1、 STL Partners|Proprietary and Confidential1The true cost of cloud:How pursuing distributed hybrid cloud can curb costs for enterprisesMay 2024Kindly supported by:Jack Hurley,Consultant Enterprises are experiencing rising bills from their cloud and network providers.This report recommends how enterpr

2、ises can use a distributed hybrid cloud model to improve performance,enhance security and streamline data processing to reduce costs and increase productivity.STL Partners|Proprietary and Confidential2Recommendations for industry players 6But a hybrid,distributed model may be best5Many find themselv

3、es on a journey to using public cloud.4But cost,performance and security are key challenges3Enterprises are increasingly adopting hybrid IT architectures.2Executive summary1Contents STL Partners|Proprietary and Confidential3Recommendations for industry players 6But a hybrid,distributed model may be

4、best5Many find themselves on a journey to using public cloud4But cost,performance and security are key challenges3Enterprises are increasingly adopting hybrid IT architectures2Executive summary1Contents STL Partners|Proprietary and Confidential4Enterprises should pursue a distributed hybrid cloud mo

5、del to improve performance,productivity and reduce costsDistributed hybrid cloudEnterprise-owned infrastructurePrivate cloudPublic cloud“Distributed hybrid cloud is a flexible and scalable IT environment that combines public cloud,private cloud,and on-premises infrastructure that has dynamic solutio

6、ns to performance requirements,sensitive data and high costs”Enterprises are increasingly adopting hybrid IT architectures.However,there is no one-size-fits-all model as they all face similar challenges surrounding security,scalability,performance limitations and cost management.Cost management is a

7、 prevailing issue,with 90%of enterprises experiencing a rise in cloud costs in the last two years.One way to mitigate this is by implementing a distributed hybrid cloud approach,allowing businesses to distribute workloads across the most cost-efficient infrastructure available.Distributed hybrid clo

8、ud also addresses the other challenges enterprises are experiencing by providing security,flexibility and performance improvements.This cloud model should be adopted,but not before ensuring organisational alignment,understanding which workloads to distribute and prioritising effective partnerships.E

9、xecutive Summary STL Partners|Proprietary and Confidential5We conducted a survey with 200 enterprise respondents across North America and EuropeOur survey quantifies trends in enterprise cloud adoption in four industry verticals across North America and EuropeNorth AmericaRespondents:100EuropeRespon

10、dents:100Financial servicesMedia and entertainmentTechnologyRetail50 respondents from each of four industry verticals+Survey respondents were from enterprises of varying sizeSurvey respondents are involved in the assessment/implementation of IT servicesDecision maker73%Decision influencer23%Operatio

11、nal4%Executive Summary43%36%21%2,000-4,9995,000-9,99910,000 STL Partners|Proprietary and Confidential6Recommendations for industry players 6But a hybrid,distributed model may be best5Many find themselves on a journey to using public cloud4But cost,performance and security are key challenges3Enterpri

12、ses are increasingly adopting hybrid IT architectures2Executive summary1Contents STL Partners|Proprietary and Confidential7Enterprises are increasingly adopting hybrid IT architectures,however there is no one-size-fits-all modelOn-premisesPrivate cloudHybrid cloudType of IT architectureWhat is it?Wh

13、ich types of enterprise would use it and why?Why would an enterprise not want to use it?Enterprise maintains its compute and storage infrastructure on its own physical premisesInfrastructure bought and owned by the enterprise itselfThird-party data centre facilitates dedicated compute and storage in

14、frastructure for enterprisesCombination of both public and private cloud infrastructures Individual applications are hosted in different cloud environments,with the choice determined by the nature of the specific use casesHard to build in-house skillsLimitations in scalability/flexibility compared t

15、o public cloudHigh upfront capex investment and ongoing maintenance costs Enterprises that have needs for scalability and cost management,e.g.cloud gaming,disaster recoveryPublic cloudEnterprises with mission-critical operations,e.g.predictive maintenance and remote control of machineryEnterprises w

16、ith sensitive/confidential data might choose to maintain full control of their own infrastructureA hyperscaler provides shared compute and storage infrastructure for the enterpriseEnterprises that want to reduce costs and manage scalability with minimal concern for data sovereignty,e.g.chatbotsEnter

