ENTERPRISE CLOUD TRENDS A STATUS CHECKPOINT 2015 - Delli.dell.com/sites/doccontent/shared-content/data-sheets/... · 2020-05-20 · business to change it up a gear. They can learn

ENTERPRISE CLOUD TRENDS

An IDC InfoBrief, Sponsored by

A STATUS CHECKPOINT 2015

INNOVATION AND COMPETITIVENESS ARE HIGH PRIORITIES

In a 3Q15 survey, IDC investigated the factors having the greatest impact on businesses. While cost control and productivity improvements headed the list as usual, supporting innovation and remaining competitive also ranked very highly.

This indicates that businesses are under pressure to deliver new products or services while being impacted by new market entrants or changes in the competitive landscape.

These pressures are also impacting IT organizations, which, as we will see later in this InfoBrief, are often under pressure when it comes to supporting the required pace and scale of change.

IT departments need to be open to adopting new and more flexible approaches to IT service delivery to help the business not just grow but to thrive in this age of the digital economy driven by the 3rd Platform of IT innovation.

1: Business Dynamics and IT Alignment

"We've started testing new initiatives in the cloud and from a budget point of view we can invest some more money in cloud solutions and services."

IT Manager - Dutch Retailer

1 copyright IDC 2015

Cost ControlIncreasing ProductivityInnovationRemaining Competitive

Improving Customer ServiceEnsuring Quality

EconomyIncreasing Pro�tability

Identifying/Generating New BusinessRetention/Recruitment

33% 41% 26%As a neccesary cost As an enabler of business

e�ciency or productivityAs a driver of competitive

advantage or revenue growth

THE ROLE OF IT IS SHIFTING TO GENERATE NEW BUSINESSOR HELP COMPETE EFFECTIVELY

Q. How is the Role of IT Generally Seen by the Senior Management of the Company?

At the other end of the scale, around a quarter of companies still view IT as a cost to be borne rather than a value-adder to the company; these companies may not be able to do much about the way they deliver IT internally today, but may gain a lot of benefit from moving to external IT delivery services such as the cloud to gain access to the services they need without having to build or maintain them.

With the emergence of the 3rd Platform of IT, enabling innovative new markets and business models, the role of IT is shifting to enable this digital transformation in companies. This is reflected in how IT is viewed by senior management.

The largest group of respondents, at just over 40%, use IT to boost profits by making the company more efficient and reducing waste. This remains important given the importance of cost control and increasing productivity. However, the importance of supporting innovation and competitiveness means many IT departments will have to look to transform the role of IT in the business to change it up a gear.They can learn from a large group of companies that have already done this. A third of companies surveyed are very active in the digital economy and rely on IT to help drive business growth or keep the company competitive, and we can learn from them about how to achieve this.



IMPROVING THE RELATIONSHIP BETWEEN BUSINESS AND IT

Given the increasing importance for many businesses of digital transformation on their long-term competitiveness, the relationship between IT and business is critical to the success of the business as a whole.

For many companies IT has good engagement with the business but only in certain parts such as finance, sales and marketing, and business operations.

There is still a long way to go before IT is seen as an effective partner by the broader organization, and IT has its work cut out to engage better and provide the technology solutions that functions such as R&D, production, and logistics demand.

The challenge for IT is that it sees itself as effective in aligning skills and tracking costs of IT projects, but much less effective at communicating with the business, generating business value, and driving innovation. To engage better with the business, IT has to adopt new skills and tools.



Engagement:R&DProductionLogistics

Worst Case

Business operationsSales and marketingFinance

Best Case

IT CAN BE EFFECTIVE IF IT USES THE SKILLS & TOOLS AVAILABLE



Organizations in the highest quartile here are:

more likely to beextremely effective at

drivinginnovation


aligning businessskills withtechnology

more likely to beextremely effective atcommunicating with

the business


tracking IT costs

3x

4x 4x 4x

3xmore likely to be

extremely effective atgenerating

business value

IT often sees itself as doing a good job at delivering technology services to the business, but often the business does not see things the same way. Much of this is to do with how IT interacts with and communicates its value and successes back to the business.

IT sees itself as effective in aligning skills and tracking costs of IT projects, but much less effective at communicating with the business, generating business value, and driving innovation.

IT effectiveness comes from good planning, tools, tooling, automation, and management of internal IT skills.

