New research from CDW reveals that organizations are becoming very comfortable with the cloud. They are managing their cloud environments effectively and driving innovation. But experts warn IT leaders to avoid complacency as they make investments in the cloud.

“Organizations have had success in the cloud, and they’re comfortable migrating important workloads to public cloud providers,” said Roger Haney, CDW’s chief architect for software-defined infrastructure. “But they should be careful not to get complacent, because the cloud is evolving very rapidly along with other technologies. The public cloud capabilities of today are much more advanced than 10 years ago. If they don’t keep pace with this change, they may get left behind.”

In June, CDW surveyed more than 900 IT decision-makers, including senior executives and IT personnel from a variety of industries. With its research, CDW aims to provide a deeper understanding of how organizations are having success in the cloud and deliver insights that can help IT leaders continue to mature in their use of cloud services.

“By doing this foundational research, we really get to understand what our customers are facing and what their strategies are for the cloud,” Haney said.

As the IT landscape continues to evolve, organizations must maintain their momentum. They can rely on the cloud to support their IT needs consistently and efficiently, and they can use it to drive innovation via emerging technologies such as artificial intelligence. However, to take advantage of these benefits, their cloud strategies must reflect the rapid advances of technology as well as accelerating changes in business objectives and practices. Further, maintaining trust in the cloud requires organizations to address significant security issues.

CDW found that 88% of respondents said they were able to effectively manage their cloud environments, including 50% who said they were able to do so “very effectively” and 38% who said “somewhat effectively.”

Cloud management solutions appear to play an important role in organizations’ growing comfort with their cloud environments. In fact, of the respondents who said they could effectively manage their cloud environments, 68% cited cloud management platforms as a key factor. Further, 64% cited the cloud management skills of in-house staff, while 58% cited cloud management services from a third party.

“I’m not surprised that people feel they can manage the cloud effectively, because the cloud management tools are fantastic,” Haney said. “They’ve gotten so much better and easier to use.”

CDW’s research reveals that organizations have become comfortable moving numerous workloads to the cloud. More than 36% of organizations have moved one-quarter to one-half of their applications to the cloud, while an additional 35% have moved between one-half and three-quarters. Further, 68% plan to move at least one-quarter of their remaining on-premises applications to the public cloud over the next three years.

As organizations grow more comfortable with the cloud, they must still approach it strategically. Successful organizations may find new ways to harness the cloud’s flexibility.

“Previously, many organizations took their on-premises bad habits and moved them to the cloud,” Haney said. “The people who are starting to see benefits are the ones who have gone from lift-and-shift activities to lift-and-improve activities. Then there’s still a whole step to go, in which we modernize their workloads and move people into a cloud-native mindset.”

For many organizations, the most strategic option is to establish a hybrid cloud environment that places some workloads in a public cloud while locating others on-premises or in a private cloud. Business objectives should be the primary factor for IT leaders in determining where to place workloads within a hybrid environment.

“Decide based on whatever motivates your business or that particular workload or application,” said Dee Baker, a senior manager for CDW Advisory Services. “Is it end-user experience? Is it availability? Is it cost? Organizations should let the needs of the business and the requirements of the application decide where it sits.”

A majority of IT leaders indicated that strategy is essential to successful cloud management, with 63% of respondents citing the lack of cloud governance or strategy as a key factor that hinders their cloud management efforts.

IT and organizational leaders also need to understand that a cloud strategy must offer flexibility. New advances in technology arrive constantly, along with changes in the business landscape. An effective cloud strategy is one that can adapt and help organizations keep pace.

“It’s a living thing, and you have to be willing to pivot. The only thing constant about technology is change,” Baker said. “Be prepared to readdress your strategy because your business needs have changed. What you set out to do under the last CIO may need to be updated.”

Organizations appear to be having some success in finding cloud strategies that work for them. Nearly three-quarters of respondents said the benefits of the cloud have lived up to their expectations, with 38% saying the benefits have been what they expected and 35% saying the benefits have surpassed expectations.