17、prises have unique business objectives and operational requirements which impact which IT architecture they useEnterprises that look to balance the benefits of cloud scalability and flexibility with the security benefits of on-premises infrastructure,e.g.media streaming,IoT deployments,big data proc

18、essingFairly high compute and storage costs as have dedicated infrastructure Pricing can be complex and lack predictability making financial planning difficult Integrating and orchestrating workloads across numerous cloud platforms and on-premises infrastructure can add management complexity for ent

19、erprises STL Partners|Proprietary and Confidential8Over 60%of enterprises have adopted mixed infrastructure models,however there is variation depending on industryQ:What is the current IT architecture that you use?25%11%31%33%0%20%40%60%80%100%Type of IT architecture usedOver 60%of enterprises curre

20、ntly operate a mixture of cloud and customer owned infrastructure There is no one prevailing IT architecture that all enterprises are tending towards,likely because enterprises all have distinct needs and requirements The technology sector had the highest response rate for workloads running in cloud

21、-only infrastructureSource:STL Partners enterprise survey 2024,n=200Technology companies prioritise the scalability and flexibility provided by cloud infrastructure to facilitate the agile deployment of new products,services and features.However,media organisations tend to steer away from cloud-only

22、 infrastructures potentially because of strict regulations around content ownership and fear of the costs of streaming large volumes of media content into and out of the public cloud18%23%26%32%0%5%10%15%20%25%30%35%Media and entertainmentRetailFinancial servicesTechnologyUse of cloud-only infrastru

23、cture by industry verticalMixture of cloud and customer owned infrastructure,with multi cloud vendorMixture of cloud and customer owned infrastructure,with single cloud vendorOn-premises/co-location onlyCloud infrastructure only STL Partners|Proprietary and Confidential9Recommendations for industry

24、players 6But a hybrid,distributed model may be best5Many find themselves on a journey to using public cloud4But cost,performance and security are key challenges3Enterprises are increasingly adopting hybrid IT architectures2Executive summary1Contents STL Partners|Proprietary and Confidential10Enterpr

25、ises are currently facing cost,performance,security,and scalability challenges with their IT architecturesSecurity concernsIT environments are becoming more complex with sensitive and confidential data potentially vulnerable to data breaches and security threatsScalabilityComplexity of individual sy

26、stems,dependence on legacy technologies,resource constraints,and interoperability presents scalability challenges for enterprisesPerformance limitationsEnterprises are requiring greater levels of performance,reliability,and security from their systems which can be troublesome with outdated,legacy IT

27、 environmentsOvercoming these challenges are imperative to an enterprise using digital technologies to unlock new avenues for growth,efficiency and innovationCost managementEnterprises are increasingly dependent on vast volumes of data,the collection and management of which are critical for running

28、their businesses but come at high costsQ:What is the main challenge you are experiencing with your current IT architecture?39%22%19%16%Source:STL Partners enterprise survey 2024,n=200 STL Partners|Proprietary and Confidential11Q:What is the main challenge you are experiencing with your current IT ar

29、chitecture?Security is a greater concern for enterprises that operate cloud only infrastructureSecurity concernsScalability35%0%10%20%30%40%RetailFinancialTechnologyMediaScalability as main challenge by vertical29%47%of enterprises who run workloads in the cloud identified security as the main chall

30、engeof enterprises that run workloads on-premises identified security as the main challengeSecurity concerns were the greatest challenge for enterprisesSource:STL Partners enterprise survey 2024,n=200With the rise of streaming platforms,the need for scalable cloud infrastructure is growing to handle

31、 sudden surges in user traffic and ensure seamless content delivery STL Partners|Proprietary and Confidential12Q:What is the main challenge you are experiencing with your current IT architecture?Q:Approximately how much data does your organisation produce within one year?Enterprises costs are being

32、driven up by increased data usage,whilst smaller companies are facing performance issuesCost managementPerformance limitationsLess than 500TB1PB500TB-1PB35%25%40%Smaller companies often encounter performance limitations as they contend with financial constraints when investing in their IT infrastruc

33、ture1PB1 petabyte =11,0004K movies=200mdigital photosEnterprises are producing vast quantities of data,which will exacerbate cost challengesSource:STL Partners enterprise survey 2024,n=200Source:Cobalt Iron19%15%9%0%5%10%15%20%2000-49995000-999910,000Performance limitations as main challenge by empl

