Covid-19 makes the case for cloud and hybrid IT solutions

Anecdotal evidence that home working caused a spike in cloud usage during lockdown is now backed up by hard numbers.

In a survey by software asset management specialist Flexera, 57 per cent of companies said they expect higher than planned cloud usage in 2020 and a 47 per cent rise in cloud spend in 2021.

Gartner forecasts that public cloud spending will grow by 6.3 per cent in 2020 to $257.9 billion, up from $242.7 billion last year. Desktop-as-a-service offerings are the biggest beneficiary, with investment expected to increase by 95 per cent year-on-year to $1.2bn.

None of this will come as a great surprise to the many businesses that have been talking openly about how Covid-19 has accelerated digital strategies and cloud migration plans.

Another less discussed development, however, has been a focus on costs around Microsoft Azure, Amazon Web Services and Google Cloud consumption, and how hybrid IT strategies might alleviate cloud bills that have gone through the roof during the pandemic.

“We are absolutely seeing a spike in cloud-related projects and with that comes an increase in cloud consumption costs,” said Sandra Dunne, sales manager at Logicalis. “Every connection you have with your cloud provider, regardless of who it is, incurs a cost, whether you are putting data up there or taking it out.”

She pointed out that it's a very different model from traditional IT, where physical equipment sits in a data centre with no need for any additional investment until it's running at full capacity. “Organisations need to change mindsets, because every click costs you in the cloud,” she said.

Desktop-as-a-service and variations of VDI (virtual desktop infrastructure) have proved particularly expensive, according to Dunne, as companies scaled up a service designed for a few users to one adopted by an entire workforce.

“They have gone from maybe 30 people working at home some of the time to 300 doing it all of the time. The next phase is deciding if they want to commit to that cost long term or make a decision to put another process in place,” she said.

Logicalis is coming across a lot of businesses that have arrived at the point where they have to turn stop-gap investments into something strategic. More robust security policies may need to be put in place and additional data protection to support remote working that looks like being a permanent fixture for the near future at least.

Dunne argued that firms need to be similarly strategic in the way they move their data around. They need to explore the opportunities around multicloud and hybrid environments for cost as well as compliance efficiencies.

“While some clients have made the decision to be cloud only, most others have a hybrid combination of cloud and their own data centres, and I believe that's the way it will be for most organisations for a very long time to come,” she said.

Data that sits in the cloud is often the source of excessive consumption costs, particularly if there is a significant volume that needs to be shared and accessed over a long period of time. This is where a hybrid approach can help.

“To keep costs down, you should store the data in a data centre and do the processing in the cloud. That lets you manage the costs much more efficiently,” Dunne said.

Logicalis customers have cut consumption costs in half by adopting a more flexible hybrid approach, according to Dunne, and learnt that it pays to keep some assets on premise or in a data centre.

“Previously, executives thought moving data to the cloud was a much cheaper way of accessing services. It's not. You choose the cloud because of its agility, not costs,” she said

“And it’s important to remember that all of the organisation's responsibility around data remains the same, even if it's in the cloud. People have to be very cognisant that they are still managing an environment they own.”

None of this is intended to put organisations off the cloud and she recommends a cloud-first approach for many workloads. “There are projects that never need to go into your data centres, that should be provisioned in the cloud and remain in the cloud,” she said.

More cost-effective clouds

Logicalis is an Irish partner of NetApp, which enables businesses to connect and streamline data management and storage resources, often by leveraging hybrid environments to deliver value and flexibility.

In June NetApp acquired Spot, a leader in compute management and cost optimisation on public clouds, to address the challenge of achieving the best possible level of performance and cost for storage and compute while maintaining contracted service-level agreements (SLAs).

“We are trying to make it as attractive and cost efficient as possible with application driven infrastructure that has the same SLAs in any cloud,” said Andreas Limpak, director of solutions engineering.

“When organisations go to the cloud, it's mostly about agility and being able to react to changing circumstances. After that there is often an element of price shock. We want to help the customer bring applications to the cloud and make it as efficient as possible by keeping the same ‘legacy’ SLAs.”

NetApp develops application driven infrastructure that makes it easier to move more applications to the cloud more quickly. Part of the process is data classification, working out which workloads can move, and where they should move to.

“If you want to move data around to optimise cost points, you first need to know where your data is, what’s the SLA, and which data to bring to which cloud,” he said.

