Why do companies stay with on-premise hosting?

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At Nordcloud, we naturally promote the public cloud. The public cloud providers define new IT standards and innovate at a speed and quality that is unmatched. The public cloud is the answer to most of the IT challenges we all grew so painfully used to during the last 10 years. However, since we are not just dealing with digital-native companies in the media, gaming and Web industry but also very traditional and several hundred years old enterprises, we know very well that the on-premise world exists for a reason. And no matter how much we would love to get all of our customers workloads to where they would be best hosted, we understand that sometimes the answer has to be: no. In this blog post, we want to discuss some use cases that we have seen over and over and that were stopping companies from moving their workloads to the cloud.

Migration Cost vs. Business Case

Migration cost and transformation effort are seen as too much of an investment compared to the seemingly uncertain benefits of adopting public cloud services. Well, there are a few edge cases where companies just do not have the money at all, and that’s definitely a show stopper. But all others are just afraid. Don’t be afraid! Public cloud is not just about reducing infrastructure cost. It’s about gaining agility, changing your business model and becoming more digital. If you refuse to take the step forward, your competitors will – and then one year later, you will be left behind.

Private Cloud

For many customers it turned out that their private cloud is more of a burden, less of an innovation catalyst. It is a hosting platform. However, be that as it may, the cost is sunk and depreciation runs until 2019. What now? Well, it is pretty simple. Get every bit of it out of your basement as soon as you can and bite the bitter lemon now. There might not be any more lemons for you, once you reached 2019 and all your competition has outpaced you by far already. You can bury your business and your private cloud with it then.

Software Readiness

We often start customer projects with application discovery deep dives to identify best candidates for a cloud migration. In that process, what we always find are that ancient,  unstable, utterly monolithic applications. They never win the contest for the first mover. They would sit on that public cloud and be just as expensive, just as hard to maintain and just as unstable. That is what we would call: not cloud ready. We advise customers to leave the thing where it is and use their time wiser. At some point, they can start rebuilding the beast from the ground up, or just parts of it. And we can help them with it when the time is right. However,  sometimes it makes more sense to have a quick win than a hard try.

Regulatory Reasons

Maybe this is the only use case where we just can’t help you at all. If you are in a regulated industry or run your business under a government that forbids hosting of citizen data in another country, then maybe the public cloud is not for you. We have experience in helping customers understand and evaluate such situations, yet even the best technology is useless when it is illegal. But hang in there, the wind of change is ever blowing, and maybe soon your government decides to loosen the strings… or one of the big three cloud providers picks your country for their next region.

Don’t give up yet!

We have all seen an incredible change in the way IT works within only a very few years. This trend will not stop, neither AWS nor Azure or Google are going to stop improving, innovating and challenging existing concepts. Our customers have to adapt to new realities every year. So must we. Things we think impossible today, might be a click-and-buy tomorrow.

Therefore, let us turn the answer to the public cloud from no into yes, or at least not yet!

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How the cloud is changing the IT sourcing game

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Five years ago, the cloud was comprised of three components; compute, network, and storage. Hence, when you compared the cloud to legacy hosting arrangements the main difference was that cloud operated a pay-per-use/pay-as-you-go model with instant capacity. From a services perspective, it was essentially the same as a virtual environment. Today, the cloud means value added services on top of the IaaS layer, and there are only three players with a complete offering: Amazon Web Services, Google Cloud Platform, and Microsoft Azure.

The big three cloud players are all solving horizontal IT problems with services ranging from databases, data warehousing, mobile push notifications, and IoT solutions. Companies leverage these services to get their products to their customers faster and to reduce project and support costs. New services are also introduced each month – all with the same billing and security framework. Today, all hosting providers are competing simultaneously with AWS, Azure and Google, which creates an element of risk in long-term hosting contracts.

What implication does this have on cloud-sourcing?

It is important to ensure that hosting and cloud sourcing arrangements do not prevent your ability to leverage the cloud to the maximum. Traditional outsourcing is often done in a way that creates a deep frozen environment that responds very slowly to changing business requests – that is why digital transformation quite often starts as shadow IT. Therefore, any cloud RFP should consider a breadth of cloud services, support for DevOps and self-service, separate cost models for capacity and support services, as well as proven capability to increase IT productivity with the cloud.

Additionally, the delivery of commercial software is changing. Increasingly the software is delivered as service in IaaS, such as an MS SQL server in Azure and Amazon. Cloud vendors also have marketplaces which provide pay per hour licensing models for a growing number of ISV software as preconfigured images. This reduces the cost of buying as there is no license management and pricing negotiations to worry about, but it requires the IT organisation to ensure the necessary spend controls.

The cloud is changing the IT sourcing game and we’ll be having a series of events that will explore this topic in more detail. If you would like to learn more on cloud-sourcing best practices or our future events, then please contact us and a member of the Nordcloud team will get back to you shortly.

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Let’s discuss how we can help with your cloud journey. Our experts are standing by to talk about your migration, modernisation, development and skills challenges.