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October 21, 2019
Cloud migration ranks among the top three IT initiatives for organizations of all kinds, but too much technology spend is going to waste, according to new research from software firm Flexera.
Survey respondents estimated that 12% of their overall IT money (not just cloud) ends up down the drain, Flexera found in its first-ever 2020 State of Tech Spend Report. Flexera and other industry experts, however, peg the amount of waste at 30% or more. That finding, in addition to others, should encourage channel partners to assert a greater role in guiding clients who are moving to the cloud.
Cindy Grogan, vice president, worldwide channel and strategic alliances at Flexera, agreed.
Flexera’s Cindy Grogan
“As enterprises continue to increase spend in SaaS and public cloud, the indirect channel must expand their value-added services for all types of cloud offerings,” Grogan told Channel Futures. “This survey points to the challenges that organizations have in managing and optimizing all types of IT spend, and especially fast-growing cloud spend. This represents an opportunity for the channel to offer services to uncover and recover wasted spend — delivering strong ROI to their customers.”
The shift to cloud is evident — as is the possibility for investments to lie fallow or suffer misdirection. Here are some of the report’s key discoveries:
Cloud spend has surpassed on-premises software spend. One-quarter (25%) goes to cloud, 22% to on-premises software, 7% to SaaS, and 18% to IaaS and PaaS combined.
Almost one-half (40%) of respondents have six or more data centers, but one-third (33%) of respondents plan to significantly reduce that number next year.
Nearly one-third (32%) of workloads already live in the cloud across SaaS, IaaS and PaaS, and Flexera projects those workloads to increase to 43% in the next year.
Interestingly, contrary to many statistics floating around, Amazon Web Services came out as one of the least-used cloud vendors among Flexera’s respondent population — at least for now.
Respondents, who consisted of CIOs and IT executives within organizations comprising 2,000 employees, minimum, reported relying most on Microsoft Azure, VMware, SAP and ServiceNow, with AWS and Oracle tying for fifth place. Sixty-five percent of respondents, however, said they expect to increase their use of AWS over the coming year, while 30% expect to decrease their use of Oracle over the same time frame. These findings indicate that AWS offers packages and capabilities that offer broader appeal, and underscore Oracle’s ongoing struggle to capture cloud market share.
Meanwhile, 43% of the professionals providing input to Flexera noted the bulk of their cloud spend goes to Microsoft, which also stood out as the on-premises vendor with the largest adoption of SaaS (39%) and public cloud (25%). Microsoft tends to land in second place after AWS in most surveys, so its prominence among Flexera’s 303 IT population representatives is notable.
On the whole, Flexera’s findings regarding technology spend in general – and cloud migration specifically – presents partners with a range of ideas for supporting customers.
First, enterprises require insight into which clouds best support which workloads. Managed service providers, system integrators and other partner types are well suited to provide this counsel. Organizations also need to understand the state of their environments so they don’t risk buying assets or services they won’t use. Again, partners can step in to conduct an inventory, investigate requirements and recommend ideal approaches. Further, clients require help bringing all monitoring, management and reporting systems into one platform for complete visibility. Finally, enterprises will benefit from outsourcing activities to partners.
“Since companies are struggling with too many manual processes, another opportunity for the channel will be to expand services to supplement headcount constraints with more managed services offerings that assist with data center consolidation, identifying apps for cloud adoption and cloud migration,” Grogan said. “Cloud services provide partners a significant way to monetize and provide additional value to their clients.”
Read more about:Channel Research
Contributing Editor, Channel Futures
Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.
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