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Are ANZ business too keen for cloud?

19 Apr 16

“Cloud is a hot topic, but many local organisations are getting a little too enthusiastic about it.”

That’s the word of Gartner research director Michael Warrilow, speaking ahead of the Gartner IT Infrastructure, Operations and Data Center Summit in Sydney this May, where he will explore the latest IT infrastructure trends and developments in Australian and New Zealand for 2016.

According Warrilow, some Australia and New Zealand business are making ‘dangerous assumptions’ that cloud will always save them money, which he says is not necessarily always going to be the case. 

“What they will get is more agility and a different mix of capex and opex, which the business likes,” Warrilow explains. 

“I have this conversation every week with companies in Australia and New Zealand now.”

Warrilow says another notable trend is the continuing movement away from owning a data centre, which is really pronounced here compared with other markets like Europe and the U.S. 

“Concerns about supply and capacity have diminished, with cloud being seen as almost limitless and many commercial providers in the local market,” he explains.

“Businesses don’t want to have all their capital tied up in data centre facilities, when they can be spending it in other areas. Instead, they’re using an increasing mix of co-location, hosting and cloud,” says Warrilow.

Legacy modernisation is still an important issue, Warrilow continues. 

In Gartner’s 2016 CIO survey, Australian and New Zealand CIOs placed it as an equal priority to infrastructure and data centre. 

“There’s still mainframe systems out there for really big workloads, particularly in government and banks,” he explains. “These businesses want to know how they can keep it in the fold and relevant, so modernisation is important.

“There are few alternatives at this point - it’s a captive market with organisations still spending serious money on it,” says Warrilow.
Impacts of digital business on infrastructure and operations

“Digital business has created the need for organisations to go faster, which provides an inherent conflict – the faster the business goes, the more risk it introduces,” Warrilow says. 

“They also won’t risk maintaining high availability, which compels them to go slower. It’s a vicious circle,” he says.
Warrilow says this where bimodal IT is so important.

“It’s where two separate modes of IT delivery are managed – one focused on stability and the other on agility,” he explains. 

In Gartner’s 2016 CIO survey, Australian and New Zealand CIOs are moving faster than global peers into a bimodal working model, with 72% either already doing it or planning to within three years.

“So the positive news is that local organisations are getting their bimodal strategies together, but some assumptions around cost remain an issue,” says Warrilow.

Virtualisation in 2016

“Gartner is seeing a decline in new virtualisation licenses in Australia for the first time since it became mainstream well over a decade ago, although overall revenue is still growing due to maintenance,” Warrilow says. 

“Australia has always been a leader in virtualisation, but growth has now reached its peak. Smaller and medium sized business have already started using it less and will continue to reduce their usage,” he explains.

Warrilow says one of the main reasons for this is that they are not getting the return they need. 

“There’s a minimum investment in skills that is needed for virtualisation and when you can get more of a turnkey solution from hyperconverged integrated systems (which scale out, not up, for a more modular and agile approach to deployments) or cloud, these technologies start becoming more attractive,” he says.

“The challenge for organisations then becomes choosing the right platforms given all of the changes. For the server environment, what was just a few storage and server vendors is now an increasing mix of storage hardware and software, plus a new breed of hyperconverged players,” Warrilow adds.

The future of private cloud in Australia and New Zealand

Only a few short years ago, internal private cloud infrastructure would seem the likely evolution of server virtualisation in the data centre, say Warrilow. 

“However, successful adoption is being restricted by complexity, enterprise immaturity and the effort required, such that providers must plan carefully or risk overinvestment,” he explains.

“In fact, we are now at a point that Gartner survey data shows a decline in enterprises expecting internal private cloud to be their primary cloud deployment model,” Warrilow continues. 

“In contrast, hosted private cloud is expected to almost double as the primary model. Then there’s hybrid cloud, which also appears set for growth,” he says.

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