Reimagining the IT infrastructure of the cloud operating model, IDC

Research by International Data Corporation (IDC) has revealed that 49% of CIOs across the Middle East, Turkey and Africa (MEA) believe that the cloud has the potential to play a significant role in driving innovation, creating new digital products, transforming business models and refining revenue streams and this will influence their spend over the next 12-18 months. Speaking at the recent IDC Cloud and Datacentre Roadshow, Jon Tullett, research manager for IT services for IDC Sub-Saharan Africa said there  are two primary reasons why companies should be paying attention to cloud and making it a strategic priority in the current environment.

“First, making the best use of infrastructure is always going to be a strategic priority for the CIO and, in many cases, the cloud is the best infrastructure choice,” says Tullett. “Secondly, cloud services and business requirements evolve very quickly so there needs to be a constant process of re-evaluating the services that are in use and assessing whether or not they should be refreshed or migrated elsewhere.”

That said, if cloud is to be a strategic priority, it equally needs to be given the right resources to ensure that it operates optimally. IT teams need to take a holistic look at their cloud operating models so that they are assured that the spending and implementation meet business value expectations and enable the business across the essential pillars of speed, flexibility, cost and reliability. To ensure these efficiencies and optimisation strategies, several common elements need to be addressed.

“A consistent security policy along with common management and central reporting are three areas where the cost of getting it wrong is immediate and appears as additional overheads and reduced agility,” says Tullett. “If you dig deeper, this leads to discussions around API management and integration strategies that, for many CIOs, are easy investments in the future. They don’t add much cost today, but payout handsomely as company use cases expand.”

Cloud deployments can fundamentally help the organisation improve its operational efficiencies over the long term, particularly those that have not yet fully optimised their technology environments.  This has already been seen in the measurable returns on investment and productivity found by companies already moving down the digital transformation road – they have realised benefits such as faster time to market, simplified innovation, easier scalability, and reduced risk. If a company can get its strategy and operating models in alignment then it will see improvements in these baseline metrics and overall operational capability.

“If an organisation is experiencing worse operational inefficiency after deploying into the cloud, then the cloud has been implemented incorrectly,” says Tullett. “As blunt as that may be, it’s the reality and asks that the organisation relook its strategy and approaches to turn this around. It’s not always obvious where the business is experiencing operational inefficiencies, however, so it is worth using the built-in telemetry in cloud platforms to assess performance.”

Use the tools and the third-party services that allow for the business to measure its efficiency. This will allow for it to measure and improve efficiencies as part of cloud key performance indicators rather than as guesswork and estimations. Also, do not stop assessing at the implementation phase when moving the software into the cloud because the real benefits only show themselves once the organisation actively leverages the advantages of cloud. These are, of course, agility, speed of deployment, inter-service integration, faster iteration, and consumption pricing.

“If you cannot express your cloud spend in these terms – across these benefits – then you may get stuck on first base,” says Tullett. “Then, once you have established these as your foundation, take these cloud advantages and overlay them over your entire IT infrastructure. You can get most, if not all, of these benefits with other technologies as well. Cloud is not the only option, it is a change in how you articulate business value and how the business aligns with IT.”

In the end, whether cloud, operations, implementation or transformation drive the business journey, every part of an organisation’s infrastructure needs to be held to high standards that prioritise strategic imperatives and align with mission-critical business objectives.

Trends shaping the public cloud market in South Africa are setting the scene for business growth, says IDC

The IDC South African Public Cloud Market study 2021-2025 found that one word defined the future – momentum. Cloud deployments underwent rapid growth in 2020 as enterprises raced to connect geographically dispersed workforces and build digitally robust business processes so they could survive the unexpected uncertainty. For most decision-makers, the past 18 months have been defined by transformed digital roadmaps, reprioritisation of budgets, and cutting CAPEX to embed agility and ensure sustainability. According to Jon Tullett, Senior Research Manager at IDC Sub-Saharan Africa, the next five years will see more workloads move to the public and private clouds as momentum builds towards further adoption, and that this presents opportunities for organisations and service providers alike.

“Service providers need to position themselves to catch customers as they pivot and accelerate, to ensure that they are in a place to take advantage of this momentum,” he adds. “Those that can offer solutions and approaches that fully leverage existing business investment and that allow for companies to better adapt to the short- and long-term changes brought by the pandemic are those that are likely to get the best seats in the house.”

