Hybrid multi-cloud computing delivers cost reductions and allows businesses to increase their data performance and innovation. Leading organisations in financial services, retail and construction have improved the efficiency of their technology infrastructure, resulting in business opportunities.
Whether serving retail customers, insuring properties or building them, business technology leaders continue to seek reductions in their data centre costs. "A data centre migration to a co-location provider with Nutanix moved us from 20 racks to four with Hyper-converged Infrastructure (HCI). The same workloads are taking place, and the cut in cooling costs had a direct reduction in IT costs," says Paul Petty, Group IT Platforms and Infrastructure Lead with Laing O' Rourke, a UK-based construction firm. He adds: "It also delivered better sustainability."
Despite the maturity of the cloud as a business technology platform, the fifth Enterprise Cloud Computing Index (ECI) study found in 2023 that almost a quarter (24%) of organisations still counted on an on-premises data centre as their primary resource for application hosting, data storage and web services. A similar number (23%) depended on hosted data centres, and 21% had a hybrid multi-cloud estate. Laing O'Rourke is not alone in discovering cost savings from modernising its hosting environments. "We have made significant IT cost reductions over the last seven years, and in the US, we have gone from three to just one data centre," says Michael Allen, Head of Infrastructure at shoe retailer Clarks. Like Petty, Allen says they have seen energy cost savings, which is vital in a time of energy price inflation.
The ECI study finds that 60% of IT operations use a mix of private and public cloud operations to deliver enterprise infrastructure. Many use multiple cloud providers, and 74% of ECI respondents expect the multi-cloud model to grow.
At the heart of this trend is the adoption of cloud-hosted applications and platforms to deliver business operations. The risk for business technology leaders is that application sprawl leads to rising and uncontrollable cloud cost increases. At insurance firm Markerstudy, CIO Adam Miller has developed an application template and platform to prevent this. His organisation acquired the insurance arm of retailer The Cooperative, which resulted in an additional 64 platforms. Miller's platform approach reduced that to four. "This is a typical approach," he says of the highly acquisitive business he leads technology for. "Nutanix helps us deliver this at pace," Miller says.
Markerstudy is ahead of the curve. The ECI study finds that 85% of organisations consider cloud costs an IT management challenge, with 34% saying it is a significant challenge. As Lee Caswell, SVP of Product and Solutions Marketing at Nutanix, says: "What we're hearing from customers is that there's a need in the market for a cloud operating model to help build, operate, use, and govern a hybrid multi-cloud to support all types of applications."
The greatest cost challenge facing CIOs is application migration across clouds; 86% of ECI respondents said moving applications from one environment to another was costly and complex. Yet, with businesses worried about the economic outlook, nearly half (46%) said they plan to move some applications back to on-premises data centres to mitigate rising cloud costs in the next 12 months.
Despite the challenges of application migration, business technology leaders report that interoperability between application estates is improving; only 8% said they experienced limits to interoperability.
Data-driven
As organisations become increasingly data-driven and adopt new technologies such as artificial intelligence (AI) and Edge computing, CIOs are finding that a multi-cloud strategy provides the infrastructure these business opportunities demand. The ECI report finds that data security, recovery and sovereignty were leading the infrastructure decision-making process for business technology leaders. "Understanding data is significantly easier in the cloud than with on-premises," says Allen at Clarks. The shoemaker and retailer are using a Microsoft Azure platform and PowerBI to draw insights from its cloud-based Point of Sale (POS) systems and is beginning to experiment with AI to gain better visibility of its products and the behaviour of customers.
In construction, Petty said the building site and its increasing use of technology are examples of how edge computing is transforming the sector. Increasingly, construction firms have manufacturing sites to pre-fabricate parts of a building; Petty says Edge computing ensures these have the applications and compute they need on-site. Cloud infrastructure means that Laing O'Rourke only needs to deploy the necessary technology to that site. Additional applications and compute are only required at headquarters.
"We have 80 locations in the UK, and we don't have to compute power at all of them, so we capture data from a crane, for example, and then push that back to the cloud," Petty says. The benefit to Laing O'Rourke, he says, is that in the past, the business would need to "put in" on the device and site but can now use a multi-cloud environment to simplify site operations and increase its access to data.
All three business technology leaders say that a multi-cloud environment ensures the business can be data-driven but has cost-efficient infrastructure. "Workloads are not entirely consistent, and we do sometimes need low-latency for warehouses, so the cloud is enabling greater efficiency," Allen at Clarks says. For Petty at Laing O'Rourke, the development of a Microsoft Azure-based data platform has enabled the business to be data-driven. Still, at the same time, the business technology leader has analysed cloud and on-premises usage to be as efficient as possible for the organisation. "It is managing a hybrid operating model and getting it all to work together. That enables us to get the data to where it is needed, but I can keep some stuff on-premises if it is cost-effective," Petty says.
Laing O'Rourke, Markerstudy and Clarks have visibility of their infrastructure and its operational efficiency. This enables the three businesses to have a mixed infrastructure and, therefore, be able to move and monitor workloads, a challenge for many respondents to the ECI study. What all three organisations demonstrate is that visibility drives business innovation and efficiency.