According to a recent report released by Infosys, the purpose behind cloud expenditure has undergone a significant shift. The report, titled “Cloud Radar 2023,” highlights that the utilization of cloud resources has evolved beyond mere storage and cost reduction. Companies are increasingly leveraging cloud services to access cutting-edge technologies like artificial intelligence (AI). This shift is driven by a desire to unlock new revenue streams and modernize existing systems.
This year, 67% of companies have raised their investments in cloud services, with 80% planning to further increase their spending next year. Additionally, they are expanding their pool of cloud vendors. This trend is expected to escalate as cloud-powered AI and industry-specific solutions continue to advance.
Although expenditure on cloud services remains substantial, its actual utilization remains comparatively low. Out of the cloud commitments made by companies, only 47% are currently being leveraged. The report reveals that 12 cloud and cloud-based software providers report that the over $300 billion in corporate cloud commitments are unused. This presents a potential issue, as companies that fall short of meeting their cloud contract obligations may face elevated costs when renegotiating contracts with cloud providers.
The report also highlights that over half of the companies admit to encountering difficulties in effectively managing costs within this multi-provider environment.
How to effectively leverage cloud in the new era
To help enterprises make the most of their cloud investments, the report proposes three key strategies:
- Master Monitoring and Prediction
Enterprises must address the critical challenges of cloud cost management and compliance by establishing robust governance and cost guidelines. This is particularly crucial in the face of a rapidly expanding and increasingly complex cloud landscape, with the integration of technologies like generative artificial intelligence, internet of things, data analytics, and more.
- Embed the Business Case into Cloud
The report highlights that many companies add cloud resources without a clear business case. Only 21% of respondents reported consistently having an approved business case for cloud adoption. Cloud adoption must align closely with the overall business strategy. Building a transparent, agile, and collaborative relationship between IT and business units can foster accountability and improve return on investment.
- Adopt a Value-Centric Cloud Operating Model
A value-centric operating model enables teams to track the flow of value, establish alignment, and encourage engagement around measurable objectives. It encompasses six essential elements: value-based delivery, a customer-centric outlook, diverse ways of working, strategy alignment, an engineering mindset, and a focus on innovation.
By implementing the suggested strategies, companies can not only optimize their cloud investments but also position themselves for greater success in an increasingly digital-centric business environment.
Source: Infosys
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