A survey of 300 CIOs in the U.S. working for organizations with over 500 employees finds 83 percent are on average spending 30 percent more on cloud infrastructure and applications than what their organization initially budgeted for, even as spending levels continue to increase.
Conducted by Azul, a provider of a platform for running Java applications, the survey suggests that CIOs are less concerned about total costs and more focused on maximizing their investments. For instance, the survey highlights several methods for optimizing cloud computing spending: modernizing application workloads for cloud deployment (52 percent), leveraging cloud provider cost management tools (51 percent), utilizing enterprise discount programs (49 percent), tracking and auditing cloud deployments (45 percent), and adopting FinOps best practices (32 percent).
Additionally, CIOs are exploring Java platform options to reduce cloud computing waste (30 percent) and considering alternative chip architectures like ARM for better price-performance (29 percent). The survey also reveals that only 22 percent of respondents plan to repatriate their workloads on-premises to manage cloud costs next year, and just 2 percent indicated that their company leadership advocates a return to on-premises solutions.
Cloud ROI matters more than cloud spend
Managed service providers (MSPs) should recognize a key fact: the primary issue in cloud computing today is not how much organizations spend, but how effectively they utilize that spending. While much of the cloud infrastructure may go to waste, cloud computing still offers a better overall return on investment (ROI) compared to other application deployment methods for most organizations.
The survey highlights that the main business drivers for deploying workloads in the cloud include data analytics and artificial intelligence/machine learning capabilities (42 percent), cost efficiency and lower cost to serve (40 percent), scalability and flexibility (39 percent), employee productivity (32 percent), and business continuity and disaster recovery (25 percent). Other significant factors are competitive advantage (25 percent), sustainability goals (25 percent), and faster time to market (22 percent).
Overall, 80 percent of respondents reported cost savings due to the cloud. More than half (56 percent) indicated that their business leadership supports current spending levels and would approve further increases. However, 43 percent expressed concerns from their CEOs and/or board of directors regarding cloud spending. Among these respondents, 27 percent now require more favorable market conditions to expand their cloud footprint. Only 9 percent are unwilling to approve additional expenses, and 5 percent reported that executive leadership advocates for reduced cloud spending. Additionally, only 17 percent of the CIOs surveyed indicated they had to cut or delay projects.
MSPs play a key role in unlocking cloud value
The challenge is that most organizations still lack the expertise to maximize the returns on their cloud computing investments. Many of those organizations are looking to MSPs and their cloud service provider partners to help them achieve that goal in a way that enables them to deploy more, rather than less, software at, if necessary, modestly higher costs.
The survey reveals that 71 percent of CIOs currently run more than 60 percent of their workloads in the cloud. Furthermore, 42 percent plan to increase that number to between 81 and 100 percent within the next five years. Only 1 percent say 40 percent or less of their organization’s infrastructure and application workloads are in the cloud.
There are still plenty of valid reasons to deploy applications in an on-premises IT environment. However, most organizations will continue deploying software in cloud computing environments, which grow more complex to manage over time.
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