The most stand-out trend shaping the public cloud market today is the extremely rapid adoption of public cloud services thanks to the pandemic. Over the next 6 to 12 months, this is likely to introduce greater complexity such as the widespread adoption of multiple platforms within organisations and the need to mature these platforms and investments to squeeze out their full value. Speed of adoption is unlikely to slow down thanks to the tidal effect – more applications will migrate to the cloud and, as they move, IT will likely move other parts of the ecosystem along with them – and neither will the organisation’s drive to cut costs and get more value for money.

“This movement towards the public cloud is not new, it has been around for years, but the pressure of the past year drove increased speeds to adoption for obvious reasons,” says Tullett. “Companies had to make sudden and sweeping changes to business practices and their infrastructure to ensure they could manage operations effectively in the remote workplace.”

Accelerating public cloud service adoption was an effective way of achieving productivity and collaboration in a shut-down world, and it allowed for the improved management of costs thanks to the usage-based models provided by public cloud services. A win-win. But one that cannot be left to rest on its proverbial laurels. Organisations need to start thinking about their infrastructure in terms of the cloud, regardless of location, and how they can get more from it.

“Instead of asking how the cloud will complement on-premise infrastructure, corporate conversations are now turning to how legacy infrastructure can be aligned with cloud-era applications,” says Tullett. “This isn’t restricted to private or public cloud but is more about adopting a different approach to deployment, scaling, integration, costing, and all the operational considerations that come with managing enterprise applications.”

However, despite the pressures put on companies by the pandemic and the evolving workforce that has emerged from the ashes of this complexity, many companies are still resistant to this change. There are still there are concerns that linger around data governance and compliance, which are security and skills, and the complexities that go hand-in-hand with migrating applications to the cloud.

“It can be daunting for some companies to step into this cloud infrastructure and leave their trusted and traditional systems behind,” says Tullett. “This is once again where service providers can translate the challenges into opportunities. If they collaborate with companies to assuage their concerns, then they can create new ways of working together, such as in delivering hybrid cloud management solutions, or providing security as a managed service.”

For those companies still sitting on that fence, as uncomfortable as that may be in the digital-first world right now, it’s important to unpack the benefits that come with the move to the public cloud. For the service provider, it’s a chance to build new frameworks, deliver new services, and meet customers on the very edge of the digital battlefield. For the business, there is the proven value of agility that comes with cloud – it’s got the flex the enterprise needs to shift strategy in the face of the unexpected or uncertainty.  The ability to make immediate and relevant adjustments to IT and business strategies on demand was underscored over 2020 and 2021, and the cloud was the cornerstone in helping companies to adapt.

“As organisations move out of the pandemic and look to take advantage of new opportunities, their focus will shift from a defensive posture to an expansive one and IT will be expected to support this shift with new capabilities such as automation, analytics, and agile deployment,” concludes Tullett. “And cloud will be an inevitable part of those capabilities.”

[Column] Jon Tullett: Speed to Value – Accelerating resilience and business continuity

Why invest in cloud-driven transformation? This question likely sits on every boardroom table and circulates in most strategic technology discussions. Cloud is undeniably one of the most transformative technologies on the market today and it offers the organisation a resilient and trusted business continuity and disaster recovery toolkit, but it must be approached intelligently.

According to Jon Tullett, Research Manager for IT Services, International Data Corporation (IDC) South Africa, cloud transformation that allows for robust disaster recovery and business continuity can be anything from evolving legacy infrastructure into the cloud, to going deeper into cloud practices and outcomes that are far more strategic and sustainable.

“Moving into the cloud is a process, not a transformation,” he adds. “Cloud as part of digital transformation talks to the adoption of cloud practices and outcomes rather than technologies. It’s looking at the transformation to platforms that are scalable, flexible, self-provisioned, priced by consumption, not deployment, and highly interoperable and extensible through APIs.”

This level of cloud adoption is fundamentally more sustainable and robust in terms of infrastructure and is a profound transformation for the organisation. It requires significant investment and time spent on strategy, but the result is a business that is more responsive and resilient. A business that is capable of flexing and pivoting with far more ease than it could in the past. This introduces numerous business benefits that include agility, resilience, scale, and growth.

“Cloud technologies, whether public or private or hybrid, are far more capable of pivoting to meet business requirements,” says Tullett. “Companies with this level of cloud investment can deploy new capabilities on demand, move in new directions, and break down unused resources. They can shuffle and flex and adapt as needed – all highly relevant skills in a world defined by uncertainty and change.”

The industry also benefits from this level of cloud commitment. Indirectly, it benefits from the value derived by organisations in terms of performance and reliability; directly it benefits from supply chain transformation. As entire supply chains move through the transformation process, cloud capabilities introduce the integrated supply chain efficiencies that can multiply benefits for all. But when it comes to business continuity and resilience, this is where deep cloud investment really comes to the fore.

