Tech Trends: The Cloud and Your Business Operations
In mid-October, Gartner released its top 10 biggest technology trends for 2023 and beyond. Not surprisingly, cloud computing is listed as one of the strategies that will allow businesses to scale with simplicity and efficiency. Even from its earliest days, proponents of the cloud touted cost savings, ease of use, scalability, and a shared responsibility model to facilitate secure computing.
And while cloud adoption is at an all-time high, use of cloud isn’t without its trade-offs. One organization, HEY, a global email application provider, has stated that it will move away from the cloud precisely because its promises have reached their tipping point.
Looking ahead, cloud will continue to be a major part of enterprises’ operating models. But here’s what you might want to consider as you build out your own 2023-and-beyond operating model.
Most people today consider cloud computing to be a relatively new technology, one that has been widely available only for the last 20 or so years. And while cloud computing in its current iteration aligns with that notion, the fundamental capability dates back to 1963 and a DARPA-funded project. Initially, the aim of the project, granted to engineers at MIT, was to create a computing space that could be “used by two or more people, simultaneously.” This simplistic functionality was groundbreaking at the time.
Since 1963, however, there have been many advancements in cloud computing, and what we think of today as “cloud computing” is far more advanced and feature-rich. This more-modern concept of cloud took hold in 2006, coinciding with Amazon’s public launch of Amazon Web Services (AWS). Prior to that date, throughout the 1970s, 1980s, and early 1990s, cloud-like capabilities were used by a select few.
With Amazon leading the way, other cloud providers emerged on the scene and businesses were eager to learn about this “new” technology. By 2008, when the idea of “private cloud” was introduced, business leaders were intrigued. And the providers took note. Their marketing materials honed in on benefits revolving round economies of scale:
No more expensive hardware to buy, build, or maintain
No more guessing at how much hardware you’ll need; only rent the space you need, when you need it
Free up people resources for projects that can’t be outsourced
Speed your time to market by eliminating cumbersome and inflexible hosting requirements
Gain a flexible computing environment that allows for greater business agility
Since 2008, cloud has taken hold in a big way; business leaders have consistently touted the cost and efficiency benefits of cloud usage, and security vendors have been diligently developing products to improve security control for the parts of cloud environments for which they are responsible. Technology practitioners, too, have benefitted, as new jobs and new responsibilities have emerged as a result of cloud adoption. Roles that didn’t exist ten years ago are now commonplace, and they offer some of the highest salaries in the industry.
Managing YOUR cloud
But managing the cloud isn’t without its aches and pains, its trade-offs and compromises. For one thing, the shared responsibility model necessitates that cloud consumers play an active part in security, configuration, access control, and data management. Further, attending to these responsibilities isn’t administration-as-usual. Working with cloud requires a new set of processes and capabilities, so it’s not as if a company can take a traditional network engineer, plop them into a role, and let them do their thing. Many smart engineers (and other job titles) have done this, of course, but learning-as-you-go isn’t optimal. In many cases, it has been necessary, but the costs and aggravation always add up.
For another thing, cloud consumers are highly dependent on cloud providers to keep their environments available and secure. A single point of failure is the longtime concern of security professionals.
And then there are the cost considerations. “Savings!!!” has been a battle cry since the cloud’s introduction to the modern enterprise, but industry players paying close attention have been firing warning shots for years. Yes, you can save budget on hardware. Yes, you can save on maintenance costs. Yes, you can even save on electricity and building fees. But you still need to employ a knowledgeable person to be your internal champion and watchdog. And that’s on top of the staff needed to fill internal roles in cloud networking, engineering, and development.
If your company is on the lower end of the cloud usage spectrum, your consumption costs will be lower and thus justifiable. As a company grows, though, consumption costs become more irregular, and the surging can come as a great surprise to many organizations, especially those with siloed IT/security/development teams and where individual business units are empowered to make autonomous decisions about what they can put in the cloud. At this mid tier, companies may find themselves caught with higher-than-expected monthly bills, and it’s not until someone in procurement or accounts payable flags a problem that the company is even aware of the total expenditure.
Bucking the cloud migration trend
It’s this mid-tier conundrum that led email provider, HEY, to decide to pull out of the cloud entirely, deciding instead to put more resources into on-prem management. The company did the math and decided that the costs and complexity of the shared responsibility model are not in its favor. For HEY, this is the right decision, because it’s based on an individual assessment of business needs and capabilities (including budget). It’s relying on the belief that they will be able to staff the company’s networking team to manage and maintain internal data centers 365x24x7. It’s trusting that, as the company scales, it will be able to innovate as quickly as the monster cloud providers (who have the money and reputations to attract and retain some of the best and brightest talent in the industry).