34、oyee numbers STL Partners|Proprietary and Confidential13Recommendations for industry players 6But a hybrid,distributed model may be best5Many find themselves on a journey to using public cloud4But cost,performance and security are key challenges3Enterprises are increasingly adopting hybrid IT archit

35、ectures2Executive summary1Contents STL Partners|Proprietary and Confidential1430%of enterprises selected technical advancements as their trigger for adopting a cloud-centric model Q:What has been your primary trigger in your adoption of cloud technology?5%6%7%7%11%16%20%28%0%5%10%15%20%25%30%Exiting

36、 applications end of lifeDissatisfaction with current IT architectureChanges in regulatory or complianceShifts in customer expectationsInternal organisational changesIncreasing costsSecurity and data breachesTechnological advancements in industryTechnological advancements in industryTechnology impro

37、vements in industry could benefit from cloud technology e.g.,moving IoT-enabled point of sale(POS)systems to cloud can enable retailers to access real-time sales data from any location.Security and data breachesCloud providers offer centralised management platforms and monitoring tools that provide

38、enterprises with greater visibility into their security levels.Increasing costsCloud infrastructure permits flexibility in the scaling of resources depending on usage,optimising utilisation.Additionally,cloud providers often use a pay-as-you-go model,which is attractive for customers.Demand for clou

39、d services continues to grow as enterprises explore digital transformation practices,with cloud-based applications playing a crucial role in facilitating remote work.Source:STL Partners enterprise survey 2024,n=200 STL Partners|Proprietary and Confidential1590%of enterprises have experienced rising

40、cloud costs in the last two years2%4%1%4%9%31%29%20%0%5%10%15%20%25%30%35%21-30%decrease 11-20%decrease0-10%decreaseNo change0-10%increase11-20%increase21-30%increase31-40%increaseQ:How much have your cloud costs changed over the last two years?Cloud costs have increased over the last two years for

41、enterprises due toDemand for cloud services continuing to grow with businesses relying more heavily on digital transformation,remote work and cloud-based applications,putting upward pressure on pricesCloud providers are incurring substantial costs associated with building and maintaining infrastruct

42、ures to support their networks,deterring providers from lowering pricesEnterprises are generating and collecting larger volumes of data than ever before resulting in increased resource usage and ultimately higher cloud storage and transfer costs Source:STL Partners enterprise survey 2024,n=200 STL P

43、artners|Proprietary and Confidential16Data storage,support and maintenance and data transfer are the most significant cloud cost bucketsData storage29%21%17%Back-up and disaster recoveryData transfer(cloud egress)Support and maintenanceQ:What is the largest category of cloud costs you are currently

44、experiencing?26%Data storageSupport and maintenance Data transfer(cloud egress)Back-up and disaster recoveryAs enterprises are generating and collecting larger volumes of data than ever before,the need for storage capacity also growsIncreasing regulator.requirements e.g.GDPR are now mandating the re

45、tention and secure storage of data for longer time periods which incurs greater charges.As enterprises are migrating a larger proportion of their infrastructure to the cloud,the complexity of managing and maintaining these environments increases.Enterprises also need to invest in training and skill

46、development programs to ensure that their IT teams are equipped with the expertise to effectively manage and maintain cloud environmentsCloud egress costs are rising due to the increase in data volume generated by enterprises cloud providers typically charge based on the amount of data transferred.E

47、nterprises are also adopting hybrid models which incurs greater costs for data transfer between varying environments,e.g.cross-cloud provider boundaries.Enterprises are investing more in advanced backup solutions,to protect against data loss and mitigate the impact of cyberattacks.Managing backup an

48、d disaster recovery across hybrid environments also requires specialised tools,expertise,and resources.Source:STL Partners enterprise survey 2024,n=200 STL Partners|Proprietary and Confidential17Enterprises are expecting this trend to continue with cloud costs rising significantly over the next thre

49、e years2%4%1%4%9%31%29%20%0%5%10%15%20%25%30%35%21-30%decrease11-20%decrease0-10%decreaseNo change0-10%increase11-20%increase21-30%increase31-40%increaseQ:How much have your cloud costs changed over the last 2 years?Q:How much do you think your costs will change over the next 3 years?4%4%2%4%11%31%2