Line-of-business spending on IT has been increasing since the emergence of IDC's 3rd Platform of IT innovation. The ability to buy fully functional applications or services from third parties and cloud providers means that business units can satisfy their technology needs when the IT department is seen as not being able to do so.

As a result, many IT departments have poor visibility into LOB spending on technology, including cloud services. Many have only a partial insight into independent business unit technology spend, with over half of respondents admitting they either don't know what is being spent or have an incomplete view of spending.

The most successful IT departments act as an enabler with the business and cloud. Being able to accommodate new business technology needs quickly and effectively can help IT partner with the business to deliver change, rather than being bypassed by "shadow IT."

IT CAN'T ALWAYS SEE WHAT THE BUSINESSSPENDS ON TECHNOLOGY



0%

20%

40%

60%

80%

100%

We know about some of the significant spending We don't know what they spend

All FR DE IT NL SE UK

53

67

42 47

66

57

41

8 6 7 3

178 8

We know about all or most of the significant spending

CHANGE IS PART AND PARCEL OF LIFE FORMOST COMPANIESChange in any aspect of life, be it personal or business, is always a challenge. For companies active in the digital economy, where IT plays a central role in the business itself, over two-thirds see moderate to frequent change in the business requiring adaptability and a new approach to providing IT services. But these companies are not the only ones seeing strong demand for change. Where IT is seen as an enabler of business efficiency, over half of companies still see demand for moderate or frequent change — and those where it is seen as a cost are not that far behind.

So change is a constant for many companies, and dealing with change is the key to success for both the company and the long-term survival and relevance of the IT department given the business challenges we discussed earlier.

When it comes to enabling change, it is a case of good begets good for many IT departments. Where change is frequent, IT departments are much more likely to be able to cope comfortably with it because they have experience — of the culture of change or the requirements to make it a success — and they have the people, tools, and skills to help enable it.

A lot of companies, even in innovative markets, are slow to realize the need for change even if it is needed. And when change is needed it is often critical for the company. But when change is infrequent, the skills and tools to manage change in IT are often lacking, making it particularly difficult just when it is most required. This is when looking to outside help can enable change to be more effectively delivered.

2: Cloud as the Innovation Engine


IT is seen as a necessary cost

IT is seen as an enabler of business

e�ciency

IT is seen as a driver ofcompetitive advantage or

revenue growth

The organization seesno or infrequent change

The organization seesmoderate to frequent change

51%

49%

69%

31%

44%

56%

Organization sees no orinfrequent change

Organization sees moderateto frequent change

IT can cope comfortablywith change

IT struggles to copewith change

69%

31%

41%

59%??

CLOUD IS A KEY TOOL IN THE CHANGEARSENAL FOR IT

When it comes to coping comfortably with change, there is a stark contrast in the maturity and scale of adoption of cloud for the change enablers compared with those IT departments that struggle to live with change. 40% of companies where IT departments cope comfortably with change have adopted cloud widely through the business, compared with just 26% in organizations that struggle with change. This is a strong indication that cloud is an enabler of change when used the right way.For many companies struggling to cope with change, it may be tempting to just move the problem onto a third party and buy public cloud services, as transforming internal IT may seem a step too far. But the indication is that this should be a short-term tactical plan to improve the situation on the ground, and that the long-term

approach should look to develop the internal IT infrastructure to increase its capabilities and competitiveness when compared with external public cloud providers.

Whatever the approach to using cloud to enable change, it is a vital tool for IT when it comes to helping deliver the change that the business requires.




IT copes comfortably with change


IT copes comfortably with change

Widespread use in the entire organization, supportedby a "cloud �rst" strategy to drive business innovation

Widespread use in the entire organization, supported by business & IT leadership

13%27%

9%17%

36%28%

27%38%

We strongly prefer cloud services and will use in-houseresources only if there is no cloud alternative

No preference either way, we use whichever is more appropriate We strongly prefer in-house resources and would use cloud only if there is no alternative in-house

36%35%

"Cloud has become one of the important building blocks for the transformation that we are undergoing. We are enjoying the high-quality services provided by cloud. We are also able to offer benefits to our customers."

HybridTraditional IT Choices

On-premises Off-premises

Hybrid

&

&

&

&

&

New IT Choices

Datacenter Manager - German Media Firm

"It allows us to take the risks without huge penalties. This enables us to provide innovative products and IT services."

