At a time when cloud spends of enterprises is under stress in a complex macroeconomic climate leading to an uncertain demand environment for IT companies, a report by Infosys’ research arm said that cloud spends are high, but its purpose has shifted.
The report, titled Cloud Radar 2023, says that while spending remains high, its utilisation is still low. It states that over $300 bn in Cloud commitments made by companies is untapped as only 47 percent of current cloud commitments are utilised which could pose a problem as companies that that fail to meet their cloud contracts may stare higher costs when cloud providers renegotiate contracts.
However, 67 percent of companies increased their cloud spending this year and 80 percent intend to increase it next year.
Anant Adya, Executive Vice President and GTM Head for its cloud solutions platform Cobalt told Moneycontrol that when customers started to embark on their cloud journey, it was primarily centred around efficiency and cost optimisation.
“Post COVID, more and more customers are rethinking their lock, stock, and barrel migration to cloud approach. They are saying that cloud is not cheap. If you are trying to use cloud as another data centre, you will end up spending much more money than what you're spending on-prem,” he says.
This, in turn, has also led to a question of what is cloud supposed to be used for — “which is global, scalable, elastic, compute for fail fast, learn fast, faster time to market, launching new products and solutions, building better experiences for the clients, getting the value out of the data and those kind of things.”
The report states that cloud and its adoption has reached a tipping point and just like legacy systems, it becomes unwieldy and costly with time, adding that companies risk losing the benefits of the new era of cloud unless they take a new approach to how they manage it. As per the report, roughly 50 percent of companies struggle to manage their cloud costs.
“It has reached a tipping point because cloud is a standard thing in every enterprise today,” says Adya.
“Essentially, where the money is being spent is much more on grow-and-disrupt than just optimise. With Gen AI, I think cloud spends are going to skyrocket, it is not going to slow down. On the core technology side, maybe it is looking like that. But, when it comes to getting the value of data, becoming an AI-first company, I think the only leverage that the customers have is cloud, they have to leverage cloud in a big way,” Adya said.
Adoption of cloud going beyond cost optimisation, used for growth and transformation: Infosys report - Moneycontrol
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