The Flexera 2020 State of the Cloud Report: Adoption and Tech Trends

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One of the most anticipated annual reports in the cloud market, the Flexera annual survey reveals – in great detail – the current state of all things cloud computing. Including:

  • Multi-cloud adoption
  • Public cloud adoption 
  • Adoption of specific cloud adoptions
  • Cloud initiatives
  • Cloud challenges
  • Containers
  • Impact of COVID-19 on cloud adoption

To provide insight into the cloud report, I'll spoke with a true cloud thought leader, Kim Weins, VP of Cloud Strategy, Flexera

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What stood out for you from the annual Cloud Report?

Weins: So the new questions are always really interesting. So, we've been asking about cloud spend for a number of years, and the reason is because we found, for the fourth year running, that optimizing your existing cloud use and getting cost savings, has been the top cloud initiative. And this is the fourth year in a row. Followed closely by moving more workloads to cloud, which of course, creates more challenges for managing your cloud spend.

So, we've been asking about how much people are spending on cloud and that's continued to go up. This year, we asked them to tell us how much they are spending on specific cloud providers.

We got some insights into, not just the overall adoption of how many people are using AWS, Azure or Google, but how much they're spending in those environments. And that's really emphasized that the horse race, especially between AWS and Azure, who've been in the lead, is starting to tighten.

Not only are we seeing higher adoption of Azure each year with closing the gap with AWS, but we're also seeing them start to close the gap in the level of spend as well as in the footprint, the number of virtual machines or instances that are running. So that was interesting this year to really validate that it wasn't just more people using a particular cloud but how many VMs were they running and how much were they spending.

And then on the spend, there was one other, a couple other new questions that were really interesting. So we know that budgeting for cloud has been really challenging, people are growing their cloud use so quickly and they often have a difficult time forecasting what that's gonna look like. And what we did this year was we asked how much they were over budget in the prior year. And the average was 23% over budget, which is fairly significant.

Maguire: I saw it. I'm sure there are some very upset people in the accounting and executive levels like, "For goodness sakes, what happened to our cloud spend?"

Exactly, exactly. And it's hard because it's a new way of managing spend. In other areas, you typically go through a pre-approval process to get approved to use something or buy something. And in this case, once you've decided to use a cloud and opened that up to your various application or development teams, consumption happens and you have to have a different way of managing it than that traditional pre-approval process.

Hand in hand with that was we asked how much would their cloud spend grow next year and there we got an average of 47%.

Maguire: Wow.

So you see the problem, which is, we're over budget, we haven't been able to forecast effectively, and the spend is growing, so the problem is getting worse.

Change in cloud usage based on COVID-19: up a stunning 59 percent

Weins: "Yeah, this is their planned usage. So, just to put that in context, so we said, based on what you were planning at the beginning of the year, what do you think is going to change compared to that plan? And you can see 59% are saying it's gonna be higher.

Now, keep in mind that could come from two different factors. So factor number one could be things that are already running in the cloud are gonna be used more. So if you're running retail, online retailing, that's obviously going through the roof.

“If you're doing software and SaaS, that may be going through the roof. At the same time, there are maybe other areas where it could go down. What's gonna happen in the hotel industry, or something like that, but 59% are expecting it to increase.

Now, the second place where it could increase is by more migration to cloud. So you may already have planned migration that you decide to accelerate because you think that there's some benefit in bringing things into the cloud.

So for example, during COVID, everybody works from home. We saw a little bit in terms of some outages from some SaaS solutions or some challenges for a while, so Teams was struggling, WebEx was struggling for a little while, but they seem to have pretty quickly got those under control.

And the cloud providers themselves, the public cloud providers, have weathered this pretty well to date. So for some companies that are looking for business continuity, they may see the cloud as more attractive given what we saw with COVID.

Also very interesting: 93% of enterprises have a multi-cloud strategy, which says to me that basically cloud computing is multi-cloud now, it has very much arrived.

Absolutely, and this has been... This is the strategy question, which is interesting, 'cause it tells you what people are thinking and what they're planning. And it's been running kind of in the high 80s for a number of years.

The hybrid cloud number has gone up. So we used to ask also about multiple private clouds and that's almost gone away. So you can see, not only is it multi-cloud, but primarily that's hybrid, so some combination of public and private clouds.

And on a related note, if you look at organizations' lack of multi-cloud management tools: so cloud is multi-cloud and yet companies are really struggling with multi-cloud management.

Weins: "Yeah, and I think we're kind of early days for this, even with multi-cloud and the average this year we got back was, companies were using 2.2 public and 2.2 private clouds on average already today, so they have a multi-cloud situation.

