2018 Year in Review: The 4 Shifts in IT Priorities That Changed the Cloud Landscape

In 2018, the most dramatic shift in IT that I’ve ever seen suddenly accelerated. Cloud became a necessity. Companies that delayed moving IT infrastructure to the cloud faced increased pressure to evolve, imparting tremendous velocity to the change. Traditional technology vendors were caught flat-footed after years of dragging their feet and acting like the cloud was a marketing label instead of a leap in technology. I was thrilled to finally see the action shift from these legacy players to the true innovators. Almost overnight, organizations turned to Amazon AWS, Microsoft Azure, IBM, and their ever expanding circle of partners – the trusted solutions experts supplying every level of the IT stack, including storage, networking, security, analytics, and more.

What sparked this acceleration? This past year I worked closely with IT leaders and C-level executives at various stages of their cloud journey, and a few clear themes emerged. Below are some subtle changes that drove the shift in 2018:

1. Cloud-First to Cloud-Only

There is no one left alive in IT who doesn’t believe that cloud is real and it’s here to stay. Five years ago C-suite executives redefined the technology agenda by asking for a cloud option to be considered first when looking at any technology refresh. This ask was due mostly to cost. The large Web companies, like Amazon, Google and Facebook, were putting everyone to shame by being able to run IT at a fraction of the cost of traditional IT. Teams were challenged with evaluating cloud options before just doing more of the same. This cloud-first ask imparted real momentum to cloud initiatives. Suddenly cloud vendors, specifically those of us in infrastructure, no longer had to fight our way into the party. Instead we were invited to participate and told that we had the right stuff. At the time, I thought these cloud-first initiatives would be as good as it gets, in terms of high-level strategic support. In 2018 the C-suite upped the ante by demanding that cloud be not only the first option but the only option. Large organizations want out of the data center business altogether.

2. Cloud-Washed vs. Cloud-Native

Executing on this cloud-first strategy has not been without considerable pain. Traditional data center technology had decades to evolve. The current shift is happening in just 3-5 years, the average technology refresh cycle. This puts enormous pressure on IT teams and vendors alike to make sure that everything that works now works in the cloud. But it has also shined an unfavorable spotlight on many so-called cloud technologies. I often meet with clients who are experiencing significant scale or performance issues after having moved to the cloud through what I call “cloud-washed” solutions. Think of these as traditional technologies with some element of cloud doused over them or inelegantly attached.

These cloud-washed solutions fail organizations because they fail to understand cloud itself. Cloud is neither a marketing label nor a location. Cloud is real technology. It is an architecture; one that favors scale and commodity components above all else. But it has to be treated as such, not merely bolted onto traditional tech. Fortunately, there are plenty of offerings that are cloud-native. The long, slow start to this cloud transition gave us all a chance to mature our segments of the cloud technology stack. The pieces are there, and I’m happy to see more organizations recognizing their value.

3. One Cloud to Many

When large companies were merely dipping their toes in the cloud, they could afford to have a single supplier of cloud services. In 2018 optionality is everything. Cloud is now strategic. There is not a single discussion I have with a CIO where the topics of cloud portability and the flexibility to be able to access data in the cloud from any cloud provider does not come up. As cloud services have matured and proliferated, there are now too many possibilities for any one provider to satisfy everyone’s wish list effectively. So we see that each has its strengths: Amazon is best at core infrastructure services; Microsoft dominates the application stack; Google is coming on strong from the rear with their AI offerings. Then you factor in the dozen of more specialized services from the likes of Oracle, SAP, and Salesforce. The days of relying on a single cloud are over. Optionality and the ability to integrate across best-in-class services are now essential.

4. CAPEX to OPEX

Cloud models are service annuity models and, as such, they need to be expensed against a company’s OPEX budget. While most large businesses carry a large IT CAPEX budget to buy big bright boxes, the OPEX budget has been much smaller, confined to paying for things like telecommunication services and utilities. In 2018, businesses finally started catching on to the fact that cloud as a subscription model is not only cheaper but gentler on cash flow. Organizations have begun moving dollars from their CAPEX to their OPEX budget. Larger OPEX budgets have in turn accelerated the transition of additional core functions to the service model.

As anyone I had the pleasure of meeting with this past year will tell you, I’m beyond excited about these changes. Those of us who recognized the transformative potential of cloud early on had to wait for large organizations to take it seriously. We had to wait for them to trust their infrastructure to this technology. Now the wait is over. The so-called cloud solutions have faded. Organizations have the strategic mindset to embrace the shift to cloud, and the budget to make it happen. This past year was an exciting one, but I can’t wait for the changes to come in 2019.