Undoubtedly there were many many discussions before HEY decided to buck corporate trends and pull out of the cloud. But most companies won’t be pulling out of the cloud any time soon. Since the start of the pandemic, cloud adoption has skyrocketed. The need to adjust for a highly fragmented and distributed workforce pushed hesitant companies to the cloud faster than any previous time in history. Access, speed, flexibility, scalability, high availability, collaboration, backup and recovery, and, yes, security, —these issues and more were all covered by cloud usage in the face of a dire situation. And companies that realized some of these benefits of cloud over the last few years are now converts.
Venture capital firm, Accel, says that companies have migrated 40 percent of their workloads to the cloud already. Gartner calls industry cloud platforms a strategic imperative for business innovation. Forrester predicts that 40 percent of companies will take a cloud-native strategy in 2023. So skies are certainly looking cloudy ahead. But Forrester also warns that companies will need to keep a keen eye toward cloud cost management, which is apparently what HEY did well before any analysts said it was OK to do so.
And although cloud usage is part and parcel of most companies’ operating models, some businesses have decelerated migration in recent months. According to an assessment by Tomasz Tunguz, a venture capitalist at Redpoint, while cloud usage and spending remains more popular than ever, all three major cloud providers—AWS, Azure, and GCP—experienced a significant slowing in their rate of growth over the last four quarters. This could be because companies adopted cloud resources so quickly during the pandemic that, now, there’s simply a leveling off. It could be because companies that adopted cloud are taking a wait-and-see approach to cloud management. Or it could be that companies new to the cloud or that have consequently more cloud use than before the pandemic are reckoning their internal processes. It’s hard to tell without further study, but a 25 percent decline in cloud providers’ growth rates is noteworthy.
The future of cloud and your company
Debating this topic on October 27, 2022, with Tyler Shields and Matt Alderman, my co-hosts on Enterprise Security Weekly, we bantered about industry trends and business decisions. Why is it such big news when one company says they’re pulling out of the cloud? Probably because everyone else is streaming in the other direction. There will be some industry professionals who posit HEY’s slow and painful death as a result of their decision to move away from the cloud. There will be others who cheer them on for their courage. And there will be others, still, who quietly lament that they cannot make that business decision for themselves….because the analyst firms say, “Cloud is on the rise! Look at all the cost savings and business advantages you’ll realize in the cloud!”
But the real conclusion here is that running a business is not a trend. Running a business should not be a herd decision. Of course there are industry, consumer, and technology trends that affect what a business can do. When it comes to technology, that’s 100 percent what digital transformation is about—offering innovative options. The key word being “options.” Just because an option is available, though, that doesn’t make it right for every business. In some cases, certain technology becomes obsolete and is therefore not viable to sustain a business. If a business chooses to stick with that option, then…well, they may very well fail. However, in the case of cloud or no cloud, we’re not talking about switching back to some antiquated method of computing. We’re simply talking about a company that can run—or believes it can run— just as effectively as outsourcing the computing platform.
This should not be considered a bold decision. As long as the decision was predicated on thoughtful planning (which, for HEY, it appears to have been), it should be considered smart, because it takes into account business needs, context, capabilities, funding, strategic planning, and desired outcomes.
Cloud consumption considerations
The takeaway, then, should be for all companies to think about their cloud strategy in a similar way: What do we need to run the business? How will we get there effectively and efficiently? What resources do we have? Which ones do we not have that we need, or that can get us there faster and more efficiently, with greater ROI? What are the business risks associated with implementing certain technologies/processes over others? What are the business gains associated with the same decisions?
I, personally, don’t believe HEY posted the company’s cloud strategy (anti-cloud strategy?) for shock and awe. Sure, it earns the company a bit of media buzz. Still, I think someone there decided it would be worthwhile to urge companies to think about how they run their businesses, what makes sense for them instead of simply following the herd. This is a worthwhile exercise. This is smart business decision making. Cloud will continue to dominate companies’ operating models; the economies of scale are too big for most businesses to ignore. But for a certain segment, it may very well make sense to keep the balance of on-prem and cloud that already exists, or even pull back to a degree. No one, no industry watchers or trend setters, can or should make that decision for a business. It’s a cost and capability calculation that each company needs to make individually.