are growing disillusioned by their move to the cloud. It might be because they are focusing too much on the wrong goals.
Written by Daphne Leprince-Ringuet, Contributor

Migrating to the cloud seems to be on every CIO's to-do list these days. But despite the hype, almost 60% of UK businesses think that cloud has over-promised and under-delivered, according to a report commissioned by consulting company Capita.

The research surveyed 200 IT decision-makers in the UK, and found that an overwhelming nine in ten respondents admitted that cloud migration has been delayed in their organisation due to "unforeseen factors". 

On average, businesses started planning their migration to the cloud in 2015, and kicked off the process in 2016. According to the report, one reason clearly stood out as the push factor to adopt cloud computing: 61% of businesses started the move primarily to reduce the costs of keeping data on-premises.

But with organisations setting aside only one year to prepare for migration, which the report described as "less than adequate planning time," it is no surprise that most companies have encountered stumbling blocks on their journey to the cloud. 

SEE: Cloud v. data center decision (ZDNet special report) | Download the report as a PDF (TechRepublic)

Capita's head of cloud and platform Wasif Afghan told ZDNet: "There has been a sort of hype about cloud in the past few years. Those who have started migrating really focused on cost saving and rushed in without a clear strategy. Now, a high percentage of enterprises have not seen the outcomes they expected."

Four years later, in fact, less than half (45%) of the companies' workloads and applications have successfully migrated, according to Capita. A meager 5% of respondents reported that they had not experienced any challenge in cloud migration; but their fellow IT leaders blamed security issues and the lack of internal skills as the main obstacles they have had to tackle so far.

Half of respondents said that they had to re-architect more workloads than expected to optimise them for the cloud. Afghan noted that many businesses have adopted a "lift and shift" approach, taking everything they were storing on premise and shifting it into the public cloud. "Except in some cases, you need to re-architect the application," said Afghan, "and now it's catching up with organisations."

The challenges "continue to spiral," noted Capita's report, and they are not going away; what's more, they come at a cost. Up to 58% of organisations said that moving to the cloud has been more expensive than initially thought.

The trend is not only confined to the UK: the financial burden of moving to the cloud is a global concern. Research firm Canalys found that organisations splashed out a record $107 billion (£83 billion) for cloud computing infrastructure last year, up 37% from 2018, and that the bill is only set to increase in the next five years. Afghan also pointed to recent research by Gartner, which predicted that through 2020, 80% of organisations will overshoot their cloud infrastructure budgets because of their failure to manage cost optimisation.

Infrastructure, however, is not the only cost of moving to the cloud. IDC analysed the overall spending on cloud services, and predicted that investments will reach $500 billion (£388.4 billion) globally by 2023. Clearly, the escalating costs of switching to the cloud is coming as a shock to some businesses – especially so because they started the move to cut costs.

Afghan said: "From speaking to clients, it is pretty clear that cloud expense is one of their chief concerns. The main thing on their minds right now is how to control that spend." His response to them, he continued, is better planning. "If you decide to move an application in the cloud, make sure you architect it so that you get the best return on investment," he argued. "And then monitor it. The cloud is dynamic – it's not a one-off event."

Capita's research found that IT leaders still have faith in the cloud, with the majority (86%) of respondents agreeing that the benefits of the cloud will outweigh its downsides. But on the other hand, only a third of organisations said that labour and logistical costs have decreased since migrating; and a minority (16%) said they were "extremely satisfied" with the move.

"Most organisations have not yet seen the full benefits or transformative potential of their cloud investments," noted the report.

As a result, IT leaders are left feeling frustrated and underwhelmed by the promises of cloud technology. But Capita's experts argued that the reason for such disillusionment comes down to the misplacement of expectations. Cloud migration, and its promise of cost-cutting, is a means to an end, reads the report; focusing too much on the process might be "a misaligned goal". One that leads businesses to forgetting that the actual purpose of the move is to enable innovation.

Mark Cook, executive officer at Capita, said: "One of the most important questions raised by the research is how far today's IT leaders are able to see beyond cloud as a means to an end – while staying focused on their original transformation goals and aspirations." 

SEE: Pay for these four tech jobs is rocketing. Cloud computing is the cause

To illustrate, Capita's report pointed to the top transformational priorities identified by respondents. IT leaders largely indicated cloud migration as their top priority – above process automation, big-data analytics, and artificial intelligence or machine learning.

In other words, cloud has become the end-goal for many businesses, more so than the applications enabled by cloud and which will drive innovation to create new value. "Could too much focus on 'cloud' be clouding the issue?" asked the report.

Researchers recommended, therefore, that companies recover an "innovation mindset", and remember the original goals that prompted their move to cloud. Combined with a better strategy, including better governance and skilling up the workforce, the report predicts that a fresher vision will let organisations reap the real benefits of cloud computing.

"'Destination digital' can itself become an all-consuming journey," said Cook. "This points to the importance of individually designing and pressure-testing each journey to ensure it will successfully bring the organisation closer to actual business goals."

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