There has been an exponential rise in the volume of cloud-based business tools and cloud-first businesses, which has been further propelled by the pandemic and necessitated a rapid transition to remote working. As business working models settle after these significant changes, cloud is becoming an increasingly popular choice for organisations looking to improve productivity and long-term business strategy.
However, some aspects are coming under increased scrutiny as the promise of cloud being the cheaper option is becoming challenging for some businesses selling cloud-based platforms or tools to their customers. Cloud providers using hyperscalers, once touted as cost-effective solutions, are now being re-evaluated in terms of affordability.
The exponential growth in the volume of cloud storage required by businesses has created challenges for hyperscalers, and as a result, running costs have increased, seeing rising costs passed down to their customers. This includes the likes of SaaS providers, who are too starting to pass these on to their customers.
This process has seen cloud become more expensive than previously promised, resulting in a bloated cost model whereby costly inputs are forcing costly outputs from the SaaS provider to the end customer.
To mitigate these rising costs, some businesses are opting for a hybrid cloud model, combining both public and private cloud solutions. Some organisations even choose to go entirely private. For this to be successful, in house-expertise is required and high maintenance costs occur. However, this is simply out of reach for some due to limited capital, modern IT infrastructure or a lack of skills to carry this out effectively.
Risks such as reduced security protections are presented if introduced without the sufficient resources. In an era of heightened cybersecurity threats, it is crucial to have robust security measures in place to counter cyber-attacks. This can act as a barrier to adoption, making a change in infrastructure strategy unviable for some businesses.
Choosing the right partner
Organisations need to plan carefully and consider their provider when moving to the cloud. This involves assessing the specific needs of the business and aligning them with those of the chosen service provider.
It is important that providers are transparent around their own business strategy. As a business aims to grow, increased prices can occur, so getting a clear idea of how scaling up may affect the price of the service is essential to long term planning to continue to offer value to customers.
Understanding a cloud partner’s long-term ambitions is also essential, gathering insights into their market sustainability, potential mergers or acquisitions, and their plans for innovation and growth.
These factors will affect customers in the future. Aligning business values and strategies with the cloud partner is essential to ensure a seamless customer experience and mitigate the potential for unexpected surprises in the long run.
The benefits of cloud
There is no question that a cloud-based business strategy will provide unrivalled business benefits. Organisations should recognise the long-term implications of incorporating the cloud into their business strategy, such as more flexible and cost-effective IT infrastructures, while weighing up the potential risks it may pose to their business.
With the right strategy to enable education and adoption throughout an organisation, cloud computing enables businesses to run more efficiently and can provide business insights in real-time from anywhere. As part of this, employees can access files and applications from anywhere, essential in a hybrid working world. With employees more dispersed than ever before, cloud allows people to connect and collaborate seamlessly.
It can automate many processes, saving significant time and labour for business operations. It can also ensure a stronger customer experience, offering a complete picture of the customer journey as well as speeding up processes in customer engagement. And it can provide deep insights available in real-time to enable speedy and strategic decision-making to drive business success.
Cloud can enable a business to increase its agility, flexibility and adaptability. Businesses can gain insights to look ahead to potential risks or turbulence and take steps to tackle these before they impact performance. Businesses can scale up or down to suit demand much more easily and quickly.
Cost savings with the right provider are another benefit. Businesses can significantly reduce their IT expenditure by enjoying benefits such as cheaper initial expenses, pay-as-you-go pricing, and lowered total cost of ownership over time.
All of these benefits can help a business remain competitive in any market. However, the right considerations need to be made to mitigate risk.
The risks involved
An emerging and major risk is the possibility of significant cloud price rises as a company grows, which can have a cascading effect on other sectors of the business. These ‘bloated costs’ may force budgetary cutbacks in areas such as recruitment or marketing, or lead to the costs being passed on to customers. However, with the right provider, these risks can be all but eliminated and provide strong ROI.
A chosen provider must be robust and protect business data. Cyber-attacks and data breaches which can result in data, financial and reputational loss are also potential risks. However, most SaaS providers are equipped with stronger expertise to avoid security risk than most businesses could be if they took data storage in-house.
While investing in cloud can bring huge business benefits, the potential risks must be evaluated carefully to inform implementation strategies and help the customer realise the full benefits of cloud.
Cloud Economics
We have already explored the benefits of running a cloud-based business. These benefits allow organisations to future proof their business, setting them up for growth while also preparing them for unforeseen circumstances.
Recent events, such as the pandemic, supply chain challenges, geopolitical conflicts, and high inflation, have demonstrated how economic conditions can rapidly change without warning. This highlights the importance for decision-makers to prioritise building a robust business model that can withstand such turbulence.
In the face of these challenges, businesses have encountered significant hardships, with many struggling to survive. A lack of agility, flexibility and adaptability can lead to an organisation’s downfall and cloud computing can provide a route to building a resilient and robust business to navigate unstable conditions.
Wider purpose
On top of the benefits cloud computing can bring to businesses, it can also provide wider socio-economic benefits, offering increased opportunities reducing geographical barriers and expanding the available talent pools.
The cloud enables individuals to work from their preferred locations. This can improve employee experience, allowing increased flexibility, improving work life balance. It also provides opportunities to people all over the world, expanding the talent pool for recruitment.
Organisations no longer have to face restrictions when hunting for new talent or choosing a desirable destination as the cloud enables a seamless and collaborative working environment, that is not location-dependent.
Additionally, as the demand for highly skilled labour increases, cloud can help to eliminate the war for talent while restricting talent erosion and improving skills distribution. Skills no longer need to move away from areas towards traditional cities and business towns, as it enables talent to stay in local communities, building prosperity, rather than eliminating it.
The road ahead
During challenging economic times that present uncertainty and unpredictability, businesses must now assess their cloud strategy with a long-term view in mind.
Organisations considering a cloud-based model must carefully consider all key factors to maximise benefits. This involves assessment and strategic planning in line with company objectives to ensure success.
With the right approach, cloud computing can bring huge benefits, helping businesses become resilient, so they can adapt to any unexpected market disruptors now and in the future. Now, the promise of cloud is as strong as it has ever been.
Sridhar heads the European Operations for Zoho Corporation. He has spent over 2 decades building B2B software and has played leadership roles in Product Management, Business Development, Marketing and Engineering. He is no stranger to public forums on topics from building a strong product culture to how technology is changing the world. Being part of the Zoho team since inception, he has thoroughly enjoyed the journey from a bootstrapped start-up to a global software product company.