IT decision-makers under pressure to demonstrate public cloud adoption cost savings

Unless you’re an Olympic athlete, you probably don’t want a stopwatch tracking your performance -- pushing you to work harder and move faster. But, according to Six Degrees’ newly published independent research, one in five IT decision-makers at SMEs feel that the clock is on them when implementing public cloud migration projects.

Six Degrees’ UK SME Cloud Intelligence Report 2024 found that the extent to which IT decision-makers feel rushed varies considerably between sectors. Finance and insurance (57 percent), blue light (55 percent) and education (42 percent) are impacted the most compared to those working in government (33 percent), healthcare (32 percent) and manufacturing (29 percent).

Data from the report also suggests these stresses are more likely to impact more junior IT decision-makers, with Heads of Infrastructure four times more likely to feel rushed than CTOs.

Make a plan or feel the pressure!

Thankfully, as we’ll discuss later, there is growing evidence of a more mature approach to public cloud adoption. However, plenty of companies still see it as a cost-saving exercise.

Our data reveals that almost 30 percent of UK SMEs want to adopt public cloud services to reduce capital investment, 25 percent hope to reduce operational costs, and 32 percent aim for improved flexibility (often just another way of talking about cost savings).

These organizations should be worried: Basing a business case for public cloud migration primarily on cost savings is unlikely to save money in the short term. That’s because the application modernization needed to realize savings can be harder to achieve than many people expect and often takes far longer than initially anticipated.

You only have to look at some of the barriers to cloud adoption cited by respondents to see why this might be the case. They include worries about locating apps and data (22 percent), concerns about operational disruption (21 percent) and lack of knowledge (17 percent).

Almost 20 percent also mentioned issues relating to legacy app and data compatibility. This highlights that many applications and associated data repositories need significant updates before they can function in a public cloud environment. Updates such as these are likely to take time and are not always factored into migration project timelines.

Caught out by unexpected costs

Problems surrounding an inability to deliver cost savings can be compounded by poor planning and implementation, both of which may result in unexpected costs and additional expenditure. This is a particular danger for organizations that decide to carry out the migration themselves in an attempt to keep down costs. It’s also a major blow to roughly a quarter of respondents who said they would judge the success of their cloud transformation project based on reduced capital expenditure. 

According to our research, almost eight out of 10 UK SMEs have experienced unexpected costs or budget overruns of this nature. Indeed, 86 percent of business owners, 84 percent of IT Directors and 81 percent of CIOs admit to this issue. In addition, we can also reveal that such overspending is more common in the public sector, with 93 percent of government sector-related SMEs impacted. 

This isn’t only a short-term problem: 73 percent of respondents say their cloud spending will increase over the next 12 months (one in five said it would increase by more than 20 percent). Furthermore, 80 percent said it would increase again in the following 12 months (over half said it would increase by more than 20 percent).

Aligning cloud adoption and business strategies

To be successful, an organization's business strategy and cloud adoption rationale should be aligned. Our research provides evidence that this is starting to happen in some quarters. Here are a couple of examples:

• Respondents said their top objective for the next 12 months is improving security. This aligns with security as the top driver for cloud adoption -- alongside keeping one step ahead of cybercriminals.

• Respondents said their most important objective for the next five years is developing an IT infrastructure that allows long-term hybrid working. This aligns with adopting public cloud services to reduce reliance on on-premises infrastructure.

In addition, a significant number of respondents are implementing public cloud migration projects to access innovative technology (30 percent), adopt new applications that require a hosted environment (30 percent) and improve regulatory compliance (27 percent). Projects such as these are more likely to have a direct, positive impact on business efficiency, customer experience, and staff productivity. Plus, those carrying out the implementation are far less likely to experience pressure to deliver on short-term outcomes.

Take stock on team skills

It’s important to note that we’re experiencing a considerable shortage of cloud engineers and security staff. More than three-quarters of SMEs report facing challenges in recruiting cloud talent. That rises to 81 percent for SMEs in the blue light sector and 92 percent in local or national government.

With no sudden influx of individuals to plug the gap, this situation will likely continue for at least another decade. With that in mind, it could be worth researching a trusted IT partner you can work with right from the outset. Taking this route will ultimately save money. It will also help to better align your business strategy with your cloud strategy. 

Remember, these long-term public cloud adoption projects must be well thought out and planned. They need clear communications at each stage, realistic milestones and pre-defined objectives tied to measurable outcomes. So, if anyone in your organization does pull out a stopwatch, remind them that this is a marathon, not a sprint.

Photo credit: pathdoc / Shutterstock

Chris Jackson is Chief Product and Technology Officer, Six Degrees. You can download a full copy of the Six Degrees UK SME Cloud Intelligence Report 2024 by visiting https://www.6dg.co.uk/whitepaper/uk-sme-cloud-intelligence-report-2024/