Two years ago, there would have been widespread immaturity around the topic, but Covid-19 has shaken things up, according to Limpak, and organisations are turning over every stone to squeeze more value out of cloud environments.

“Right now, they are questioning everything they do. They need to look at their application landscape before they move to the cloud, including legacy, and do some work before they ‘lift and shift’,” he said. “There is a big difference between monolithic legacy applications and micro services. Lift and shift won’t work for a lot of legacy.”

The pandemic has become an unwanted ally in pushing more businesses towards hybrid environments than span everything from hyperscale public clouds to on-premise data centres.

“The first couple of months was tactical, about enabling emergency continuity plans for lockdown, making the business 'Covid secure', ramping up virtual desktops and enabling everyone to work from home,” said Limpak. “After that, it’s been about driving digital transformation.”

The first steps in this new phase have seen the implementation of simple micro services, like providing electronic processes to employees who can’t get into the office.

“I call them satellites in the cloud,” said Limpak. “After they’ve used them to stabilise the business, customers start to move data-rich enterprise applications to the cloud as well.”

Organisations either re-engineer mission critical databases and legacy applications or make them moveable by putting them in containers, explained Limpak. What they have to avoid is a cloud strategy that changes the cost model but ends up with the same bottlenecks.

“The last thing customers need is to turn a ‘capex’ data centre problem into a cloud ‘opex’ problem. And they need to avoid hyperscale ‘lock-in’,” he said, adding that choosing the right hyperscale cloud platform is tricky because Amazon, Azure and Google all have different strengths.

“My personal opinion is that Amazon will have a problem keeping customers on their platform. They have a lot of application development tools, but from a production point of view, customers will probably see more advantages in going with Azure and its Microsoft connections,” he said. “Google is probably better for AI and machine learning.”

Planning for success

Steve Blanche, chief technology officer at Ergo, emphasised the importance of careful planning and preparation in advance of cloud migration.

“We have seen businesses that went to the cloud in an unplanned way and paid the price in terms of workflow, performance and cost management. That’s why we developed a blueprint to ensure we can manage client costs down to every cent per second. It’s critical if you move from a ‘capex’ to ‘opex’ model,” he said.

Ergo’s cost analysis and advisory services are part of an ongoing monitoring process that continues after the initial cloud move, prompting tweaks and changes to ensure clients save money and extract maximum value at all times. With this level of attention, the business case for cloud becomes even more compelling, according to Blanche, and it’s been accentuated by the pandemic.

“Every organisation has now moved some services from traditional platforms to the cloud, particularly to SaaS solutions like Microsoft 365, where you can reap the benefits more quickly, especially when it’s about a fast and efficient way to get people to work remotely,” he said.

Blanche goes as far as to say that the ‘cloud-first’ marketing mantra of the big cloud vendors is becoming more credible.

“Microsoft has become so security oriented in its design that it’s increasingly difficult to argue against a complete cloud-first IT strategy,” he said. “Issues remain about where data resides and regulatory compliance, but the idea of hybrid is getting eaten away as confidence around cloud security, governance and data management grows.”

Ergo has earned Microsoft accreditations in these areas and topped it off by being named Microsoft Country Partner of the Year for 2020, the fifth time it has scooped the award in 10 years.

“Our whole focus has been on developing expertise in helping customers adopt cloud services and it’s great that Microsoft sees us as the leader in the Irish market,” said Blanche.

While he accepts there are still arguments for having dedicated kit on-premise, and acknowledges that private clouds can emulate the scalability and flexibility of public clouds, he believes the cloud-first business case will almost always win out.

“Covid-19 shone a light on the shortcomings of legacy and traditional on-premise platforms,” he said.

“Businesses had tons of servers and networking kit sitting idle because nobody was in those buildings and able to consume those very expensive systems. They have had to adopt cloud services. They can always switch back but on-premise and data centres will never give them the same levels of flexibility and agility.”

Public private migrations

Dell Technologies is committed to making sure client applications are running in the best place across multicloud and hybrid environments. The company has spent the last few years reshaping infrastructure into modern platforms and encouraging clients to leverage them as part of a drive towards more agility.

It’s a roadmap that hasn’t been affected by Covid, according to John O’Donoghue, solution consultant for the data centre compute group in Dell Technologies Ireland.