IT Manager - French Retailer

Secure, compliant Self-service, flexible

Complex Simplified

Self-service, flexible

System level, slow,integrated apps portfolio

API level, agile, process-specific applications

Traditional on-premisesapps on LAN

HYBRID CLOUD DELIVERS CHANGE AND CHOICE



IT IS TRUSTED MORE WHEN IT IS AN ENABLER OF CHANGE

When it comes to determining IT strategy and choice, or the business, the more aligned IT is with the business and able to deliver change, the more it is trusted and the greater the freedom it has to steer the direction of IT and determine its own budget and roadmap.

Being able to deliver change effectively is one of the main ways that IT can get more involved and align with the business, and using cloud can be a significant part of enabling this.

At first, IT organizations should be prepared to work with the business as well as external experts to help select and implement the first generations of cloud services.

However, as the impact of these services becomes felt and the benefit recognized, the IT department will more likely be able to have increasing autonomy and trust to select and implement future cloud services.



40%

13%

47%

49%

24%

26%

IT struggles with change IT copes comfortablywith change

The business does not trust IT and uses external consultants or partners to assist in cloud selection and implementation

The business takes input from both IT and external consultants or partners when it comes to cloud selection and implementation

The business trusts IT for cloud selection and implementation

A HYBRID APPROACH TO CLOUD SERVICES HAS BECOME ESTABLISHED

Cloud has become broadly accepted across Western Europe and a broad range of industries and company sizes. Younger companies with less of an installed legacy of infrastructure, along with digital and media centric companies, tend to lead in terms of depth of adoption, but companies across all industries generally intend to increase spending on cloud over time.

Building complex infrastructure to deliver IT services used to be the standard as no alternatives were readily available. Cloud is changing this. By adopting a hybrid approach to cloud, IT departments can access the best of both worlds. The business need can be served by whatever provider — internal or external — makes most sense for cost, performance, time, or functionality. At the same time, a lot of the

experience of using third-party cloud services can translate into helping evolve and enhance the way internal IT is delivered.

Over the past two years companies have started to see use of cloud expand in two main ways. Firstly, as the platform and enabler of new business initiatives. Initially, this was limited to being used as a test and development environment, but is increasingly used as the platform for new app development and production application deployments. Secondly, cloud is increasingly used as the de facto standard for enterprise IT. As enterprise organizations see the benefit of cloud for new initiatives and as a testbed, they look at ways in which the best practice can be integrated and implemented within their core IT infrastructure.

3: Current Status of Cloud in European Enterprises


We strongly prefer in-houseresources and would use third-party cloud services only if there is noalternative in-house

No preference either way: we use whichever is more

appropriate

We strongly prefer to use third-partycloud services and will use in-houseresources only if there is no cloudalternative

35%

34%

31%

MORE OF THE IT BUDGET IS SHIFTING TO THE CLOUD

Cloud continues to increase in importance to IT service delivery. Only a fifth of companies responding to the survey used cloud, while most are comfortable with both public and hybrid cloud use.

A very encouraging sign is that spend is becoming much more committed. We can see this clearly as the proportion of companies where cloud spend is less than a fifth of IT spend looks to drop markedly by the end of 2016.

At the same time, the proportion planning to spend 40% or more on third-party cloud almost tripled from 5% to 14%.



More than 50% 41% to 50% 31% to 40% 21% to 30% 11% to 20% 6% to 10% 5% or less 0% (None)

1%2%

17%

11%

21%17%

30%

26%

16%

20%

9%10%

3%7%

2%

7%

2014

2016

Q. What percentage of your total IT spend in 2014 was spent on third-party cloud services?What do you expect this to be in 2016?

PRIVATE CLOUD REPLACING LEGACY IT SYSTEMS

What is encouraging about the evolution of IT application delivery is that only a small minority of companies are still using the traditional siloed approach to delivering applications. Increasingly, IT has moved strongly to deploy these applications on a virtualized private cloud infrastructure where the applications are not run on dedicated systems but are set up to use resources from a pool of hardware.

While a significant proportion of these clouds are not fully mature, with advanced features like orchestration and billing not yet in production, they still represent a significant move forward from the IT infrastructure of old.

