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The surging adoption of hybrid cloud

The surging adoption of hybrid cloud
June 11, 2019

If we go back to the 80s, enterprises used to invest in monolithic centralized IT systems such as mainframe to help run the business. In the 90s, this subsequently moved to client-server architecture to help businesses scale. Beginning around the latter half of 2000, IT started emerging as a business driver, and today technology drives every business. Companies effectively utilizing technology as a business differentiator are out-performing their peers, and the ones not able to modernize are perishing at an unprecedented pace.

Enterprises today are, therefore, under tremendous pressure to modernize their IT landscape to meet customer expectations and beat the competition that is arising from new-age cloud-native applications and cloud service providers who do not have the baggage of legacy. While public cloud brought with it the highly scalable and agile infrastructure required to run an agile enterprise such as Netflix, Amazon, Illumina, and Fleetcor among others, most of the traditional enterprises continue to run and manage hundreds and thousands of applications in their legacy architectures. This is because a public cloud also comes with its own set of challenges where it is difficult to migrate most applications without modernization. Besides, it’s expensive to run an application 24x7 as it can’t leverage agile public cloud infrastructure and new age analytics workloads, which require extremely low latency like sub-10 millisecond response time to end users, latest regional compliance requirements or possess critical customer data—for example, customer billing systems, payment processing, and customer IPs.

Customers are, therefore, investing in private cloud and micro data centers to deliver agility and scalability provided in a XaaS model, but without the constraints of public cloud and in a more controlled, compliant, low latency and self-secured environment. This is paving the way for cloud service providers to provide hybrid cloud where customers select the best private cloud platforms and public cloud platforms to run applications and intend to seamlessly migrate these applications across cloud platforms as required.

Customers are investing in private cloud and micro data centers to deliver agility and scalability.

HCL's Perspective & Strategy

As industries embark upon their digital journey, they are looking at accelerating the adoption of hybrid cloud platforms. As cloud service providers, we at HCL understand that cloud adoption is dependent on the primary motivation of the enterprise. For some customers such as H&M and Manchester United, the motivation to move to the hybrid cloud could be achieving agility and scalability. For some, it could be doing away with infrastructure and datacenter ownership, such as HCSC and Addecco for instance, and for some, it could be gaining access to better functionality such as JLT and J&J. For others, like Cadent Gas and SGN, faster time-to-market plays a critical role in defining their hybrid cloud journey since it becomes a core decision point in cases like M&As where everything must be set up afresh or migrated in a very short interval.

Another motivation for cloud adoption could be cost savings. This has its own intricacies since different functions look at IT costs from their own lenses. For example, some reflect the cost of data center co-location under admin cost and don’t take that under TCO consideration. True TCO calculations for public and private cloud adoption are, therefore, best done by the CFO function.

Categorization of Applications under Enterprise Customer Environment

If we look at any enterprise customer environment, we can bucketize the applications under three distinct buckets: Maintain, Sustain, and Explore/Enhance.

Maintain set of applications are typically your back-office applications such as exchange, general office administration, batch processing, and F&P to name a few. These should be replaced with a SaaS-based solution, for example, O365 if possible, else the approach should be to minimize the cost of running these applications through initiatives like automation until their functionality gets replaced by a modern application.

Sustain set of applications are typical front-office applications further segregated into business differentiating and non-differentiating types. If it’s a non-business differentiating application like CRM or HCM, we should look at SaaS alternatives, for example, Salesforce and Workday. As the first step, if not, we should look at PaaS/IaaS options on public/private cloud depending upon the primary motivation. If it is a business-differentiating application such as customer billing application or core-business IP application, we should look at PaaS/IaaS options on private cloud to avoid some of the pitfalls of the public cloud.

Explore/Enhance set of applications are cloud-native applications built on microservices architecture and can be delivered through SaaS or public/private PaaS/IaaS solutions depending on the primary motivation. The similar decision model is followed for the infrastructure associated with these applications where there is a ‘surround and drown’ strategy for infrastructure associated with the ‘Maintain’ bucket (back-office applications). Either private or public PaaS/IaaS for the ‘Sustain’ and ‘Explore/Enhance’ buckets is chosen depending on the primary motivation and SaaS first for non-differentiating applications.

Adoption of Hybrid Cloud: The Right Workload and the Right Placement Approach

While there are many reports already published by leading analysts that clearly indicate hybrid cloud as the future, another good indicator is the growth being achieved by hardware players such as Dell (grew by 52.9% in Q2FY18 on the basis of the average selling price and units sold) and Cisco (grew its share by 22.4% during the same period driven by higher server sales & hyperconverged offerings). This reinforces the fact that enterprises are adopting hybrid cloud and taking the right workload and the right placement approach. New-age use cases such as big data, analytics, Edge, IoT and digital initiatives among others are forcing enterprise customers to invest in the upgrade of their IT infrastructure, tool modernization, process alignment, skill upgrade, and presents a big opportunity for HCL to be their partner of choice in their journey towards digital.