“We haven’t seen long-term strategies change. Organisations are still looking for the right combination of public clouds, whether it’s Amazon or Azure, and private clouds in data centres,” he said. “But some things have become an imperative because of the pandemic, rather than strategic.”

He is talking about the rapid adoption of tools like Microsoft Teams, which became the key for unlocking people’s productivity when they were forced to work from home.

“We have seen acceleration in digital transformation, companies using more unified communications and a move to ecommerce from businesses that were more challenged by lockdown, but people’s plans for workload adoption across hybrid cloud environments hasn’t really altered.”

These plans are increasingly about moving applications between different environments to make them more dynamic. It’s not one-way traffic to public clouds, according to O’Donoghue, because more agile and elastic data centres are encouraging a reverse movement into private clouds.

“Our ultimate goal is for clients to use Dell Technologies, including VMware, to pick and choose where their applications and services reside, whether it’s multicloud or in their own data centre,” he said.

“We provide platforms for building their own private clouds, and we’re seeing some role reversal with clients moving email servers and file servers out of public clouds and back into data centres, where they can be just as dynamic.”

Part of this is because of increased automation, enabled by Dell and VMware data centre solutions.

“There are a lot of tools available for managing data centres remotely and they are accelerating journeys to private on-premise clouds,” he said. “They use public cloud service models that minimise IT touchpoints.”

Agility is the goal, according to O’Donoghue, and it’s led to the concept of ‘anything as a service’, where every aspect of IT can be treated like a utility. He is sceptical when some vendors talk about complex technologies like AI in these terms, but broadly accepts that it is the direction of travel for the IT industry.

New data centre drivers

Séamus Dunne, managing director of Interxion’s Irish data centre, confirms that conversations have changed in his business too, and puts much of it down to Covid-19.

“When I talk to customers now, power and cooling are table stake stuff. They want to know about network resilience, capacity, carrier choices and cloud on-ramps. Covid-19 has definitely accelerated all of this, no question,” he said.

“Two years ago, there was a lot of experimentation with new technologies and workloads in the cloud; now the deployment and execution is real.”

He describes the pandemic and lockdown as the “all-time biggest test” for network resilience and performance. “What we have seen is clients expanding their network nodes in our data centres. The level of work has been incredible from all sorts if players, including Microsoft and Amazon,” he said. “Five racks of IT network equipment are now 10 racks.”

The role of data centres in facilitating interconnection between private clouds and hyperscale public cloud platforms has become much more important as organisations have moved to hybrid and multicloud models. Interxion has responded in all sorts of ways, from recruiting different skills to forging new types of partnership.

“We are now hiring pre-salespeople and solutions architects, people with network skills, not just power and cooling experience. We can offer a cloud platform with 700 different carriers connecting into it, so we want to be able to talk a lot more about network options,” he said.

The last few months have also seen Dunne working closely with businesses looking to get out of their on-premise data centres, more often a comms room in the office building. Interxion’s network nodes facilitate on-ramping to hyperscale public clouds or Saas (Software-as-a-Service) providers, enabling a more agile and less expensive pursuit of hybrid strategies.

“Organisations put infrastructure in our data centre because it opens up a whole new set of network opportunities,” he said.

“They have direct access nodes that are more cost effective than if they went direct to the cloud from their own data centre. Amazon, Azure and Google are expanding their direct nodes in our data centre for this reason.”

At the same time, Interxion has been forging partnerships with IT vendors and solution providers that can expand the part that data centres play in hybrid strategies. Working with HPE’s Greenlake solution, for example, Interxion can host a platform that combines public cloud pay-as-you-go features with private cloud security and performance.

With hyper-converged infrastructure provider Nutanix, it’s all about facilitating movement in and out of public and private clouds to maintain optimum performance in the most cost-efficient way.

Another big growth area for Interxion has been bricks-and-mortar retailers having to change strategy and take their businesses online.

“Two of Europe’s biggest ecommerce companies run out of our Dublin data centre and they have been incredibly busy, but other more traditional retailers are now coming to us,” he said.

“People and enterprises are appreciating the digital economy and IT in ways they really hadn't before. Change always create a bit of fear and risk aversion. What Covid has done is say that it has to happen.”