“It’s a lot easier for cloud infrastructure to rapidly provision resources or roll back damage during a continuity event,” says Tullett. “Applying legacy continuity practices to a cloud-era business is like giving a sports car a wagon wheel for a spare – it might technically get you back on the road, but it won’t perform to spec. COVID-19 was a superb demonstration of sudden disruption and transformed businesses were far better positioned to continue with just that, business.”

Adaptive infrastructure and ICT practices were what defined success in the pandemic, not just planning for a global crisis. Businesses with this level of flexibility are much better positioned to take advantage of new market opportunities, regardless of whether these opportunities are taking place in a pandemic or not. Thanks to cloud transformation, these organisations are more agile and more robust, however, it is worth noting that the business should not forgo additional continuity investments. While the cloud is uniquely suited to providing continuity solutions in a landscape that is consistently evolving, there is still the need to protect data, provision fail-over resources, and regularly test capabilities. No one system is infallible, failover is essential.

“There are several cloud applications that should be the focus of any investment with regards to building business resilience,” says Tullett. “ERP solutions offer a big win and CRM and HRM platforms are currently taking the lead in cloud transformation as well. There are numerous advantages to adopting new solutions and extending existing applications with new capabilities.”

These investments not only layer on resilience but allow for richer scope and scale when it comes to connecting partners and third parties, applying deeper data analytics, improving user experiences, and providing automation and remote infrastructure management. Having the capability to do all this without interruption during a crisis is immensely valuable, and it can consistently empower the business outside of crisis conditions. For the front office, productivity should be at the forefront of the business strategy. Cloud investment can provide users with access to modernised front-end services that are accessible from any device with streamlined interfaces that integrate multiple data sources and services. It is all about interconnectivity and data relevance, and the cloud brings these together, seamlessly.

“Cloud was invariably central to the process of organisations reinventing business processes and accelerating digital transformation during the pandemic,” concludes Tullett. “It is underpinning transformation if done intelligently and if aligned with best practice. The risks in the cloud are like those in the non-cloud world, so focus on minimizing security risks, strategic investment as opposed to innovation and hype, and trusted partnerships.”

Cloud does not remove the need to invest in basic disaster recovery and business continuity solutions, it just makes it easier to evolve these in concert with the rest of the organisation’s infrastructure. This is not the great panacea that will solve all enterprise problems, but it is an intelligent and customisable resource that can put the organisation on the fast track for innovation, disruption, and transformative infrastructure.

Jon Tullett is the Research Manager for IT Services at International Data Corporation (IDC) South Africa.

Hyperscaler, Neutral Carrier, Cloud Player, the 2021 Datacentre Trends, IDC

Datacentres will undergo significant change in 2021. There has been a revolution in behaviours and approaches that is shifting investment and innovation, and how datacentres provide services and provision for data and compliance.

According to Sabelo Dlamini, Senior Research and Consulting Manager, IDC Sub-Saharan Africa, some of the trends include the growth of the hyperscaler, continued reliance on the carrier-neutral datacentre, and a focus on performance and quality as data becomes increasingly invaluable.

“In addition to the introduction and expansion of hyperscalers such as Amazon, Google, and Microsoft, there will also be growth in the carrier-neutral datacentre for cross-connect services, meet-me rooms, and internet exchange points,” he adds. “This is because we are expecting a growth in traffic volumes due to changes in enterprise processes and consumer behaviour because of COVID-19.”

The carrier-neutral datacentre is likely to become key in developing fair playing fields, particularly for smaller internet service providers (ISPs), to have access to different interconnection points and internet exchange points. As emergent technologies such as artificial intelligence (AI), the Internet of Things (IoT), and robot process automation (RPA) continue to cement their scope and capability, demand for datacentres will increase, as will the volumes of data generated by the enterprise.  Cloud computing demand will continue to rise, as will the adoption of AI and IoT services that are hosted in the cloud, and this will put a heavy reliance on datacentre capability and ubiquity.

“Mostly everyone will be moving to the cloud so it is critical for every organisation, especially larger enterprises, to see how these changes can impact their business process in the near future, and start to prepare for it,” says Dlamini. “Even if your business is not planning to move, or you think your organisation won’t be affected, your key clients might be moving, and they may expect your processes to be cloud-ready. This is the right time to develop a cloud-ready or digital strategy that ensures the company can survive this transition.”

Everybody is transforming. Competitors, clients, and governments. It is time to ensure that the organisation has the right tools in place to fully leverage the potential of cloud, technologies such as AI or RPA.  This trend towards cloud-ready, digital-native organisation reliant on robust datacentre capabilities, will be further influenced by an increased demand for improved performance and quality of service that will push the datacentre further into the spotlight, and into the critical heart of the organisation.