Respondents most frequently cited greater reliability and recovery capabilities as a business benefit their organization has received from the cloud (57%), followed by greater access to data and applications for remote users (55%) and increased agility and efficiency (51%).

“There are so many more tools and options, and so much more is cloud-native than it was 10 years ago,” Baker said. “As a result, organizations benefit significantly more from increased business continuity, recovery capabilities and access to data.”

Still, some organizations are reluctant to engage with the cloud. About 19% of organizations have moved less than one-quarter of their applications to the public cloud. And among those struggling to manage their cloud environments, 61% cited a lack of on-staff skills as a key hindrance.

This likely stems from insufficient support from senior leadership within those organizations, Haney said. CDW can help IT teams convince organizational leaders of the cloud’s value and break through inertia that has them locked into old ways of doing business.

“They need to have the flexibility, the scalability, the availability — everything we promised them about the cloud. They need the security and the governance, but this is a complex problem,” Haney said. “We’re best aligned to help them think through that strategy. We can help them accomplish things that move the whole business forward through strategically addressing those elements and coming up with a plan.”

As organizations move more workloads into cloud environments, spending has become a focal point. Nearly 32% of those surveyed said their organization spends $50,000 to $99,999 per month on cloud services, while 30% spend $100,000 to $499,999, and 5% pay $500,000 or more.

Because organizations pay for cloud services as an operating expense rather than a capital expenditure, many find this model more flexible.

“With the OPEX way of purchasing, if you can align your purchasing with your revenue creation on a monthly basis, it can help you avoid large spikes in capital expenditures,” Haney said.

As they improve their cloud maturity, organizations can look for more ways to drive cost savings. “I love the cloud,” noted one survey respondent, an IT executive at a small manufacturing company. “It’s cheaper and boosts productivity in the department where we are having systematic problems.”

The cloud spending model also provides an avenue for IT teams to scale services to meet unexpected spikes in demand. 

“The ability to scale rapidly without the restrictions of supply chain issues and procurement hoops to jump through is very important,” said David Wharton, co-founder of the FinOps practice at CDW. “It’s really about scaling based on need, and you’re not paying the maintenance, the physical power or the systems administration costs associated with maintaining that.”

A large majority of respondents said they have clear visibility into their cloud spending. Overall, 86% of respondents said they are confident in their ability to track the costs of their public and private cloud systems, with 47% saying they are very confident and 39% saying they are somewhat confident. However, they might need more than visibility to get the most value from their cloud investments.

“They may be confident in their ability to track their costs, but not everyone knows the best practices to control their costs,” Haney said. “We can often help customers reduce their spending in ways they are not considering.”

Wharton recommends that organizations adopt FinOps practices to gain better control of their cloud costs. FinOps refers to an operational framework that helps organizations manage their cloud costs more effectively by aligning spending with business goals. The practice requires collaboration from various internal teams, including finance, operations and engineering personnel.

FinOps enables organizations to break down cloud spending to see how specific workloads are using certain services. By determining their cloud costs so granularly, organizations can find opportunities to use microservices that can shrink their costs significantly. To maximize savings, IT teams should implement FinOps practices before migrating workloads.

Wharton advises organizations without FinOps experts on staff to get assistance from a third-party provider. “Organizations should absolutely seek outside help, because you can’t always see the forest through the trees,” he said.

CDW uses its experience to create a checklist of more than 150 elements to identify where savings may be found. CDW experts can also help IT teams reduce their cloud bills through steps such as committed use discounts and business scripting to ensure that organizations are spending only on resources they’re using.

The cloud has emerged as a powerful tool as organizations across industries seek to innovate. Artificial intelligence is moving into widespread use, but organizations need to take it to the next level to stay ahead of their competitors.