What is not so clear yet is where is the best place to run a private cloud workload, with a good balance between on-premises datacenters and a hosted environment provided by a managed service provider, co-location provider, or similar. This indicates that both are likely equally good, and the choice depends on particular circumstances.

Also of note is that there is now strong adoption of applications delivered by a dedicated SaaS vendor, or hosted on a platform of a service provider partner.



Design PLM

Visualization Project & portfolio mgmt.

Field service mgmt. CRM

Human resources ERP

Helpdesk or customer service Supply chain & logistics

Finance Office productivity

Email

Full software as a Service (SaaS)

Application hosted on public cloud

Application on-premises private cloud

We run this on traditional IT environment/legacy systems

Not applicable Application managed on hostedprivate cloud

Looking to how the use of cloud will develop, companies have some definite priorities around security and databases and analytics. Security continues to be the top priority for cloud. Most cloud providers have exceptional security capabilities, but due diligence into potential cloud providers is needed to confirm actual capabilities as not all providers are built equally.

Somewhat counter-intuitively for many given the security and privacy concerns that have been raised in recent years, many companies would be able to quickly improve their security posture by using cloud providers due to the extensive investment and regular, tough third-party audits they undergo. By contrast, few IT departments can afford a dedicated security team, let alone assemble a world-class one. Few companies do regular assessments and audits either, leaving themselves vulnerable compared with the basic posture of cloud.

Data is a popular topic for new or enhanced cloud services. Cloud databases

are being seriously considered to potentially make it easier for individual applications or business units to get up and running without impacting enterprisewide systems or having to tap into existing licencing arrangements. Big Data and analytics services are becoming more popular too, with the ability to get up and running without purchasing high-performance analytics servers and software, which can be a significant initial outlay. Business applications remain popular to deploy in the cloud, helping to deliver to mobile users and avoid the complexity of on-premises setup and integration. Increasingly, unified communications are being tied into these applications, and being able to deliver this from the cloud is increasingly popular.

BEYOND SECURITY, DATA, BUSINESS APPS, AND UNIFIED MESSAGINGARE THE FOCUS FOR CLOUD



"We will get greater data security in the cloud than in our internal infrastructure."

IT Director, Swedish Media Company

ALIGNING CLOUD WITH BUSINESS GOALS

Companies are looking at both tactical and strategic roles for cloud within the IT service delivery approach. Top of the list is a quite tactical role, with cloud being used to augment existing IT services by helping to scale access to existing IT resources without having to massively expand, rearchitect, or undergo a forklift upgrade.There is now an increasing understanding that in order to help the company grow into new markets, IT will need to develop innovation and transformation based on risk management commensurate with reward using cloud.With the advantages that come with cloud, there is a need for caution too. Being cautious about the ability to understand the cost and associated business value of various technology options of cloud is an indication that mastering the complexity of the marketplace is as key as the technology itself.



14% 10% 9%36% 30%

Tactical needs Enable managed risk taking to deliver innovative IT-enabled products and services

Create business transformation opps with cloud, associate risks with reward

Understand cost andbusiness value of tech options

Scale up access to standardized IT resources

Q. Going by your roadmap, what is your topbusiness goal for your next stage

of cloud adoption?

PEOPLE AND PROCESS ARE VITAL FOR SUCCESSFUL CLOUD

When it comes to cloud, it may be natural to assume that the technology is the most important factor to consider, as this is very often an area of differentiation between the different providers and technology vendors and is often messaged heavily.

The reality is that the technology underpinnings of cloud are one cog in a much bigger machine. The overwhelming consensus is that having the right process and governance structure is the most important element to get right when looking at cloud, followed by having the right people and skills.

This reliance on process and governance, as well as people and skills, means that for most IT organizations cloud will mean a different role for

the IT department of the future than today — one where the drudgery of routine, ongoing operations is replaced by the vibe of being focused on delivering new services and value to the business.

4: Making Cloud Work


Q. What do you think is the single most importantingredient in a successful cloud implementation?

16% 22% 35% 27% Having the right

people and the right skills

Having the right process and governance

structure for the project

Choosing the right

technology solution

None

"There should be a right set of people, right resources, right managers, right technicians, as well as right understanding of the technology before we get engaged with it."

Enterprise ArchitectU.K. Business Services

CLOUD READINESS STILL NEEDS IMPROVEMENT

When it comes to cloud readiness, most companies could improve their approach across all aspects of cloud adoption. Most often, the business and high-level IT aspects of cloud are viewed as more ready than much of the IT operations side of things.

