Friday, November 22, 2019
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Cloud services: Transforming IT delivery and consumption

In our numerous conversations with Chief Information Officers (CIOs) across the region, it is clear that most of them are unhappy with the level of IT service they have been receiving from IT service providers, both local and international.

Many believe they [CIOs] have not received the same level of service delivery seen in other more mature markets. At around the height of this sentiment, cloud services began eliciting significant interest, led by the widespread use of high-profile examples such as Google, Salesforce.com, and Amazon. The biggest appeal of cloud for Middle East organisations is the opportunity to access the most up-to-date, externally managed IT resources in a pay-as-you-go model. For the first time in the evolution of IT, organisations, both big and small, have access to the same level of IT.

The region’s organisations are now beginning to catch up with this fundamental shift in the way IT is consumed. Be it a small retail organisation in remotest Saudi Arabia that is never visited by the partners of IT vendors, or a large bank in the UAE that is struggling to deploy IT solutions quickly and manage them in-house, cloud services offer a viable alternative. And as cloud adoption proliferates, it will reinforce long-held views that IT by itself is not a competitive advantage; instead it is what organisations do with their IT resources that really matters.

In a sign of improving maturity, the discussion around cloud in the UAE has moved from ‘privacy’ and ‘security’ to ‘which workloads?’ and ‘how to move?’ In fact, many progressive organisations are looking beyond the typical non-mission-critical workloads around email, collaboration, and office productivity to core workloads such as ERP, CRM, and HCM. This wave of adoption also includes many small and medium-sized businesses that are leapfrogging to a ‘cloud-first’ model as their first ever IT solution for a business problem.

While public cloud services have gathered momentum, many Middle East organisations have also started implementing private cloud initiatives as they look to enjoy the benefits of a centrally shared IT resource that is provisioned (and de-provisioned) depending on use, all within the security of their own organisation. However, most private cloud activity in the Middle East has focused on infrastructure virtualisation and the basic automation that comes along with many such solutions. In general, there has been a lack of motivation to implement full-fledged self-provisioning and automation, and this has a lot to do with the rigid hierarchical nature of businesses in the region. We believe that to derive greater value from a private cloud initiative, organisations must take the effort to identify and segment workloads and users that can self-provision IT resources on the go.

Employing a wait-and-see approach to emerging technology is emblematic of many organisations in the Middle East, partly because IT leaders are generally not well empowered in the region. While the last few years have seen cloud services adoption driven by innovators and early adopters, the coming 24 months will see more widespread adoption among mainstream organisations. Indeed, while an unplanned approach to cloud may prove counterproductive, prolonged inaction will mean that organisations miss out on delivering significant value via this fast-maturing IT delivery model. IT leaders facing increasingly scrutinised IT budgets, complicated IT systems, and demanding business users need to begin identifying suitable workloads for cloud.

However, cloud migration should not be performed without careful consideration and forward planning. IT leaders must first understand the security measures employed by the relevant providers, develop business continuity plans for the workloads considered, and calculate TCO compared to an on-premise model. They must also fully prepare for the impact on internal business processes, address the potential implications of vendor lock-in, and assess the skills capabilities of existing staff.

And while large IT service providers are partnering with vendors to resell and migrate customers to cloud, it is the smaller and emerging service providers that are most passionate about championing it. Cloud also opens up competition from niche software vendors. To differentiate and compete with traditional giants, progressive vendors will now consider frequent upgrade cycles and “freemium” or try-before-you-buy models, strategies that were not feasible with on-premise-only models. For software vendors, cloud also allows them to price in the hardware or computing element of software, which was not realistic earlier.

Recent International Data Corporation (IDC) research revealed that total cloud services spending in the UAE, one of the Middle East’s two major cloud services markets alongside Saudi Arabia, will grow at a compound annual growth rate of 45.7 per cent between 2012 and 2017. However, public cloud services will comprise the larger portion of this spending, predominantly led by the software as a service (SaaS) and infrastructure as a service stacks. IDC expects emerging workloads within SaaS (such as ERP, HCM, and CRM) to lead the next wave of spending.

And while private cloud implementations will be held back by the lack of full-fledged self-provisioning, IDC believes that progressive organisations with capable partners will be able to implement true private cloud environments that will deliver significant benefits.

The columnist is Group Vice-president and Regional MD for the Middle East, Turkey & Africa at global ICT market intelligence and advisory firm, IDC.