“There will be a growing need for distributed content delivery networks, and these need to be hosted in regional or local datacentres that are closer to end-users,” says Dlamini. “Additionally, we will see an increased expansion of existing datacentres locally to cater for the growing legal requirements for data to exist within the country.”

On the hyperscaler frontier, the growth and expansion of Amazon, Google, and Microsoft is likely to remain a key driver impacting all these trends. These giants of cloud will continue to evolve their services and reach, allowing for the organisation to reach deeper into its cloud investment and squeeze out every last virtual drop of potential.

“The datacentre trends of 2021 are driven by the need to ensure that organisations have systems and processes in place that are cloud-ready, that can cover both on-prem and off-prem cloud investment, and that can fully support the hybrid cloud model that many sectors require,” concludes Dlamini. “These factors will shape how the datacentre evolves over the next 12 months and it is very likely that continued innovation and investment will further shift the capabilities of the datacentre and how the organisation can benefit from them.”

Cloud IT infrastructure revenues decline amid a slowdown in overall spending, IDC

According to the International Data Corporation (IDC) Worldwide Quarterly Cloud IT Infrastructure Tracker, vendor revenue from sales of IT infrastructure products (server, enterprise storage, and Ethernet switch) for cloud environments, including public and private cloud, declined 10.2% year over year in the second quarter of 2019 (2Q19), reaching $14.1 billion.

 IDC also lowered its forecast for total spending on cloud IT infrastructure in 2019 to $63.6 billion, down 4.9% from last quarter’s forecast and changing from expected growth to a year-over-year decline of 2.1%.

Vendor revenue from hardware infrastructure sales to public cloud environments in 2Q19 was down 0.9% compared to the previous quarter (1Q19) and down 15.1% year over year to $9.4 billion. This segment of the market continues to be highly impacted by demand from a handful of hyperscale service providers, whose spending on IT infrastructure tends to have visible up and down swings.

After a strong performance in 2018, IDC expects the public cloud IT infrastructure segment to cool down in 2019 with spend dropping to $42.0 billion, a 6.7% decrease from 2018. Although it will continue to account for most of the spending on cloud IT environments, its share will decrease from 69.4% in 2018 to 66.1% in 2019. In contrast, spending on private cloud IT infrastructure has showed more stable growth since IDC started tracking sales of IT infrastructure products in various deployment environments.

 In the second quarter of 2019, vendor revenues from private cloud environments increased 1.5% year over year reaching $4.6 billion. IDC expects spending in this segment to grow 8.4% year over year in 2019.

Overall, the IT infrastructure industry is at crossing point in terms of product sales to cloud vs. traditional IT environments. In 3Q18, vendor revenues from cloud IT environments climbed over the 50% mark for the first time but fell below this important tipping point since then.

 In 2Q19, cloud IT environments accounted for 48.4% of vendor revenues. For the full year 2019, spending on cloud IT infrastructure will remain just below the 50% mark at 49.0%. Longer-term, however, IDC expects that spending on cloud IT infrastructure will grow steadily and will sustainably exceed the level of spending on traditional IT infrastructure in 2020 and beyond.

Spending on the three technology segments in cloud IT environments is forecast to deliver growth for Ethernet switches while compute platforms and storage platforms are expected to decline in 2019.

Ethernet switches are expected to grow at 13.1%, while spending on storage platforms will decline at 6.8% and compute platforms will decline by 2.4%. Compute will remain the largest category of spending on cloud IT infrastructure at $33.8 billion.

Sales of IT infrastructure products into traditional (non-cloud) IT environments declined 6.6% from a year ago in Q219. For the full year 2019, worldwide spending on traditional non-cloud IT infrastructure is expected to decline by 5.8%, as the technology refresh cycle driving market growth in 2018 is winding down this year. By 2023, IDC expects that traditional non-cloud IT infrastructure will only represent 41.8% of total worldwide IT infrastructure spending (down from 52.0% in 2018). This share loss and the growing share of cloud environments in overall spending on IT infrastructure is common across all regions.

Most regions grew their cloud IT Infrastructure revenues in 2Q19. Middle East & Africa was fastest growing at 29.3% year over year, followed by Canada at 15.6% year-over-year growth. Other growing regions in 2Q19 included Central & Eastern Europe (6.5%), Japan (5.9%), and Western Europe (3.1%). Cloud IT Infrastructure revenues were down slightly year over year in Asia/Pacific (excluding Japan) (APeJ) by 7.7%, Latin America by 14.2%, China by 6.9%, and the USA by 16.3%.