Australia’s digital transformation: Can’t sweat it? Don’t sweat it

Cloud computing has become big business in Australia, with companies choosing short-term cost and convenience over long-term control in a market expected to hit AU$6.5 billion by the end of the year.

In the sharing economy, the concept of renting IT infrastructure – essential to power even the most basic functions in a business, like email - is still relatively new and has only been available during the economic good times in Australia.

The model is simple: public cloud providers offer the ability for enterprises to "outsource" their IT systems (and in some cases, departments) to a vast cloud network.

By renting a public cloud, the client pays a set-up fee and then a core monthly subscription.

Additional services come at a cost and may be temporary or permanent.

This model avoids companies spending millions of dollars upfront on IT infrastructure and personnel instead spreading the cost over a longer period.

But as the threat of an economic slowdown looms, businesses may have cause to sweat, because the billions they're investing in cloud services don't leave them with any assets to sweat for themselves.

You can't sweat the cloud

In tougher times, we tend to draw out the inevitable: the car that is usually replaced every two-or-three years, is held onto for five, or more; the home repairs get delayed because we can manage without them; clothes get a few more wears before they're ditched, and the desire to replace them with the latest brands trickles away.

This is sweating an asset.

It's a survival instinct.

We can do this because we have purchased the items outright – and so the power to replace, renew or retain rests with us.

It's why ownership, and the desire for it, is still so common at a time when you can rent or lease virtually anything.

Up in the cloud, it's a different matter.

What may have seemed a short-term benefit may soon change: a monthly subscription from a public cloud provider may suddenly turn to bill shock after the realisation that it can't be turned off on demand, and the bills are not paying for a tangible asset you can fall back on.

Turning the tap off completely is tricky too – public cloud contracts tend to have an element of Hotel California about them.

 The more data you have in the cloud, the more difficult it becomes to exit.

And you can't just cut ties to this data completely, you're dependent on it; it's running your emails, sales, financial software and whatever else you've handed over.

In what may be a trend that comes back to haunt Australia's businesses, many are unconditionally reacting to cloud popularity. Recent research by Gartner indicates more than 30% of new software investments by technology providers will shift from 'cloud-first' to 'cloud-only' - making the public cloud the only hotel in town.

How we got here

The insatiable appetite for cloud has come, in part, from businesses and technology professionals being frustrated with managing an increasingly complex IT infrastructure.

The expensive, inflexible, bulky equipment, the huge number of vendors and solutions, and the management of it has for years consumed vital resources executives would prefer directed at more valuable front-line business activities.

For the IT departments, the constant firefighting, late nights, weekend upgrades and dealing with the high expectations of management and staff has demoralised a function once prized within the organisation.

And as for value or ROI (Return on Investment), traditional hardware requires 'refreshing' or replacing every three to five years or so, presenting a prime example of tied-up capital and inflexible hardware.

Given the scale and scope of appliances and solutions, modern data centers are less integrated and more 'patched' or cobbled together.

With the cloud, you get the latest upgrades and efficiencies without the headache.

So, problem solved?

Not really – because some of the same bright people that created the public cloud realised that same technology could be brought back into the enterprise, allowing them to minimise the pain and headaches associated with traditional infrastructure.

Enter HCI (Hyperconverged Infrastructure) and private cloud.

With HCI, the dependence on hardware is minimised, as software and applications can be added or upgraded using a pay-as-you-go (or grow) model, which means businesses need not be stuck with outdated hardware.

So, if times are tough, there are assets available for you to sweat.

And don't take just my word for it.

There has been a spate of recent announcements by major public cloud players as they shift away from their 'public cloud only' stated positions and begin investing in and providing hybrid technology and partnerships.

It seems that they too have realised that to get the maximum value for your business from your infrastructure, requires a balanced portfolio.

There are several positive elements to public cloud, but the most basic tenet of business still holds true: don't put all your eggs in one basket.

As modern compliance and data sovereignty laws increase and strengthen, they limit the permissible use of the public cloud, even if its rental model did add up.

In this age of exploratory technology investment, where businesses are experimenting with chatbots, artificial intelligence (AI), internet of things (IoT) and more, the public cloud serves a great but limited purpose.

As new digital services are launched, it's often unclear what IT resources will be required to manage them, or whether those services will even still be around in a year's time.

Investing in infrastructure for that kind of purpose is like buying a season ticket for a sport you've never seen before, or a gym membership you'll likely never need.

Public cloud is an ideal platform to try these, and other inelastic services, while keeping your secure and proprietary information in-house.

You get the benefits of public cloud without the restrictive pricing, and the reassurance and security from holding the keys to your family vault, as well as the ability to make your technology go that little bit further if need be.

Businesses are always trying to get the right balance between capex and opex to maximise ROI.

As the global slowdown continues, having the freedom and flexibility to mix, match, and tailor the ideal structure for your business will help drive confidence and reassurance as well as weather the coming storm.

Hybrid cloud? Don't sweat, or perhaps do. It's your choice!