In particular, SLA setting and monitoring are viewed as needing improvement. This is a particularly difficult area with service level credit based SLAs, and with the increasing use of multicloud services where multiple SLAs may be involved.

Another area of difficulty is in standardizing cloud deployments, which if not tackled risks creating implementation and support challenges to rival the multivendor solution so prominent in the on-premises datacenter.

Billing is also a challenge, with chargeback and accounting for cloud felt to need major improvement. But given how difficult this is for existing IT, cloud could actually lead the way for how things are done for many companies.



13%

15%

16%

17%

18%

18%

18%

19%

20%

22%

23%

31%

33%

37%

38%

39%

38%

38%

39%

29%

39%

35%

30%

30%

31%

31%

29%

27%

26%

23%

34%

23%

26%

18%

15%

10%

9%

9%

11%

13%

13%

11%

11%

10%

7%

7%

5%

4%

6%

6%

5%

5%

6%

4%

6%

Ability to broker between cloud services

Consistent chargeback/accounting for cloud

Enable IT to become a service provider

Security and privacy

Understanding ROI

Standardizing cloud deployments

Set enforceable SLAs

Drive innovation

Decide on cloud migration strategy for apps

IT and business alignment on cloud service selection

Business leaders view it as a trusted partner and resource for implementing cloud initiatives

Ready for cloud Needs some improvement Needs major improvement Not applicable Not sure

Q. Please indicate how much each of the following areas need improvement to beconsidered cloud ready?

CLOUD APPLICATION FOCUS IS ON EVALUATION, INFRASTRUCTUREPERFORMANCE MANAGEMENT

Evaluating vendor andtechnology options for

cloud

0%

7%

13%

20%

26%

Increasingly identifying and testing applications and workloads to

transition to cloud

Following a documented approach to cloud

Achieving a level of excellence that includes feedback loops for continuous improvement

Incorporating structure, with quantitative performance

management

Not applicable

Applications

Infrastructure

With the increased adoption and experience of cloud, many companies are looking more strategically to optimize the use of cloud. For the most part this is the same whether it is for cloud infrastructure services or cloud application services. However, there are a couple of noticeable differences in approach to these for most companies.

Cloud infrastructure services tend to underpin a lot of higher-level platforms and applications and processes. This makes them an important foundation, and stability and predictability are key for this. To deliver this, having a structure with quantitative performance management is a strong focus for cloud infrastructure services.

It is a different story for cloud application services. These rely more on the ability to develop and deploy them quickly, and to evolve them effectively over time. In this case, we see that the priority is to evaluate vendor and technology options to see their suitability for cloud deployment.



Q. Which of the following best describes your current cloud strategyfor both application services and infrastructure services?

SKILLS SHOULD DEVELOP TO REFLECT THE NEW DIGITAL REALITY

Current enterprise IT skills tend to be biased toward the technical side, which is a reflection of how IT has been funded, built, and operated the past few decades. Infrastructure has had to be assessed, built, tested, and operated, requiring deep knowledge of individual elements to create a reliable and high-performance infrastructure.The growing adoption of cloud means that within IT, governance and business skills will be much more important, but currently these are much lower down the list of top strengths of the IT department.

As cloud is adopted and the reliance on technical infrastructure experts in delivering IT services is reduced, IT leaders need to start planning now to reskill or restructure the IT department to focus much more on the business side of IT delivery.



Q. What do you considerto be the top skills orstrengths of your ITdepartment?

"Generally, because IT lacks a well-informed forward vision, the strategic view is unclear."

Business Services Company

"Within the past two years we have changed our IT strategy and cloud has become our first choice. Previously we used to outsource, and in the last 2–3 years we have invested in our own cloud for various departments. Going forward this will be consolidated."

CIO - Swedish Government

Supplier management

Project management

Enterprise architecture

Technical architecture 22%

16%

20%

13%

16%

12%

BUSINESS/GOVERNANCE

TECHNICAL

Business acumen

Creative/design skills

About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and busi-ness strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 49 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

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ENTERPRISE CLOUD TRENDS A STATUS CHECKPOINT 2015 - Delli.dell.com/sites/doccontent/shared-content/data-sheets/... · 2020-05-20 · business to change it up a gear. They can learn