Accelerating cloud-first adoption

Nostra is a Microsoft partner with a cloud-first agenda which the firm’s founder and chief executive, Kevin O’Loughlin, believes to have been significantly advanced by Covid-19.

“Before lockdown, I’d say that 15 per cent of Microsoft 365 customers were actively using Teams periodically; now it’s a primary application for 90 percent of them,” he said.

“We have also seen a huge amount of companies migrate from on-premise file servers to SharePoint.”

A new-found need for unified communication and document sharing platforms was understandable when lockdown happened, but O’Loughlin argues that the same logic applies to a whole host of applications and services.

“The most economical and efficient way forward is to migrate SaaS applications in particular, but we have seen a lot of customers 'lift and shift' everything from their office to the cloud,” he said.

This is not without its challenges. O’Loughlin warns businesses that cloud spends will go up in the short term because they are replicating what they already have, rather than doing anything different.

“You will get massive cloud bills if you make no effort to improve the solution; it’s extremely efficient to run SQL databases from a hyperscale platform, but build a single server in the cloud to do it and it could cost you five times more,” he said.

He argues that a lot of cloud/on-premise cost comparisons are based on everything being equal, but when cloud solutions are properly sized, on-premise will very rarely win. Not all vendors will spell this out, according to O’Loughlin.

“There are IT companies that benefit by keeping their customers in the dark. They move people to the cloud and the more they can get them to consume, the higher their revenue,” he said.

“Nostra's core business is about managing and maintaining a customer's IT and our secondary business is cloud services. When we move people to the cloud it will cost us as a provider, but it’s the right thing to do, so we do it.”

While O’Loughlin is a cloud-first advocate, he recognises that it doesn’t make sense for everyone – the small hotel in the west of Ireland with lousy broadband connectivity, for example, or the production company working with huge video files.

“There are exceptions, but why would you keep data on an on-premise file server if you have Microsoft 365 and SharePoint? You can keep your data properly secure behind two factor authentication and make it accessible from anywhere,” he said.

Nostra’s main customer engagements are with chief executives and finance officers, where discussions are almost always business driven.

“They come to us because they can’t understand why their IT spends are so high or why their systems aren’t as reliable as they should be. They are getting over prejudices about the cloud, the idea that their data should always reside in their office,” he said. “Covid-19 put pay to that. The data might still be in the office, but they’re not.”

Covid also lays to rest the notion that people are inherently resistant to new ways of working.

“I found the levels of cloud acceptance we’ve seen in the last six months the most surprising thing that’s happened; people getting used to different ways of working at a scale I've never seen before,” he said. “Businesses now know that the more they have in the cloud, the easier it will be for their staff to work from home.”

He accepts that obstacles to cloud still exist, like on-premise investments that firms sweat because they are too expensive to abandon, and service fundamentals that people still misunderstand.

“The big one is that they think Saas providers backup their data. They don’t,” he said.

“Microsoft only backs up data to protect against their service going down; they don’t provide a backup if you accidentally delete your own data or files. After 30 days it will be gone. Backup is cheap, so do it.”

Cloud with a personal touch

One of the earliest examples of cloud and a big part of the hybrid discussion is Software-as-a-Service (Saas). Niche applications have often driven the model, like Big Red Cloud (BRC), an Irish based accountancy package that has been delivered to small firms as a subscription service since 2012.

The solution is the envy of software giants like Microsoft, who have tried and failed to enlist the firm’s chief executive, Marc O‘Dwyer, to help launch their own small firm products. Why has he succeeded where they have struggled?

“Because we started out in accounting software and have 27 years of pedigree. We know what the small business owner in Ireland requires and we tailor our software 100 percent to all the local tax and revenue requirements,” he said. “Competitors from New Zealand, Britain and US don't deal with the on-the-ground tax requirements in Ireland the way we do.”

BRC’s ability to tap into small business needs and the accountancy community in general, highlights how the right product can be executed in the cloud without losing the personal touch. At the same time, it runs on the Microsoft Azure platform and leverages all the elasticity and security of a hyperscale platform.

O‘Dwyer puts the firm’s success down to the perfect combination of skills in the two founders. His own experience as a small business owner helped him understand his customers’ mindset, while his business partner’s chartered accountant background and self-proclaimed “tech nerd” status helped with the product development.

“Small business owners aren't accountants or bookkeepers so we set about giving them a product they could use simply and efficiently,” he said.

