Published on the 31/08/2023 | Written by Heather Wright

As hybrid and multicloud becomes cloud of the future…

Enterprise software providers bumped up the prices for software-as-a-service offerings an average of 12 percent in the past year – and the impacts are leading to increased tentativeness for local cloud users.  

Data from SaaS purchasing platform Vertice shows 73 percent of vendors have increased their prices this year – making the impact on enterprise SaaS spend difficult to ignore, with the average organisation globally using as many as 130 tools.

“Cloud technologies are not a binary choice for organisations.”

Microsoft announced in July that Australian and Kiwi customers will face price increases of nine and six percent, respectively, from September 1, as part of its ‘consistent global pricing’ aligning Microsoft cloud pricing to the US dollar.  

Earlier this year it increased pricing in Europe by between nine and 15 percent.  

They’re far from alone, however, with finance, sales and productivity tool vendors among those most likely to be increasing their prices, Vertice says.  

It says vendors are also driving up their costs in more subtle ways, including using bundling or unbundling features and shifting from drawdown pricing models to monthly usage models.   

Richard Adams, chief executive at New Zealand cloud and tech provider CCL, says many organisations are facing challenges adopting cloud technology due to a number of reasons, including concerns about cloud spend.  

CCL’s new State of New Zealand Cloud Transformation report found spend concern was an issue for 30 percent of survey respondents, second only to concerns over a lack of resource and expertise (31 percent). Cloud migration cost concerns came third at 27 percent. 

“Ultimately, cost reduction and efficiency gains have become even more critical as the primary objectives for evaluating progress in cloud transformation,” Adams told iStart. “Organisations face the challenge of optimising resources and minimising expenses while navigating uncertain economic landscapes.  

As local organisations look increasingly to cloud ‘if it makes sense at the price point’ rather than simply ‘cloud first’ approaches, Adams says it’s clear from the survey results that cloud technologies are not a binary choice for organisations.  

The report shows while private cloud is currently the dominant cloud model in New Zealand, at 40 percent, respondents are eyeing hybrid or multicloud as their preferred future model.  

“Business leaders are focused on finding the optimal mix of public, private, and hybrid cloud options to achieve their business objectives in an increasingly tough environment,” Adams says.  

“We know businesses are facing cost increases across the board. With that in mind, organisations want to put the right workload in the right place, at the right time, and that means making pragmatic decisions, balancing making the most out of their existing investments, while looking at the role cloud can play in future.  

“We’re seeing a shift towards hybrid and multi-cloud, as organisations seek flexibility, scalability, cost savings, enhanced performance, and improved security,” he says. 

With so many different types of cloud models and approaches available to organisations now, Adams says business leaders don’t need to feel like there is only one path – or that they’re locked into a particular strategy.  

“With hybrid cloud, for example, businesses can get the best of all worlds, and this opens up so much more opportunity to find the best cloud platform to optimise a number of factors, including cost. 

“Often we see cloud transformation discussions focus on a fixed choice between private and public cloud environments, whereas a hybrid approach is more beneficial to an organisation’s specific requirements.  

“This allows them to use different clouds for different workloads, while still being able to obtain a single view and level of orchestration across them all.”

There are, of course, fresh challenges for those moving to hybrid or multicloud models.  

Adams says the top-ranking benefits of those operating in a hybrid or multi-cloud environment include data integration between clouds (49 percent), workload mobility between clouds (39 percent), applications spanning public and private clouds (35 percent), and disaster recovery between clouds (34 percent). 

“This model, by its nature is designed to support flexibility for data and workloads. However, unifying multiple clouds is more complex than operating in a single cloud, which means IT leaders need to implement more robust management controls to optimise workloads and maintain a close watch on cost.” 

Adams notes a new focus are coming through in this year’s report, with the rise of dedicated cost management practices. 

“In particular, FinOps practices that combine financial and operational approaches, are gaining traction,” he says.  

Interestingly, respondents this year were less bullish about their cloud maturity. 

“It’s possible that the rapid emergence of new technologies in the cloud space may have shifted their perception of what is considered advanced. What was once deemed cutting-edge may now be overshadowed by even more innovative solutions and cloud deployments,” he says. 

Sustainability has also risen to prominence as a ‘vital’ consideration for organisation, with 83 percent recognising its importance when it comes to cloud adoption – a 13 percent increase from last year’s survey.