Now, often, that's not a 50-50 split, it's often a primary and a secondary, or a primary, secondary and a tertiary cloud, so it might be a 80-20 split, but as that cloud use is beginning to grow, this becomes a significant challenge, and cost especially is a significant challenge because companies are needing to manage that cost as they adapt and shift their workloads between those different cloud providers they use.

I'm not sure cloud has really ended up being less expensive than the data center. Do you have a general take on that?

Weins: Absolutely, so definitely, in the early days, cost was one of the factors considered and then it's shifted now, often people think of agility as being a large factor as well.

So there is the opportunity to save money in cloud, but you have to think differently. So if you take something you're running on-prem and you provision it apples to apples with the exact same memory, that same CPU, the same storage, and you run it and you buy it, 24 by 7, and you don't ever turn it off, and you don't take advantage of discounting options, then you absolutely will pay more.

So as you move to the cloud, you have to think about both architectural issues, which is, we don't have to run everything 24/7, we can scale up and scale down as capacity changes.

You have to think about optimizing as you move to the cloud to look at the fact that you're probably under-utilized almost certainly on your compute, and on your storage, and on other resources that you've allocated for many of those on-prem business services, so you have to optimize as you go.

And then lastly, you have to leverage appropriate discounts from the cloud providers, whether that's an enterprise agreement or an enterprise discount program, whether that's reserved instances or savings plan, you have to take that into account.

So, if you plan well, and you take advantage of both the architectural benefits, you optimize as you move, you take advantage of the discounting benefits, then you absolutely can save money in many cases, not in every case, but in many cases in the cloud.

Top four cloud challenges: security, managing cloud spend, governance, lack of resources expertise. So why are people so concerned about security in the cloud?

Weins: “It's really not about necessarily the base security of the cloud providers, it's about that shared responsibility model, where organizations are responsible for certain aspects of security. They have to take advantage of features to secure their data in those storage buckets so that it's not hacked, which many have been hacked. It's responsible for them to keep that security up to date and to make sure people have the right access.

So there's a whole set of capabilities, or responsibilities, in that shared responsibility model, that are the responsibility of the actual user of the cloud, and many organizations are still adapting to that model, they're having to learn. We're moving from perimeter security to really how we configure and protect those workloads and it's a shift in the approach to security.

So I think organizations are getting there. One of the big risks is just mistakes, that people forget to set something up properly, it's not that the feature isn't available in the cloud, it is, but they're not doing it properly or they set it up properly to begin with, and then a change occurs, and with that change, something opens up.

“I saw a recent breach where somebody had created like a backup of a database, 'cause they were making some transition, and they hadn't properly secured that, and so that remained open for a period of time. So that's the common problem, it's the cloud user's part of that shared responsibility model.

The fourth top concern is lack of resources/expertise. These cloud professionals are rare unicorns, just hard to hire?

Weins: "I wouldn't say unicorns, but they are harder to hire. Obviously, since it's a newer domain of expertise, the breadth of expertise in these areas isn't as great in terms of finding people. They do command higher salaries and are in demand more.

“Many companies are turning to cloud MSPs to help fill some of that gap, so we asked about that this year. But yeah, it's just something that's growing. Now, we are seeing more sort of traditional infrastructure and operations professional become more DevOps-oriented, become more cloud savvy, so there's also a training aspect to this where you have to learn cloud somehow, you're not born knowing cloud.

“Probably unless you're very new to your career, you probably didn't learn it in school, so you're gonna really be learning it on the job.

“And we've been tracking these challenges for many years and they have declined slightly, but not drastically, 'cause a lot of these are not a once-and-done effort. You really have to be continually managing spend, continually managing security, continually governing your environment, that requires typically automation to do that, you can't do this all manually.

"And so that's new sets of tooling, new sets of processes, and new sets of expertise."

Competition among top cloud vendors: Google Cloud is coming on strong.

Weins: "I think it's been interesting 'cause if you look at the year-over-year numbers, which I think is your next slide there, they definitely saw the most growth.

"And we have been watching for the last few years, there were a lot of people, if you look at the people that are experimenting with the cloud or plan to use the cloud, those numbers, those numbers have been pretty big for Google over the last few years, indicating there were a lot of people with interest in the Google Cloud, and now we're seeing this has happened is that they're starting to use that Google Cloud.

"The other phenomena that I wanna highlight with this is when we look at this by cloud maturity, so this is a factor we've been tracking for a number of years, beginner, intermediate, advanced, and this shows you the different cloud providers. So there were two really interesting things this year.

"First of all, in the beginner category, for the first time, Azure is used by a higher percentage than AWS, at 56 versus 44.