50、5%18%0%5%10%15%20%25%30%35%21-30%decrease11-20%decrease0-10%decreaseNo change0-10%increase11-20%increase21-30%increase31-40%increase50%of enterprises have seen over a 20%rise in their cloud costs in the last two years75%of enterprise are predicting to experience a cost increase of 10%or more in the

51、next three yearsSource:STL Partners enterprise survey 2024,n=200 STL Partners|Proprietary and Confidential18Over 60%of enterprises have started to counter increasing cloud costs by implementing cost optimisation strategiesQ:Have you started to implement strategies to try and optimise your cloud cost

52、s?Q:Please could you expand on the strategies you are implementing to optimise your cloud costs63%34%3%YesNoI dont knowAll respondentsCompany size splitOptimising cloud costs becomes increasingly important as the scale of operations grows.Larger enterprises are better positioned to manage infrastruc

53、ture efficiently with reduced financial constraints.Enterprises are seeking to find new ways to minimise cloud costs,with no clear solution60%36%4%63%34%3%65%33%2%2,000-4,9995,000-9,99910,000Identifying mismanaged resources and using auto scaling to reduce costsWe are investing in advanced technolog

54、y that would make operations run smootherWe are negotiating deals with our cloud provider and also looking into ways to reduce our cloud storage Decision maker,Financial Services,NAM Decision influencer,Retail,Europe Decision maker,Retail,NAMSource:STL Partners enterprise survey 2024,n=200 STL Partn

55、ers|Proprietary and Confidential19Recommendations for industry players 6But a hybrid,distributed model may be best5Many find themselves on a journey to using public cloud4But cost,performance and security are key challenges3Enterprises are increasingly adopting hybrid IT architectures2Executive summ

56、ary1Contents STL Partners|Proprietary and Confidential20A distributed hybrid cloud model enables enterprises to harness the advantages of public,private and on-premises infrastructure ColocationDistributed hybrid cloudPrivate data centreOn-premises infrastructurePublic data centrePublic cloudPrivate

57、 cloud“a flexible and scalable IT environment that combines public cloud,private cloud,and on-premises infrastructure that has dynamic solutions to performance requirements,sensitive data,and high costs”Enterprise owned infrastructureContent delivery networks(CDN)CDN STL Partners|Proprietary and Con

58、fidential21Over 95%of enterprises are looking towards distributed hybrid compute solutions to mitigate cloud costs Q:What is your current level of interest in deploying a distributed hybrid compute solution?37%12%47%3%1%Fully deployedPoC/PilotActively considering but notyet deployedNot a focus in ou

59、rorganisationDont knowOver 95%of enterprises have a focus on distributed hybrid solutions,with nearly 40%having already fully deployed a solutionSource:STL Partners enterprise survey 2024,n=200Security and complianceIncrease data protection and navigate industry-specific legislation that varies from

60、 country to countryDistributed hybrid cloud strategy offers security,flexibility and cost efficiency benefits that a traditional cloud model cannotFlexibility and scalabilityEnables enterprises to quicky adapt to changing demands without being constrained by the capacity of a single data centre/prov

61、ider Cost efficienciesEnables enterprises to allocate workloads to the most cost-effective infrastructure based on resource availability and budget Performance improvementOrganisations can place computing resources closer to end users based on demand and performance requirements STL Partners|Proprie

62、tary and Confidential22The benefits of distributed cloud solutions mirror the challenges that enterprises face with their IT architecture6%16%23%26%29%0%5%10%15%20%25%30%35%Resource optimisationPerformance improvementCost efficienciesFlexibility and scalabilitySecurity and complianceQ:What do you se

63、e as the primary benefit for your enterprise in adopting a distributed hybrid cloud solution?Pursuing a distributed hybrid cloud strategy enables enterprises to mitigate the current challenges they are experiencing with their IT architecture by providing increasing security and flexibility whilst dr

64、iving cost efficienciesSource:STL Partners enterprise survey 2024,n=200Q:What is the main challenge you are experiencing with your current IT architecture?4%16%19%22%39%0%5%10%15%20%25%30%35%40%45%Energy usage/carbon footprintPerformance limitationsCost managementScalability and capacitySecurity con

