March 3, 2020
Research firm Gartner Inc. forecasts worldwide public cloud revenue will reach $263.4 billion this year alone. This points to cloud as the new normal for enterprise IT; therefore, channel partners of all stripes who want to make the most of this technology must ensure they are ready to do the heavy lifting on behalf of their clients.
Of particular interest is Gartner’s assertion that, through 2024, two-thirds of organizations will opt for multicloud strategies that reduce vendor dependency. This calls for partners to familiarize themselves with more than one provider so they know whose capabilities best fit the enterprise.
But that’s just one area where the cloud-centric channel will need to become more informed. Gartner, in its recent Predicts 2020 report, revealed additional trends that will transform organizations’ cloud adoption in 2020, including:
Cost optimization. Through 2024, nearly all legacy applications migrated to public cloud IaaS will require optimization to become more cost-effective.
Delayed migrations. Through 2022, insufficient cloud IaaS skills will delay half of enterprise IT organizations’ migration to the cloud by two years or more.
Gartner’s Gregor Petri
The cloud trends and challenges Gartner analysts see correlate with what astute channel partners encounter every day. Gregor Petri, vice president and analyst at Gartner, and a lead author of Predicts 2020, discusses those issues in this edited, in-depth Q&A, which includes Channel Futures’ follow-up takeaways for readers. While Petri does not work with the channel directly, his insight into the cloud issues enterprises face give managed service providers, VARs, agents, ISVs, and others a roadmap for better serving their clients.
Learn more about what Gartner uncovered in the Predicts 2020 report and what those discoveries mean for partners focused on the cloud.
CF: This recommendation – “Start thinking of cloud computing as an enabler for your digital business initiatives rather than as a data center replacement” — is really interesting. How would you suggest channel partners (MSPs, VARs, system integrators, etc.) approach this recommendation with their enterprise customers in mind and, importantly, why?
GP: A common mistake enterprises make when embarking on cloud adoption is to try and follow the fastest path, by simply lifting and shifting their existing applications from the in-house data center to cloud infrastructure, often inclusive of their traditional middleware and tooling. After this, they typically discover this has not automatically made their applications more flexible, cheaper, faster, scalable or reliable. In fact, many companies tell us they are surprised the cost went up instead of down. Using a car analogy, they basically went from using an owned – maybe slightly older and a bit dinky – car to moving around in taxis all day, every day, but without having changed the way they use transportation to get around. Think of ordering a taxi and leaving it in your driveway every night – as you likely did with your own car – but now with a meter running.
But even more severe, the business users of the organization may not even notice the company invested significant time and effort in moving to the cloud, because the way their applications behave stayed largely the same. To get the benefits of the cloud – such as elasticity, scalability, paying only for …
… what you actually use, consuming it as a service – organizations must take a step-by-step approach. Start with looking, application by application, at what issue or bottleneck the business would like to address for this application. Is it looking for higher performance, better reliability and availability (for example, 24/7, all year-round), for a shorter time to accommodate enhancement requests, for a lower cost per transaction, for a lower risk of data breaches, or maybe a combination?
At this stage companies should – and increasingly actually do – look at whether there may be a ready-to-run SaaS solution that offers all that and that could replace their existing application, as a service. If that is not the case, or if the company feels this is a differentiating area where they want to have more control over the application functionality, they should look at what cloud capabilities the provider offers to accommodate the identified business requirements in their existing or in-house build applications.
Then, chart a path showing how they could adapt or refactor their applications to use these. This can mean adopting the cloud provider’s managed database, monitoring, encryption or identity management, reporting or data-warehousing services, or its AI and analytics capabilities.
During this more elaborate transition to the cloud, companies often operate in a hybrid environment, with applications they have adapted and moved to gain specific cloud benefits now running at one or more cloud providers — and with applications that remained largely unchanged still running in the place where they were before, typically their own data center. For some organizations, the last group may eventually become too small to operate efficiently internally, at which point they may seek alternatives such as outsourcing, moving to a colocation facility or possibly moving to the same cloud infrastructure that their other applications now run on (as it now constitutes a relatively small part of the portfolio and the standardization benefit may outweigh the higher running cost of these unchanged apps).
In summary, the goal of a cloud strategy should not be moving applications from A to B; and, as a result, the success of the strategy should not be measured by what percentage was moved. The goal of cloud should be to support the organization’s business strategy, which can range from becoming more agile, more customer-centric, more compliant, more cost-efficient or any combination of these. The success and progress of any cloud strategy should be measured as much as possible in such business or outcome terms.
Channel Futures takeaway analysis for partners: This message around employing cloud to help customers achieve outcomes, rather than using technology for technology’s sake, is not new; however, that research firms such as Gartner continue to see this issue indicates that enterprises are still struggling with this viewpoint — and indeed, their partners may be as well. Cloud sales rarely should reflect a money-saving conversation. Financial improvement likely will occur thanks to properly configured and managed cloud implementations but that can take time and training. The focus should be on helping clients solve business problems.
CF: Cost optimization for cloud is a big deal, as the report emphasizes. What best practices might you recommend channel partners implement behalf of their enterprise clients regarding cloud cost optimization?
GP: Ongoing cloud cost management is really a new discipline – some may even say a new career path – needed for effectively deploying cloud computing in large and small organizations.
We often discuss a seven-step approach that basically starts with …
… understanding current cost by smart-tagging and monitoring the usage. Next is rightsizing the resources and picking an appropriate pricing model for each, such as on-demand, reserved, prepaid or spot.
After that comes managing (egress) network traffic, cleaning up or repurposing unused resources and, where possible, throttling non-value-add resource consumption. Providers offer tooling, often free, for this and over time will reduce the required manual cost management effort further through automation. Think of how your old car needed you to manually measure the oil level every 1,000 miles or so, while new cars simply tell you when to bring it in for maintenance. But today, cost optimization is still largely dependent on discipline, manual effort and, where appropriate, using specialized tools.
Channel Futures takeaway analysis for partners: Cloud cost optimization remains a ripe opportunity for the channel. Partners who specialize in dissecting where a customer is paying for unnecessary or too many services, and who handle the elimination or reconfiguration of those issues, will stand apart from the crowd. However, doing this well requires cultivating human expertise and teaming with the right vendors. Do your homework.
CF: Another interesting observation here: “System integrators (SIs) are the fallback, but clients often do not trust them because many SIs are still learning as well and are struggling to scale their operations to meet demand.” What advice might Gartner impart to SIs that can help them get up to speed faster so they and their clients benefit? This seems especially prescient in light of the report’s finding that insufficient cloud IaaS skills will delay half of enterprises’ cloud migrations.
GP: All over the world, service providers are in a race to expand their cloud implementation and management capabilities and capacity. Established players with large numbers of in-house staff have some advantages as they can retrain their existing technical employees, rather than having to go outside and hire new staff as some of the pure-play startups in this area are having to do.
But besides skilled and certified headcount, having proven methodologies and appropriate tooling – such as differentiating cloud management platform capabilities – are equally important to be able to, on the one hand, convince customers of the service provider’s capabilities and, on the other hand, scale the service provider’s implementation capacity to meet surging demand.
Channel Futures takeaway analysis for partners: Cloud technology inherently brings with it the opportunity to earn a lot of money; yet, as Petri notes, proven capabilities act as the key to gaining client trust. No trust, no income. Have everyone on staff take advantage of industry and vendor training and certifications to beef up knowledge and skill. Hire experts. Be willing to invest in your business from all angles so operations match customer needs.
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