Cloud computing has revolutionized the way businesses operate, offering unprecedented agility, innovation, and resilience. In my numerous discussions with CIOs, they have stressed that the key to leveraging cloud investments doesn't lie solely in cost-cutting but in enhancing the ROI by accelerating business outcomes and value delivery.
Juggling Cloud Vendors: A Balancing Act
CIOs are increasingly managing a portfolio of cloud vendors and services, ranging from a couple of major providers to a mix of cloud service providers and software-as-a-service (SaaS) offerings. The true cost of this management often extends beyond financials, encompassing the need for full-time expertise and strategic oversight to ensure efficient utilization. Constellation Research VP Dion Hinchcliffe told me:
From my data, the average number of cloud providers has grown steadily in recent years. Actual providers are much higher due to SaaS. Yet the skills, processes, and even the tools for managing cloud costs are nascent. And new and compelling cloud services keep emerging on the market, often with new paradigms like serverless, for which we have little to no infrastructure or know-how to cost manage.
Smart Utilization: Getting the Most Out of Your Cloud
The challenge for CIOs is to ensure that their organizations are not just paying for cloud services but using them to their full potential. This requires a robust cost management strategy, vigilant DevOps practices, and a continuous cycle of measurement and optimization to avoid underutilization and unnecessary spending. According to New Zealand CIO Anthony McMahon, this requires good oversight of the environment, not just at a financial level, but also at an operational level: “The challenge can be that anyone with an email address and a credit card can sign up to a cloud service,” he said.
The Pitfalls of Cloud Migration: Beyond Lift & Shift
Many organizations fall into the trap of simply lifting and shifting their existing applications to the cloud, without rearchitecting them for optimal performance in their new environment. CIOs need to focus on redesigning for the cloud to avoid inefficiencies and capitalize on the cloud's full potential for modern software architectures.
Hinchcliffe says that it is unfortunate that many organizations lift and shift to the cloud, just to get there, when the resulting apps were never designed to run there and are not architected to run efficiently or well in the cloud. Organizations should always try to redesign for the cloud, he said, or they’ll move twice as much stuff as is needed:
For organizations with immature cloud practices, service overlaps are a frequent problem. Instead of sending workloads to the cheapest cloud, you end up duplicating those services in each cloud because you don't have good access and oversight to instances in other clouds. That's the main reason why I'd advise less mature teams start with a single cloud platform, build skills around the concepts, and then evaluate if it's worth adding another provider to their own catalog.
Consolidation vs. Diversification: A Strategic Decision
The decision to consolidate cloud vendors or to diversify depends on the organization's maturity and digital strategy. While consolidation can lead to cost savings and simplicity, diversification might offer flexibility and cost-effectiveness by routing workloads to the most optimal environments. McMahon says that CIOs need to have a clear plan on what is needed to achieve from the investment and to keep checking it as they proceed: "Consolidation is an outcome, not a strategy. When it comes to maximizing the value of cloud investments there is more to the equation. It really requires CloudOps and FinOps to operate it efficiently.” Former BusinessWeek CIO Isaac Sacolick agrees: “Large-scale public cloud, multicloud, or hybrid cloud requires a FinOps responsibility assigned, practice defined, and tools. Otherwise, forecasted spend is less known, and governance may be a risk.”
Maximizing Cloud ROI: A Strategic & Operational Playbook
Ultimately, maximizing the ROI for cloud investments is about strategic and operational excellence. It involves understanding the full spectrum of cloud capabilities and how they can be harnessed to support and transform business operations, underpinned by a strong governance framework and a focus on continuous improvement and value generation.
Advice for the New CIO: Focus on Value Creation
New CIOs should prioritize operational excellence through CloudOps and FinOps, foster a culture of continuous improvement with DevOps, and focus on innovation as a driver for business impact. It's essential to develop a cloud capability maturity that aligns with the organization's strategic objectives, going beyond mere cost considerations to a broader vision of business transformation. Sacolick reminds us that the cost is only part of the value of cloud infrastructure: “You should consider the big picture, especially around agility and skills when evaluating current to future state.” McMahon agrees: “Have a clear roadmap on what you're trying to achieve before you get stuck in and know what problems you want to solve. And for those in start-up mode, cloud shouldn't be the first piece of your puzzle; you can develop product without an AWS instance running.”
Maximizing cloud computing benefits goes beyond mere investment transfer. It demands a comprehensive strategy for migration and process optimization, ensuring business objectives align with the anticipated value.
