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Capitalize on the Cloud Without Overspending

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The cloud is a powerful tool for driving digital transformation, but risks abound at every step of the journey. Public-sector IT leaders must assess where they stand in the cloud adoption curve and plan how to optimize their infrastructure costs.

Government IT leaders face various and sometimes contradictory priorities: increase agility using modern software development practices, drive digital transformation to improve citizen experience, prepare for an increasingly remote work environment – all in the face of budget uncertainty, changing demographics and rising infrastructure costs. Navigating these paradoxical forces is no easy task.

The cloud offers a compelling value proposition – highly available, elastic compute and storage resources that replace manual infrastructure management with pay-as-you-go pricing. It’s no surprise that about half of government organizations are actively using the cloud, and local governments are particularly well positioned to benefit from this technology.

But the cloud is no panacea, and IT leaders must thoughtfully prepare for each phase of cloud adoption to avoid spiraling infrastructure costs and a failure to achieve ROI. According to Gartner®, “Organizations with little or no cloud cost optimization plans rush into cloud technology investments. They end up overspending on cloud services by up to 70 percent without deriving the expected value from it,” (Gartner, Realize Cost Savings After Migrating to the Cloud, Finance Research Team, April 28, 2021).

Azul offers the following recommendations to IT leaders who must address the risks associated with each step. We have used Gartner ®Hype Cycle™ methodology to further elaborate:

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Peak of Inflated Expectations: We believe that early in the adoption curve, optimism abounds and the cloud value proposition is irresistible. However, at this phase it is essential to thoroughly scope the cloud migration project and put in place cost optimization strategies. The risks prior to migration involve overestimating the number of workloads best suited for the cloud and underestimating how those costs will grow over time.

Further, we think that at this stage it is essential to take a deliberate approach to cloud usage over time. Organizations must avoid falling prey to reactive decision-making or ad hoc, siloed cloud adoption; this could lead to cost overruns at best or security breaches at worst. Involving cross-functional stakeholders early will ensure the cloud migration is undertaken with a measure of consistency, discipline and accountability from the start.

Trough of Disillusionment: Our analysis shows that roughly half of the customers who approach Azul reside in this phase of the cloud adoption curve. They undertook a cloud strategy without scoping a long-term plan and are now victims of their own success – they developed applications that gained lots of traction and are now overwhelmed with their cloud costs. Government clients in particular explain that they feel stuck, having placed a big bet on the cloud, which seemed to pay off yet produced untenable budget pressure. Their ability to rescale and resize is often slower than private enterprises, but nevertheless, they must right the ship quickly.

The key here is to optimize the infrastructure powering the organization's cloud-based applications. Java represents a piece of low-hanging fruit for government organizations because it is a widely adopted technology with a stable, long-standing track record that appeals to risk-averse organizations such as those in the public sector. Optimizing Java runtimes produces faster code that requires fewer computing and memory resources – thus lowering the cloud bill. This optimization can reduce infrastructure costs by up to 50 percent while freeing developer resources to focus on improving the core application and other innovation initiatives.

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Source: Gartner, “Advance Through Public Cloud Adoption Maturity”, Douglas Toombs, et al., 11 June 2021.

Plateau of Productivity: We think at this stage, organizations need to consider extensibility, automation and intelligence. Shared cloud resources provide economies of scale both in terms of raw compute, but also for extending optimizations and intelligence throughout an organization’s entire technology stack.

Further, we believe significant efficiency derives from reusing the output itself, not simply the resources needed to produce it. That output, such as optimized code using a Cloud Native Compiler, can be reused across one's application environment. This automation also applies to the organization itself, not merely the tech stack. Organizations with an internally aligned and operationally mature cloud strategy can quickly act upon changing requirements from their constituents and from the intelligence they receive from the cloud. And due to the cost efficiencies developed while exiting the Trough of Disillusionment, budgets are available to address evolving organizational needs. Cloud automation therefore becomes not merely a technical implementation, but an entire operating modality.

Regardless of where a public-sector organization stands in their cloud adoption curve, scoping the long-term budget impact of cloud infrastructure is essential. Many approaches are valid, and all can be taken in concert. But for cash-conscious IT departments looking for cost reduction, optimizing their cloud infrastructure is an important first step.

[1] Gartner, “Gartner Hype Cycle”, 2021( ) GARTNER and HYPE CYCLE are a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission.