Survey Says: Leaders are Doubling Down on Cloud for Stability and Financial Resilience

Originally published by Google Cloud.

Written by Blair Franklin, Contributing Writer, Google Cloud.

While the future is uncertain, one thing is clear: decision makers are looking to the cloud to help prepare for whatever lies ahead.

Cloud computing has come a long way since 2012, when one in three Americans believed "the cloud" was related to the weather. Remember when Katie Couric explained the cloud on Yahoo news using no less than six weather puns?

Today, the cloud is at the center of pretty much every modern business function and transaction, whether it's improving product discovery in retail, offering a unified view of healthcare data, or detecting bank fraud in real time. Public cloud services spending is projected to reach $1.1 trillion by 2026 — up from $531.7 billion this year, according to IDC’s Worldwide Semiannual Public Cloud Services Tracker released in October. That doubling of spend is as clear an indication that organizations are aligning their IT investments more closely with business outcomes, a point echoed by IDC’s researchers.

To that end, in the current macroeconomic environment, the role of cloud has never been greater as it provides opportunities to improve customer experiences, increase business agility, drive efficiencies, and create new revenue streams. In fact, according to a recent Google Cloud survey of more than 1,900 executives, IT leaders are looking to the cloud to help prepare for whatever lies ahead.

When asked if their organization is changing its cloud strategy to cope with market instability, the most common responses from global tech and business leaders were increasing their use of cloud-based services and migrating away from on-premises legacy infrastructure.

Here’s a look at what we learned in the Fourth Quarter 2022 Google Cloud Brand Pulse Survey, which is conducted quarterly and, among other questions, gauges issues that are top of mind for cloud decision makers. For example, our previous survey looked at the evolving meaning of digital transformation.

Top 7 ways organizatons are adjusting their cloud strategies to prepare for economic uncertainty

Our latest survey results show that business and IT leaders are looking to the cloud to weather times of turbulence and build resilience.

We asked more than 1,900 global tech and business leaders the following question: “Due to the current economic climate (inflation, supply chain issues, rising costs, etc.), is your organization changing its cloud strategy in any of the following ways?”

The top three responses indicate organizations are doubling down on cloud as part of their strategy rather than scaling back:

• 41.4% of respondents plan to increase their investment in cloud-based services and products
• 33.4% plan on migrating from legacy enterprise software to cloud-based tools
• 32.8% plan on migrating on-premises workloads to the cloud

You can view the top seven responses in the infographic.

Instead of cutting costs as part of a knee-jerk reaction, many organizations are ramping up cloud adoption to weather stormy seas and position themselves to come out ahead when the skies clear up.

This approach is something that Monisha Deshpande, Global Director of Google Cloud’s Solution Value Advisors team, has noticed in her work helping large enterprises across retail, manufacturing, and technology get more value out of their cloud investments.

While businesses are asking pragmatic questions about managing their cost structure within an IT environment, Deshpande said they also want to ramp up initiatives across a number of key areas. These include creating new business models, generating new revenue streams, staying closer to their customers, leveraging machine learning (ML) and artificial intelligence (AI) to improve operations, and staying attractive to future workers by providing modern tools and technology and better access to data.

Desphande said all of those priorities feel “very much like a growth objective, one businesses are not shying away from. It’s gratifying to see that many organizations aren’t just doing what they’ve done during past times of uncertainty. Rather, they’re being a bit more strategic about how technology can enable them to be more resilient in the future.”

Cutting costs vs. optimizing spend: Why cloud FinOps is crucial to long-term business resilience

Most decision makers tell us they are leveraging the cloud as a hedge against uncertainty. However, they also indicate the importance of maximizing every dollar to drive efficiency and support growth. The bottom line? While some organizations often focus on cost reduction, leading organizations are able to leverage their resources very effectively, creating and sustaining business resilience.

When enterprises are more efficient with their services, such as using more cost-effective storage for a workload, spinning down unused servers at various times of the year, modernizing applications by using containers instead of VMs, or using data and AI/ML products to increase efficiency, costs will eventually ramp down, and revenue will continue to increase even though overall cloud spend may increase.

“Treating cost optimization as a one-and-done event should never be the case,” advises Eric Lam, Cloud FinOps Offering Lead at Google Cloud. “Building long-term financial resilience means really looking at cost optimization as a continuous discipline — it has to be a cultural shift from a cost-cutting mindset to a cost-conscious culture.”

What is Clod FinOps?

Cloud FinOps is an operational framework and cultural shift that brings technology, finance, and business together to drive financial accountability and accelerate business value realization through cloud transformation. With Cloud FinOps, enterprises making significant cloud investments can establish detailed cost visibility, continuously optimize for cost efficiency, accurately forecast consumption, and implement metrics to quantify the true value of their cloud investments. Learn more.

The imperative to establish better cloud financial governance and controls, along with processes for putting all that in place, has given rise over the last several years to an entirely new function within the enterprise: Cloud FinOps. In fact, that’s why Lam founded the Cloud FinOps team at Google Cloud 18 months ago — his team’s had a line out the door ever since.

“I kept hearing from customers who wanted to continue their digital transformation in the cloud while having more transparency, ownership, and understanding of how to govern their cloud spend,” Lam said. “Today, our Cloud FinOps team acts as advisors, and partners with our customers to design and implement the Cloud FinOps strategy and function, but we also empower them to own it and create sustainable business outcomes. Cloud FinOps is a cultural shift and to drive sustainable outcomes, this needs to be embraced organically within the organization.”

"Building long-term financial resilience means really looking at cost optimization as a continuous discipline — it has to be a cultural shift from a cost-cutting mindset to a cost-conscious culture." - Eric Lam

Making cents of a cost-conscious culture: What does it look like?

Check out our infographicon creating a cost-conscious culture to learn some common barriers to achieving financial resilience and ways organizations can overcome them. View and download the entire 4-page infographic here.

Business resilience is a marathon, not a sprint

The burdens organizations face are daunting: the pressure to optimize existing spend, slash costs without eroding future value, extract as much value as possible from investments, and still continue to drive innovation. But while it’s a tall order, it’s not insurmountable.

No matter the status of an organization’s cost optimization journey, there are resources and best practices to help everyone establish sustainable FinOps practices and a true cost-conscious culture.

“Organizations have already weathered the biggest storm — the pandemic — where they needed to be super responsive to what the world needed at that point in time,” Deshpande said. “Now, some fundamentals are at play and there is an opportunity for leaders to really refine their businesses and be intentional about the decisions they're making. Take a pause, focus on long-term objectives, start to lay out that strategy, and think through how technology can be an enabler of that.”