Moving beyond “cloud first”

DATACOM'S FOURTH ANNUAL CLOUD REPORT

Download Datacom’s full annual cloud report

A workload-by-workload approach is yielding improved cloud performance for many New Zealand organisations, but security strategy and budgets are falling short.

The latest Annual Cloud Report also looks at AI uptake and use cases, and the role IT teams are playing in environmental sustainability governance (ESG) planning and activity.

The results of Datacom’s fourth annual cloud report show New Zealand organisations have moved well beyond the ‘cloud-first’ mantra of recent years and are taking a workload-by-workload approach to decisions about where to place their applications and data.

While this approach is driving cost efficiencies and performance gains, the complexities of working in hybrid and multi-cloud environments mean that careful planning ahead of migrations or critical cloud infrastructure decisions has become more important than ever.

This year’s research also reveals a critical gap: cloud security. While security was identified as the top tech priority, only 20% of New Zealand organisations believe they have sufficient budget for security and only 43% have an immutable or offline back-up strategy.

Research for the annual cloud report is commissioned by Datacom and undertaken by Tech Research Asia. Primary research was undertaken with 700 business and IT leaders from across Australia and New Zealand.

We’ve selected some of the report highlights to share below but for more detailed insights and analysis of the research we encourage you to download the full report.

Where we continue to see gaps is in cloud security. Respondents identified ‘managing multi-cloud security’ as their number one cloud strategy challenge — ahead of costs or skills — and yet 80% of organisations don’t have the budget to manage ongoing security policy requirements.

Justin Gray

Managing Director New Zealand, Datacom

The workload-by-workload era

While “cloud-first” and other all-in approaches are the stated goal for 50% of organisations, the reality is that hybrid cloud arrangements predominate and will continue to do so for the foreseeable future.

Most organisations have largely made their decisions on their preferred platforms whether they be hyperscale cloud, SaaS, private cloud, colocation, edge computing, traditional on-premises, or a hybrid mix of any of these. Public cloud — especially hyper scale providers — continue to achieve solid growth, but so too does private cloud.

Decreasing operational costs still ranks high among priorities and remains one of the key reasons that organisations cite for migrating more of their applications and data to the cloud.

Suz Miller

Director Growth Practices, Datacom

Security: top priority but underfunded

Security was once again identified as one of the top three technology priorities for New Zealand companies and public sector agencies attempt to combat a growing wave of ransomware, phishing and software supply chain exploits. But – tellingly – security was also identified as one of the top five challenges (along with privacy, budgets, operating models and retaining skilled staff) making it hard for organisations to put their cloud strategy into effect, followed by budget constraints.

While security is being identified as a critical priority for New Zealand organisations, the research indicates this is not being matched by investment or organisational policies.

The two other critical technology priorities were identified as “IT platforms” and “digital technologies. While IT platforms have previously ranked as a priority, there has been a shift in where organisations are concentrating their focus: changing from cloud migration to the management and orchestration of hybrid environments.

Given the low maturity, it's promising to see security flagged as a top priority. When it comes to managing IT platforms, the focus for connectivity and security is often on traditional infrastructure, and the breadth of cloud capability doesn't usually get the attention it needs.

Matthew Evetts

Director Connectivity & Security, Datacom

Chasing the data-driven dream

Despite the growing interest in data-driven decision-making and big data, just 27% of survey respondents consider themselves “highly mature” at managing data and a significant number rank themselves as having different levels of maturity in creating data policies, having the right talent and adhering to data sovereignty requirements. It is clear there remains a significant amount of work ahead for many New Zealand organisations before they can realise the data-driven dream.

Some of the obstacles to successful data-driven approaches include a lack of data literacy inhouse, data silos with organisations storing it across different departments and systems, data quality with dirty or inaccurate data resulting in poor insights. The other area that needs more focus is the policies for data management and control – and issue that will become even more critical with the rise of AI technology.

Organisations in Aotearoa, particularly those in the public sector or handling data belonging to Māori stakeholders, have critical data sovereignty requirements. Not all cloud platforms offer true sovereignty: organisations need to understand their obligations before determining a cloud strategy.

Darren Hopper

Associate Director Cloud, Datacom

Policies a critical foundation to harness GenAI boom

We are witnessing a boom in generative AI. While only 39% of the 200 New Zealand respondents said their organisation is currently using AI, a further 51% indicated unofficial AI use and the survey responses identified 200 AI use cases. What we know now as GenAI will evolve rapidly and look considerably different in 12 months: capabilities will improve, regulation will emerge, disillusionment will rise and fall, and use cases will diversify even further.

The research uncovered a low adoption of AI oversight and governance processes, which will mean a significant number of businesses are poorly equipped to manage the risks and opportunities associated with AI. We encourage organisations to get critical AI policies and governance in place now.

With GenAI the fundamental question is the same as for a cloud migration. What outcomes are you trying to achieve? We would encourage organisations to experiment with GenAI and grow their maturity so it can be deployed productively and responsively when appropriate use cases are identified.

Justin Gray

Managing Director New Zealand, Datacom

IT: roadblock or accelerator for sustainability?

For the first time in our annual research, we looked more deeply into environmental sustainability governance (ESG) and what it means to IT and business leadership across New Zealand. The research shows that just 41% of the organisations surveyed had a dedicated sustainability team that includes IT leadership and employees and just 37% of organisations have a comprehensive ESG plan that includes the IT environment.

Another notable result was that just 21% of New Zealand organisations identified as having widespread measurement of ESG efforts in place – something that will be increasingly critical to win major contracts and for compliance with regulation and reporting requirements.

The top three most common ESG activities being undertaken were identified as adopting renewable energy and decreasing single-use plastics, using automation to decrease inefficiencies, and driving towards a carbon neutral footprint.

Sustainability and ESG activity is increasingly becoming a core component of request for proposal (RFP) documents for businesses. This is no box ticking exercise. ESG commitments need to be embedded in an organisation’s DNA, and the ones that take that approach will have a competitive edge.

Justin Gray

Managing Director New Zealand, Datacom

Future focus: predictions for 2024 and beyond

We are seeing a growing understanding of the complexities of cloud but the rewards and value streams are there for organisations that plan – or partner – wisely. These are our predictions for three critical areas that will need increased focus over the next year.

Digital experience

There will be a resurgence in ANZ organisations revisiting their customer experience strategies in order to boost acquisition and retention. Top line growth will replace profitability as the new driving force in 2024/25.

AI value streams

What is considered innovation in the New Zealand market will shift from cloud-native apps and digital services (aka subscription services and digital features) to AI-based capabilities, both for internal and external consumption.

Security challenges

Security will continue to be a challenge that many IT and business leaders are not resourced to meet. We will continue to witness high profile breaches in 2024, with an increasing number of small to medium size businesses being impacted.