65、cerns and compliance STL Partners|Proprietary and Confidential23Despite the expected benefits,50%of enterprises have concerns around integration and a lack of technical maturityCost management29%22%13%Lack of skills to manage new technologiesTechnical maturityChange management and integration with e

66、xisting systemQ:What do you see as the primary challenge for your enterprise in adopting a distributed hybrid cloud solution?28%Cost managementIt is challenging to track and attribute costs to specific workloads across various cloud environments for enterprisesEnterprises should implement a cost all

67、ocation strategy that uses tools to categorise and track costs for specific workloads across different environments IntegrationIntegrating data across distributed environments can be complex because of fragmented protocols and storage systemsLeverage data integration platforms and APIs that provide

68、a standardised way for applications to interact with data,reducing integration complexity Technical maturityManaging a distributed cloud solution will require a team that is skilled in using multiple vendor environments and toolsetsEnterprises should discuss this with their prospective partners to e

69、nsure they can guarantee compatibility and interoperability,as well as support with team upskilling where neededLack of skillsAdopting a distributed solution requires a mature understanding of cloud computing,networking principles and cybersecurityIT professionals within enterprises should look to a

70、cquire and/or develop skills in these domains through training or external partnershipsMitigationMitigationMitigationMitigationSource:STL Partners enterprise survey 2024,n=200 STL Partners|Proprietary and Confidential24Recommendations for industry players 6But a hybrid,distributed model may be best5

71、Many find themselves on a journey to using public cloud4But cost,performance and security are key challenges3Enterprises are increasingly adopting hybrid IT architectures2Executive summary1Contents STL Partners|Proprietary and Confidential25Recommendations for enterprises adopting a distributed clou

72、d model Over 70%of todays internet traffic flows through some form of distributed compute architecture,being cached in locations across the globe.Alongside content distribution,this is a well-known strategy for large internet companies to improve performances.Enterprises should realise that distribu

73、ted compute can also have a significant impact on their internal workloads too.For instance,enterprises can ensure that artefacts and files that need to be accessed regularly by teams around the work are cached,so that requests are dealt with in a more localised fashion.IT and finance teams should w

74、ork closely together to gather and evaluate cloud costs in their entirety when assessing whether to have a more opex-or capex-centric IT strategy.For example,where it might not seem attractive for enterprises to buy and operate personal servers,the overall investment may be lower than ongoing cloud

75、opex costs.Enterprises must undertake a cost benefit analysis and consider the impact of their revenues if they do not adopt a distributed IT architecture.For example,in financial services if you cannot provide customers with fast and secure access to bank accounts,customers may choose another bank.

76、Enterprises should be considering their future IT requirements alongside their current needs,as their IT requirements will grow in line with organisational expansion.Initially a rapidly expanding enterprise may find that the flexibility and scalability offered by public providers is more attractive.

77、However,as its IT requirements stabilise,it may become cheaper to run some of its workloads on enterprise-owned infrastructure.Equally,data privacy regulations are ever-evolving,and an enterprise will need to consider how potential changes to recommendations and requirements could impact its IT deci

78、sion making over time.Ensure organisational alignmentUnderstand which workloads to distributeBe forward-thinking about requirements123 STL Partners|Proprietary and Confidential26Enterprises should prioritise partners who are experienced and reduce complexity of building in-housePrioritise partners w

79、ho reduce complexityLook to experienced vendors for expertiseFor many enterprises,one of the barriers to moving to a distributed compute model is the potential increase in complexity,when workloads are no longer all stored and processed in one location.Software vendors that are experienced in handli

80、ng this will be able to reduce this complexity,ensuring that there is clear observability of what workloads are running where and how they are performing.The benefits of purpose-built in-house solutions should be weighed up versus buying a solution off-the-shelf.Whilst buying off-the-shelf is conven

81、ient and can reduce the need for internal skillsets,it can also come with challenges,where solutions are not purpose-built for the set of use cases,applications and workloads of an organisation.Enterprises may want to consider prioritising partners who can reduce the burden and complexity of buildin

82、g a distributed compute solution in-house,through intuitive dashboards and interfaces.45Enterprises wishing to adopt a distributed hybrid cloud solution should follow these five key recommendations STL Partners|Proprietary and Confidential27Questions?Get in touchReach out directly to the author with your questionsJack HurleyConsultant