“We didn't use to see that in the past, but I think what's happening here is two-fold. First of all, Azure over the last several years has gotten more mature, and so it becomes a very viable option for people that are just getting started.

“And then secondly, the people that are beginners now tend to not be the most forward-leaning, get to the cloud first type of companies. They're maybe not the laggards, but may be somewhere in the middle.

“And a lot of those people use a lot of Microsoft, they're very comfortable with Microsoft as a vendor, and so they're likely to start there given that Azure has matured so much over the last few years.

“The second really interesting piece in this is in the advanced set of bars, and you can see the third bar down as Google at 41%. But if you compare Google in the beginner and intermediate levels, only 20% use it, but it jumps up quite a bit to 41% in the advanced users and it gets a lot closer to Azure and AWS.

“So what that tells me is that as you become more advanced first of all, and actually you probably use an experiment with more clouds and you start to use them for specific use cases or services. And so with those advanced users, they're looking to Google to take advantage of it, maybe not for as many workloads as the other clouds, at least at this point, but at least for certain select workloads.

“And also certain industries perhaps that are tied into AdWords heavily, for example, might find a lot of advantages in then using the analytics within that Google platform. Also we have seen now over the last year that Google is really trying to make a bigger push with partnering and going through the partner channel in order to get to the enterprise, and so that also may be helping them see this adoption increase among the advanced users."

Way down there at the bottom but coming on pretty strong: Alibaba – it doesn't get many headlines. I think they don't compete in North America.

Weins: “We don't have a lot from China. So if this was in China, we would probably have a very different picture. We do have Asia-Pacific, but they have started to make some inroads, especially within Europe, Alibaba, so we may be seeing some of that there, but they've kind of stayed fairly low. What has surprised me is VMware on AWS kind of going up, and then also Oracle, actually, which is relatively new.

“Now Oracle again is probably limited workloads, specific applications, specific use cases. I interestingly just saw an article, I think it was today, about Zoom, the platform that we're using. Starting to go to or it's gonna be using the Oracle cloud.

“For companies that want to keep their Oracle database and maybe go to the cloud, they may be taking advantage of the Oracle infrastructure cloud for those workloads.

“[On VMWare:] they've provided the workload mobility, which I think is a big factor. The fact that they've made it pretty easy to take your existing technology. It's not the cheapest option in the world, honestly.

"But it enables you to leverage the tooling you have, the VMs that you have, create that workload mobility, leverage your expertise. You're using the entire VMware stack. So it's not really like using AWS, although you can link to AWS services, it's really more like using VMware and a hosted scaled data center."

What do you see as some major trends that you would expect to be happening in cloud, in 2022 or 2024?

Weins: “Well, I think certainly continued adoption of cloud, that's no surprise to anybody. But I think one really interesting factor that's coming into play is the public clouds offering their private version.

“So we've got things like AWS Outpost, we've got Azure Stack, those showed a lot of interest and more adoption than I would have thought that even seems possible, honestly, and Google Anthos, also some interest there. So I think we're starting to see this idea of bringing the cloud to the on-prem environment.

“And then the second thing that we've seen is we have seen containers growing for a number of years, we've been tracking that change for a number of years, but that's become really very mainstream.

“Again, the breadth of adoption is maybe still narrow in large enterprises, but [we’re] even starting to see some kind of on-prem versions of that with things like Pivotal Cloud Foundry now bought by VMware, as well as OpenShift from Red Hat. Those are some interesting trends. So the face of hybrid is changing, I think, and we're gonna see a different view of hybrid than what we saw three years ago.

“Because in the past it was like, I'm gonna use OpenStack on-prem or I'm gonna use vSphere on-prem, and OpenStack kind of stalled because of the difficulty of doing that within the enterprise, so it's primarily like a hosted offering these days.

“And VMware itself, kind of pure VMware, vSphere misses a lot of the cloud aspects. So now we're bringing in some options for private cloud that start to feel a lot closer to cloud, with Outpost, with Azure Stack, with Anthos, as well as with Cloud Foundry and OpenShift where we have these container-based private cloud options. So that's where I think the private part of hybrid cloud is gonna start to look a lot more like public cloud.

“I think the one other thing is the growth of the PaaS services from the cloud providers and especially container as a service and serverless.

“When we first started doing cloud cost management stuff five plus years ago, we used to say 90% of the spend is in compute, and that's shifting. People are putting more and more stuff in these PaaS services, whether it's database as a service, container as a service, serverless, so that's starting to get to be a bigger component of cloud spend, a bigger component of your footprint, so that implies a whole different approach to managing costs and optimizing costs, which will be challenging at first, and it implies a whole different approach to governance.

“So I think that's gonna be the next wave is figuring out how to get our arms around that.”



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