With so many moving parts it’s difficult to predict how the cloud industry will evolve in 2023. In this article, Cloudscaler share their 2022 experiences and thoughts on the coming 12 months.
Increasing costs
The cost-of-living crisis and threat of recession are naturally making organisations nervous, all are looking closely at budgets and spend in 2023. Whilst most believe their cloud costs are uncontrolled and rising, generally they are unsure what to do about it. There is good news however, as while companies with a splintered cloud footprint will struggle to consolidate and understand their total cloud cost, introducing simple cloud cost optimisation techniques can see year-on-year spend decrease by more than 40%.
The perception of rising cloud costs won’t slow the move to cloud, with most enterprises still believing that shifting their systems to the cloud will reduce long-term spend, modernise ageing infrastructure and enable them to compete with smaller, cloud-native competitors. However, transformation pace is likely to be impacted by the need for a stronger business case and demonstrable ROI before budget is released.
Cloud chaos
The truth is that few companies have implemented cloud well. In the race to adopt cloud quickly, most have created multiple (often competing) cloud platforms without enforcing cross-platform technology choices and standards. This in-turn has exposed significant risk and resulted in far higher spend than is necessary, introducing uncertainty and subsequently limiting progress toward becoming a cloud-native organisation. The result is cloud chaos, an unclear operating model, technology sprawl and duplication of effort as cloud teams solve the same problems with different solutions. Organisations must tackle cloud chaos as a priority to unlock the true benefits of cloud and transition more rapidly.
Ageing cloud platforms
Those who started their cloud journey 5-10 years ago but have not invested in ongoing maintenance and modernisation will be feeling the pain of an outdated cloud platform and high levels of technical debt. Such organisations are likely to see capacity shortages in their cloud teams throughout 2023, as resources are diverted to upgrade and perform basic maintenance on cloud infrastructure, as opposed to focusing on development and delivery. Failing to invest in modernisation and the latest cloud best practices increases risk, reduces delivery speeds and results in higher run costs.
Sustainability – the ESG agenda
Sustainability remains a key focus in 2023 for both AWS and their clients, many of the announcements at AWS re:Invent 2022 reflected improvements in data centre efficiency (primarily in computing power and cooling). In addition to these gains, AWS customers can make tangible progress toward their own sustainability commitments by making use of efficiency best practices such as switching off environments overnight and at weekends. We have seen that integrating cloud use with ESG initiatives can prove to be a powerful combination.
Time to focus on governance
With a notable lack of major technology advancements at AWS re:Invent 2022, year-on-year leaps in technological advance for cloud could be slowing. We are far from market saturation so cloud adoption will continue to show significant growth and cloud will continue to evolve. However we are less likely to see major new advances. Organisations will be less distracted with the need to adopt new cloud vendor services, providing an opportunity to focus on cloud governance and the cloud operating model, an area which urgently needs attention in most companies.
With the widely publicised slow in AWS 2022 revenue growth against analyst predictions (a new phenomenon for the cloud sector), the focus of cloud providers will rightly be on reviewing internal costs and encouraging customer growth, whilst at the same time protecting their market share. Revenue growth is not a goal but a consequence of ensuring organisations successfully deliver cloud transformation projects – providers will need to help embed cloud as the de facto infrastructure. For many companies, cloud is still considered a future strategic goal they are working toward, rather than an urgent priority and unless this changes, their use of cloud will slow and frustration within development teams will rise.
The people perspective
With customer demand for expert guidance and experienced cloud engineering remaining high, and with the well-documented shortage of cloud skills ongoing, cloud providers will continue leveraging partners to meet demand for increased consumption and professional services.
In the face of an economic downturn large organisations, particularly Big Tech and the financial sector, have been reducing headcount levels. This has quickly impacted the labour market for cloud engineers:
- The recruitment market has switched from being candidate-led to employer-driven –there are more cloud specialists looking for roles than there are roles so the availability of highly-skilled cloud resources has increased. Consequently, following a period of significant increases, salaries appear to be stabilising.
- Many engineers avoided changing jobs during Covid, waiting until lockdown restrictions eased and the first signs of green shoots. Those engineers have now been in a new role for about 18 months and those who aren’t content will start looking to make their next move. Some will decide to stay where they are until fears of recession have played out, but those keen to change will join the number of highly-skilled cloud engineers on the market. Employers will need to work to both retain and recruit – culture is as important as salary. The majority of cloud-engineers will want to be part of a dynamic organisation who are serious about cloud transformation.
Internal cloud training programmes are proving largely ineffective, while they are helping engineers reach a basic level of cloud competence there is no substitute for hands-on learning. Training courses tend to be focused on technical commands rather than cloud best practice – re-trained engineers typically gain new technical skills but continue applying existing practices rather than pushing for the changes in governance and process that are needed to unlock the promises of cloud.
In 2022 organisations were understandably distracted by the problem of an engineering workforce who were pushing not to return to the office. Many organisations have now found a balance while others are still struggling to broker an agreement which works for all. Either way this distraction is fading, companies are returning to their ‘progress’ agenda. Cloud native organisations did well through Covid, continuing to gain market share and accelerate delivery pace – closing the gap on traditional organisations and bringing the transformation agenda back to the table. Traditional organisations must modernise and go faster to catch-up with their cloud native competitors to maintain market share and fight off nimble competitors.
C-suite frustration
There is a growing frustration amongst the C-suite as their organisations are unable to leverage the promises of cloud – they’re faced with a barrage of significant investment requests but at the same time, there is a lack of strategy and roadmap, and demonstrable progress is rare. If anything, delivery pace is actually slower, as organisations attempt to integrate cloud infrastructure and culture into a risk averse, traditional operating model coupled with governance that seeks to enforce control through meetings and checklists. This year there will be a change in approach for many organisations as they will need to take time to step back and reflect on progress to date.
Mitigating risks must be a priority
Moving applications to the cloud in an uncontrolled manner has introduced significant risks for organisations, effectively opening the door to bad actors and ensuring cyber-attacks and loss of client data will remain a consistent theme in 2023. In the longer term, this is likely to lead to increased pressure for additional regulation although that is in itself is unlikely to solve the problem.
Companies will need to implement a robust landing zone with a cloud control framework that mitigates their risks and forces common controls and standards on delivery teams. Once established, the framework will reduce bureaucracy and governance because those with legal accountability can be more confident that good practice and policy are in place and has been implemented effectively. Only then can the speed and benefits of cloud be realised.
Organisations with a mature, well developed cloud strategy will be untangling complex problems the traditional systems integrators are unable to solve. Without the hard-fought experience of implementing and operating a large-scale cloud platform, it’s impossible for some system integrators to see upcoming pitfalls and help clients avoid them. Worse, effort can become focused in the wrong areas and will ultimately hinder progress.
Both challenges and opportunities lie ahead
Where does this leave the cloud industry in 2023? The key themes are likely to be continued demand for cloud transformation and experienced cloud engineers, a focus on cloud costs and potentially a reduction of year-on-year cloud spend. It will be a year where suppliers and buyers will have to work together to realise the benefits of cloud. 2023 provides the perfect opportunity for businesses to look at cloud strategy and operating model with a critical eye to enable greater pace and progress.
Please contact us if you would like to understand how Cloudscaler can help your organisation create a cloud strategy which delivers the promises of cloud infrastructure.
For more information visit: www.cloudscaler.co.uk
Be First to Comment