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Companies plan to spend more on cloud computing services this year, higher prices among drivers: Clutch

June 23, 2017   by Canadian Underwriter

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Companies are planning to spend more on cloud computing services in 2017, but must be cognizant that anticipated costs could balloon absent appropriate monitoring and use, suggest survey results released this week by Clutch.

Reflecting input from 283 IT professionals at businesses in the United States that use a cloud computing service, Clutch’s Second Annual Cloud Computing Survey found 67% of polled businesses plan to increase cloud computing spending this year.

Almost half of businesses surveyed report they expect their cloud computing to increase by 11% to 30%, while almost one in five expect the increase to exceed 30%, note poll results from the Washington, D.C.-based B2B ratings and reviews firm.

Just 8% of businesses participating in the survey – which explored current and future trends – say they expect their cloud computing spending will go down in 2017.

“Cloud is the new normal,” suggests Jeremy Przygode, CEO of Stratalux, Inc., an Amazon Web Services advanced consulting partner and managed service provider.

“When businesses need to evaluate new solutions, or need to do a hardware refresh on existing solutions… cloud is the go-to solution to figure out how to do that,” Przygode says in a statement from Clutch.

Notes Clutch, “As the cloud gains popularity, businesses are perhaps less likely to see it as an alternative option, but rather as the logical next step for their data storage. Therefore, they will increase their spending in the technology.”

While the anticipated spending rise may be encouraging, Clutch cautions that these additional expenditures “may be due to a variety of factors, from a greater desire to use the cloud to negligence regarding usage.”

Consider that 47% of polled business – the largest percentage of all options – cited “increased cost” as a challenge encountered with their cloud provider in the past year.

“This suggests that, in some cases, the increased spending is perhaps not always intentional or wanted,” Clutch reports. “The reality of cloud computing’s mechanisms means that businesses may end up paying more than they expected.”

Keeping costs in line can be advanced by monitoring and appropriate use. For example, if usage surges, prices can increase dramatically.

“Cloud computing is a dual edged sword,” says Przygode.

“It’s great because you can quickly provision equipment or resources in the cloud by simply pushing a button. That’s the agility. However, the other edge of that sword is, because it’s so easy, people tend to fire stuff up and forget about it,” he points out.

“When starting out with a cloud project, the customer may think that it’s much cheaper,” says Haresh Kumbhani, founder and CEO of Zymr, Inc., a cloud consulting and software development services company.

“But, by the time they go to production, the bill goes from $800 to $8,000 per month,” Kumbhani notes, adding price increases can be alleviated through proper monitoring.

“That surge happens because they’ve chosen the auto-scale option and didn’t tune the policies which govern the costs,” he explains.

Survey findings show that advances have been made on a number of fronts, including security and perception of how secure cloud can be. In fact, the largest percentage of respondents listed “security” as a benefit of using the cloud.

Still, Kumbhani advises considering three aspects when it comes to cloud security:

  • physical security – such as protecting physical assets at a geographic location;
  • infrastructure security – such as ensuring security patches are updated as soon as possible and ports scanned for abnormal behaviour; and
  • data and access security – such as encrypting data and controlling user privileges.

“Around 80% of breaches occur because this third part is not very well-secured,” Kumbhani points out. That being the case, he recommends that clients encrypt their data and databases, ensure users privileges are correct, and deploy features such as cyber security scanners that monitor for threat scenarios.

There is also movement with regard to what type of cloud – private, hybrid or public – respondents are using or looking into using.

Though a private cloud remains the most popular option, results indicate a hybrid cloud is an increasingly attractive option, with 82% of polled businesses that do not currently use a hybrid cloud saying they are exploring the option for the future.

A hybrid cloud has services and infrastructure spread between a private network and off-site cloud provider, offering flexibility and customizable features.

“Even if you are committed to a private cloud solution, a hybrid cloud solution can provide additional benefits where you can burst your workloads into the public cloud as needed,” Przygode suggests.

“Burstability” is defined as meaning even if cloud usage surges past average levels, then the public cloud can provide the CPU to manage that, as opposed to maxing out.

“When you go with a hybrid solution, you have to make sure as a company it’s engineered properly to gain access to it,” advises Kevin Rubin, president and COO of IT managed service provider Stratosphere Networks.

Although a bit more challenging, “customizing your cloud experience allows [a business] to leverage different toolsets that are truly drilled down to their department, their individuals, and how they do business,” Rubin explains.

Przygode’s view is that the transition towards public cloud is an inevitability.

Size also matters when it comes to the cloud and choices around that.

Findings show the needs of “small- to mid-sized businesses versus large enterprises are very different, and that each type of company should evaluate their specific needs before deciding between private, public, or hybrid cloud options.”

While large enterprises may be able to afford external help, Rubin says, small- to mid-sized businesses may need to wait to transition, or seek out lower priced options.

Related: Global spending on worldwide cloud services and infrastructure to reach US$122.5 billion in 2017: International Data Corporation

In addition, almost one in five surveyed businesses using a cloud computing service are using artificial intelligence (AI) – encompasses the concept of computer systems accomplishing tasks that previously required human intelligence – features.

The cloud can progressively power AI with larger computing power and data storage, Clutch reports, adding that 60% of polled businesses using AI began doing so in 2015 or 2016; and 10% in 2017 (from January and mid-May).

Przygode points out that AI can be used to scan IT environments and analyze potential threats with greater efficiency.

“AI is a really good use case for finding the signal in the monitoring noise, because sometimes there might be alerts for an activity that is perfectly normal, but using AI,  we can filter alerts through machine learning algorithms and reduce false positives before they get escalated to our team,” he explains.

“As businesses explore their options for data management and storage in the future, it is important to understand the opinions and trends regarding cloud computing, and how this technology is evolving,” Clutch recommends.

“Companies can go it alone,” Przygode says.

He adds, however, that cloud computing is not the same type of computing as it was in previous generations, and traditional IT and cloud IT are different. “Frankly, the infrastructure and, more importantly, the way of managing that infrastructure, has changed dramatically,” he maintains.

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