In the CDW survey, 68% of respondents said their organizations are using AI, with 53% of them running AI workloads in a hybrid cloud environment. However, using AI is only the first step. Organizations must determine how they can expand their initial AI use cases to meet customer demands and develop new services.

“I think everybody’s dabbling with science experiments in AI, but how many of them are doing it at scale?” Haney said. “How many are building products around it? How many are using it to write code?”

When asked about the biggest challenges they face in using AI, 45% of respondents cited the need to assure the quality of data for AI applications, and 43% cited the cost of AI technology.

Numerous respondents indicated that they still face hurdles before they can take advantage of the promise AI offers. More than 32% said their organizations are not currently using AI. Of those respondents, 51% cited concerns about privacy and data security.

Haney said a partner such as CDW can assist organizations in tackling their AI issues. “We’re helping people use AI,” he added. “We’re doing a lot of assessments to help them understand the governance and what their data is going to do.”

CDW’s research suggests that many organizations are focusing their AI initiatives on the simplest applications first. When asked how organizations are using AI, customer service applications were the most common answer, followed by data analysis and the automation of repetitive tasks.

“We have more and more customers asking us which use cases are going to deliver the greatest return on investment,” Baker said. “They want to get enough ROI to prove the next use case, then the next one. That’s really the problem we’re solving for quite a bit lately.”

Security represents a significant challenge for cloud users, but respondents also recognize the security benefits that cloud providers offer. In fact, when asked what reasons would lead their organizations to keep an application on-premises rather than in a public cloud, respondents most frequently cited security as their top consideration (35%). Further, security and privacy concerns were the most commonly identified challenge across respondents’ public and private cloud systems, cited by 40% of respondents.

The research further suggests that security remains a limiting factor in many organizations’ cloud strategies. Roughly 84% of respondents said they had moved workloads to the cloud only to move some back on-premises. Security concerns were by far the most common reason for this cloud repatriation, cited by 68% of respondents. Haney suspected that for many, these concerns involve challenges in integrating an organization’s security policies with a cloud provider’s security controls. In some cases, it may just be simpler to move workloads than to adapt the organization’s security policy to the cloud.

Data breaches ranked as the most common security threat cited by respondents, with 24% saying it was their biggest threat.

CDW experts note that humans remain the greatest vulnerability in most organizations’ security posture, regardless of whether the systems being secured are on-premises, in the cloud or on a user’s mobile device. 

“For data breaches, ransomware and malware, humans are the weak link,” Haney said. “Ninety percent of your security spending won’t really help unless your people are taught not to get phished and to identify social engineering attacks.”

However, many respondents perceive the security capabilities offered by cloud providers as a strength. More than 48% of respondents cited improved security as one of the business benefits they have received from the public cloud.

“People now understand how cloud security works. It’s much more of a whitelist security capability,” Haney said. “You have to define what you allow through instead of what you deny. As people start to understand it, they see that it works differently, but it works just as well.”

Wharton added that the defense measures cloud providers offer can enable organizations to establish an effective security posture. Native dashboards can help IT personnel quickly determine whether systems are in compliance with security mandates, spot vulnerabilities and identify misconfigurations. Many cloud platforms also automate these tools, reducing the demands placed on in-house IT staff for both security and compliance.

The percentage of respondents who cited
improved security as one of the business benefits
they have received from the public cloud

Further, most of these features come standard as part of overall cloud services. “I don’t think any of the major cloud providers charge extra for the security view,” Haney said. “They need people to feel comfortable with the security of the cloud.”

As organizations continue to mature in their use of cloud services and resources, insights from other companies can help them find the best path forward. Ultimately, CDW’s research offers a look at the challenges organizations are facing in the cloud and suggests strategies that can help them overcome these hurdles.

“This survey really affirms the conversations that we’re having with customers today,” Haney said. “It’s easy to say that your organization has a cloud strategy and everything is moving to the cloud, but it’s a much harder thing to do.”