He is close enough to his customers to know how hard Covid has been for them and is at odds with the widespread perception of how firms have adapted.

“Everyone is saying they've seen two years’ worth of digital adoption in the space of three to five months. That's fine if you have connectivity to facilitate it. Broadband is a prerequisite, but we work with companies in Ireland that can’t adopt digital services in their local county because they don’t have it,” he said.

This is why 40 per cent of O’Dwyer’s customers are still running Big Red Book, the on-premise version of its software.

“I’d rather they were all on Big Red Cloud because there would be only one product to maintain, but they can’t move because they haven’t got the connectivity,” he said. “Rather than make them suffer during Covid when they couldn’t get to their offices, we gave them free licences to access Big Red Cloud from home.”

Another consequence of Covid that is impacting BRC is the economic downturn.

“New start-ups are at their lowest level since 2008. We used to get 50 to 150 new businesses a month from accountancy practice recommendations; that figure has fallen to around 35. But the good news is that we are up by 28 per cent over the last two years and our annual renewals are up 50 per cent,” he said.

Enterprise-class conferencing from the cloud

The rush to enable a locked-down workforce with unified communication (UC) tools is well documented at this stage. One of the beneficiaries has been Avaya, which has seen the use of its video conferencing software increase 32 fold and downloads of its mobile app rise by 400 per cent.

“There has been a huge spike in people working for home. It was under 10 per cent; now it's almost 50 per cent,” said Mike Kuch, Avaya’s senior director of solutions marketing. “The feeling is that it will stay at 30 to 40 per cent and it’s now accepted as the new way of doing things.”

In response to the new dynamic, Avaya has launched Avaya Cloud Office, a hosted UC solution paid for on subscription, a type of product the company had only previously provided as a white label service to telco partners. The firm felt the time was right for a business-to-business launch.

“The surprise with Covid is how people have adopted UC after being resistant for so many years. The technology was proven but it needed a cultural shift to take off. Covid has broken the wall and now everybody has jumped on it,” said Kuch.

Delivering seamless collaboration across multiple channels, Avaya Cloud Office enables users to call, meet and message, assisted by more than 130 ready-to-use integrations. The plan is to bring some enterprise class to the way organisations communicate remotely, something that has been lacking from other providers, according to Kuch.

“A lot of born-in-the-cloud companies don't understand what’s needed and they don’t have the heritage we have,” he said.

Avaya is a well-known brand in the communications sector with an established partner channel.

“We can leverage those relationships along with our world-class services. Customers are able get all the benefits of the cloud, but still feel safe and secure because they know they have people backing them up, either Avaya or our partners,” he said.

Migration tools and features are available to move existing on-premise Avaya customers to the cloud service, while integration with Google Docs and Microsoft 365 attracts users of other cloud software suites and eliminates the need to switch between applications.

“People use it in conjunction with Microsoft Teams. It’s an interesting dynamic and we’ll be introducing some further integration very shortly,” said Kuch.

Avaya launches Avaya Cloud Office in Ireland this month.

How data centres deal with Covid-19

Like every other workplace, data centres had to be rethought when Covid-19 struck to maintain social distancing and ensure adequate levels of cleaning. The difference is that playing host to mission critical infrastructure that other businesses depend on has made them hotbeds of automation.

“The biggest challenge has not been the actual management of data centres but the increase in traffic that’s put pressure on bandwidth. Management is very light touch and there are lots of tools available,” said John O’Donoghue of Dell.

“That said, everything with hardware needs some sort of physical intervention to be made now and again; not all of it can be done remotely.”

The challenges are greater if, like Interxion, you are a running data centre on behalf of multiple clients who own their own IT stacks. “Covid actually increased the number of people who come into our data centres because the clients that managed their own racks couldn't do it anymore,” explained managing director Séamus Dunne. “They called us to do a lot of the work they used to do.”

The company’s own engineering tasks have also been modified.

“We manage it through social distancing and cleaning regimes that have gone from once a day to four times a day. They now include the use of disinfectants and Covid protocols,” Dunne said. “And we introduced electronic shift handovers where we used to have physical meetings.”

The measures seem to have worked, according to Dunne, and it’s been ‘business as usual’ for Interxion customers in terms of uptime and availability. “We’ve had a few scares because of extra demands on capacity and resources, but there have been no outages to date,” he said.