Technology decision makers are developing their cloud strategy arising from digital transformation and artificial intelligence initiatives, but have to deal with the intricacies of managing multicloud environments. They face a predicament regarding cloud complexity that has now reached a tipping point.
As per the 2023 Cloud Complexity Report by NetApp, 98% of businesses report being impacted by the rising complexity of managing data across clouds, resulting in increased cybersecurity risk, a lack of visibility into business operations, and staff burnout.
According to most technology executives, technical and organizational challenges hinder the optimization of multicloud environments. Technical challenges, including data mobility and interoperability across cloud environments, are cited by 88% of tech executives. In addition, 50% of tech executives report facing leadership obstacles, such as a lack of clear vision for their cloud strategy and insufficient leadership buy-in.
Top technical challenges:
- Data mobility between clouds (33%)
- Security & addressing risks (31%)
- Interoperability between cloud services (30%)
Top organizational challenges:
- Having a clear vision for our cloud strategy (32%)
- Establishing the right level of governance (31%)
- Managing costs (30%)
Cloud cost complexity to continue in 2023
- 84% of tech executives are expected to demonstrate a return on investment (ROI) for their company’s cloud spending, either in increased revenue or cost savings, despite cloud environments serving various business needs and priorities.
- Moreover, 76% report that they face skepticism from their CFO, in addition to the pressure to show short-term progress.
As cloud cost complexity increases, this pressure will continue to weigh on tech executives in 2023.
Cloud cost concerns are prevalent in all countries, with skepticism from leadership pervasive across markets. Tech executives in India, Australia/NZ, UK, and Germany report the highest levels of skepticism, while France, US, Japan, and Spain report the least.
- During cloud strategy discussions, almost half of the tech executives (49%) report that cost concerns are frequently raised, with the highest percentage in EMEA at 56%.
- Additionally, 37% of executives report that cost concerns come up sometimes, leaving only 13% of companies where cost concerns are rarely or never discussed.
France, UK, Germany, and Australia/NZ report the highest prevalence of cloud cost concerns, while Japan, US, and Spain report the lowest prevalence.
- Larger companies (54%) and legacy companies (53%) report more frequent cost concerns compared to smaller and newer companies.
- The frequency of cost concerns is also higher in companies where business leaders are extremely or very skeptical about the savings from cloud migration, with 60% reporting that it occurs often or all the time.
The pressure to show ROI is high regardless of company size but is even higher where business leaders are more skeptical.
- Tech executives who report more skepticism from leadership over cost savings (44%) report more pressure to show ROI compared to those who report less skepticism (33%).
Factors driving cloud strategy
Tech executives report that their multi-cloud strategy is largely driven by data sovereignty requirements, with 74% indicating this as a major factor. In addition to complying with local regulations on data collection and storage, sustainability goals are also a top priority, with 80% of tech executives developing cloud systems with these goals specifically in mind.
Data sovereignty – Cloud strategy in all markets is primarily driven by data sovereignty requirements, with most tech executives reporting that staying compliant with local regulations drives their multicloud strategy most or some of the time. The lowest percentage is in France at 59%, while the highest is in the UK at 89%.
ESG and sustainability – ESG and sustainability are also driving forces in cloud strategy, with companies featuring cloud prominently in their initiatives to reduce their carbon footprint across all regions, except slightly lower in APAC at 64%. This adds another layer of demand to the role of the cloud within companies.
Artificial Intelligence (AI) – AI is increasingly supporting cloud deployments, with over a third of tech executives reporting that half or more of their cloud deployments will be supported by AI-driven applications in the next year. This trend is expected to continue growing, with most executives reporting that half or more of their cloud deployments will be supported by AI by 2030.
Scaling AI and automation capabilities to offset workforce gaps (39%), driving business innovation and competitiveness (35%), and creating new digital experiences for customers (34%) are ranked as the top 3 business needs to drive cloud investment in AI.
NetApp has identified a disparity between IT executives and those outside of IT. Those directly involved in implementing cloud strategies are more attuned to the complexities and cost implications of the transition, while non-IT leaders may not fully comprehend these issues. This disconnect presents an opportunity for vendors to develop solutions that address these challenges as they arise or before they occur. By simplifying the process and addressing customer concerns, vendors can improve cloud implementation and adoption.