Australian firms shift to hybrid cloud for AI & risk

Forrester has released new research on cloud adoption in Australia and New Zealand, finding that 93% of Australian enterprises now describe their cloud strategy as hybrid.

The findings suggest the regional cloud market is moving beyond early migration and basic adoption. Organisations continue to use public cloud extensively, but are increasingly spreading workloads across private cloud, colocation and sovereign environments as they balance cost, governance, resilience and compliance.

More than 90% of Australian public cloud decision-makers said their organisations had used public cloud services for at least three years, while more than 60% reported six years or more of experience. That suggests cloud use is now well established across many large organisations.

Artificial intelligence is one of the main forces shaping the next stage of spending and architecture decisions. Australian organisations still use public cloud primarily to rapidly procure new services, cited by 44%, followed by access to specialised infrastructure and services at 40%, and application modernisation at 35%.

As AI workloads expand, businesses are placing greater emphasis on controls around data management, governance and compliance. That shift is changing how technology teams decide where applications and data should reside.

Hybrid shift

Rather than treating cloud as a single destination, many organisations are following what the report describes as a right workload, right place model. In practice, that means choosing public cloud, private cloud or other infrastructure based on security, performance, sovereignty, cost and operational needs.

The report found that 88% of Australian enterprises already use cloud-native technologies outside public cloud environments. This suggests cloud development practices are extending into private and hybrid settings, not just the major public cloud platforms.

Regulation is also becoming a more direct influence on buying and design decisions. The research found that 66% of Australian enterprise cloud decision-makers said digital sovereignty completely influences their cloud vendor selection.

Privacy rules, governance demands and sustainability reporting requirements are all contributing to that shift. In response, demand is rising for systems and suppliers that can offer auditable in-country and sovereign arrangements for data and workloads.

Cost focus

Cloud optimisation is now a business priority rather than a secondary IT task. Nearly four in five Australian enterprises, or 78%, said they have an established FinOps practice, reflecting broader efforts to control spending after years of migration and expansion.

Many organisations are also investing in platform teams, cloud centres of excellence, automation, observability, resilience improvements and stronger data governance. Those investments show that the focus has shifted from simply moving to the cloud to running cloud environments with tighter financial and operational discipline.

Another theme in the research is concern about concentration risk and service continuity. Australian organisations are increasingly designing architectures that allow workloads to move more easily between providers and environments.

Among organisations actively addressing cloud resilience, 49% said they use disaster recovery failover between public cloud and private data centres. A further 47% said they use multicloud failover across providers, indicating efforts to reduce dependence on a single vendor.

Forrester linked some of that shift to broader market and policy pressures. Rising regulatory obligations, changing privacy expectations, geopolitical uncertainty and changes to VMware licensing under Broadcom are all increasing interest in hybrid and private cloud options.

Sam Higgins, Vice President and Principal Analyst at Forrester, outlined the firm's view of the trend. "AI is increasingly becoming a default enterprise workload, but organisations cannot treat cloud strategy as a one-way journey toward hyperscale environments. The most successful firms are adopting hybrid-first architectures that allow workloads to be deployed where they deliver the greatest business value while maintaining flexibility, compliance, resilience, and operational control. As regulatory expectations rise and vendor dynamics continue to evolve, enterprises should focus on building AI-ready platforms, strengthening FinOps capabilities, improving resilience, and ensuring workload portability to maximise innovation while limiting risk and cost," Higgins said.