October 12, 2021 (updated)
There’s no denying that companies have realized many benefits from using public clouds – hyperscalability, faster deployment and, perhaps most importantly, flexible operating costs. Cloud has helped organizations gain access to modern applications and new technologies without many upfront costs, and it has transformed software development processes.
But when it comes to public cloud migration, many organizations are acting with greater discretion than it might at first appear. Enterprise IT spending on public cloud services is forecast to grow 23% this year to total $332.3 billion, according to Gartner. This is an impressive number, but it’s well under 10 percent of the entire worldwide IT spending projected at $4.2 trillion for 2021. While cloud growth is striking, it pays to heed the context.
The data center is strategic
In 2021, spending on data center systems is forecast to increase by 7.4%, according to Gartner. And while much growth is attributed to hyperscalers, significant increase also comes from renewed enterprise data center expansion plans. Based on DXC Technology’s internal survey of its global enterprise customers, nearly all of them plan to operate in a hybrid cloud environment with nearly two-thirds of their technology footprint remaining on-premises over the next five years or longer.
Uptime Institute’s Global Data Center Survey 2021 reports that data center capacity growth is expected to continue; vendors of data center equipment and engineering/consulting services say that most customers’ spending is at or above normal levels. They also mostly agree that capital spending on data centers will grow in the next three to five years.
Adopting cloud is a new way of life
Deciding what should move to the public cloud takes careful planning followed by solid engineering work. We are seeing that some enterprises, in rushing to the public cloud, don’t have an exit strategy for their current environments and data centers. We have all come across companies that started deploying multiple environments in the cloud but did not plan for changes in the way they develop, deploy and maintain applications and infrastructure. As a result, their on-premises costs stayed the same, while their monthly cloud bill kept rising.
Clearly, it’s extremely important that enterprises understand that not everything should move to the public cloud. For example, many enterprises have been running key mission-critical business applications that require high transaction processing, high resiliency and high throughput without significant variation in demand due to seasonality. In these cases, protecting and supporting existing IT infrastructure investments and an on-premises data center or a mainframe modernization is more practical as moving such environments to the public cloud is complex and costly.
To achieve the full benefits, including cost benefits, let’s not forget the operational changes that using the public cloud requires — new testing paradigms, different development models, site reliability, security engineering and regulatory compliance — all of which require flexible teams and alternative ways of working and collaborating.
The key point: Enterprises are not moving everything to the public cloud because many critical applications are better suited for private data centers, while potentially availing themselves of private cloud capabilities.
How can DXC help?
With ample evidence that hybrid cloud is the best answer for large enterprise customers to successfully adopt a cloud strategy, employing DXC as your managed service provider, with our deep engineering, and infrastructure and application management experience, is a good bet. We hold a leading position in providing pure mainframe services globally and have the skills on hand to help customers with complex, enterprise-scale transformations.
Our purpose-built technology solutions can reduce IT operating costs up to 30 percent. In running and maintaining mission-critical IT systems for our customers, we manage hundreds of data centers, hundreds of thousands of servers and have migrated nearly 200,000 workloads to the hybrid cloud, including businesses that use mainframe systems for their core, critical solutions. A hybrid cloud solution is the ideal, fit-for-purpose answer to meet many unique business demands.
Customers want to migrate or modernize applications for many reasons. Croda International is a good example, with its phased approach for cloud migration. Whether moving to the public cloud, implementing a hybrid approach or enhancing non-cloud systems, DXC’s proven, integrated approach enables customers to achieve their goals in the quickest, most cost-effective way.
The lesson here: Be careful about drinking the public cloud-only Kool-Aid. With many cloud migrations falling short of their full, intended benefits, you need to assess the risks and rewards. More importantly, a qualified, experienced engineering team will not only help design the right plan but will ensure that complications are quickly resolved — making for a smoother journey.
And most importantly, every enterprise should look at public cloud as part of its overall technology footprint, knowing that not everything is right for the cloud. Modernizing the technology in your environment should not be overlooked, since it may bring more timely results and better business outcomes, including improving your security posture.
DXC helps you rapidly maximize the value from cloud and IT Modernization with our Cloud Right approach. We optimize and manage your existing investments and ensure the best use of on-premises, private and public cloud environments to achieve your business objectives, realizing up to 3X more value. Learn more about Cloud Right.