In the past few years, organizations have weathered unprecedented change as they have had to adapt to macro-economic, political, and societal challenges. These challenges are not going away—the business outlook remains uncertain with ongoing concerns, including inflation, supply chain disruptions, and rising energy prices.
Microsoft believes the best way to prepare for this uncertainty is for organizations to do more with less—less complexity and cost, with more agility, resilience, and innovation. This means applying digital capabilities to extend what organizations can achieve amidst today’s constraints.
Moving workloads to the cloud provides more flexibility for organizations to align their IT investments with business needs while benefiting from cloud economies of scale. Modern infrastructure and cloud capabilities can also free up an organization’s IT workforce to focus on workloads and applications that are most meaningful to their customers.
To get a deeper understanding of the challenges faced by our customers and their plans around cloud adoption, Microsoft commissioned a global survey with more than 1200 IT decision makers.
The study revealed three key cloud adoption trends:
1. Cloud adoption plans remain integral to strategies in uncertain business climates
The survey found 62 percent of organizations have a migration and modernization strategy in place, showing the increasing importance of cloud adoption in IT transformation. Their top motivators are reducing total business costs, future proofing business strategy, and driving revenue growth. The survey also showed security, business continuity (BC), disaster recovery (DR), and scalability as top benefits desired from cloud migrations. That said, we expect that returns on investment (ROI) considerations will remain top of mind in the near term as customers prioritize cloud initiatives for implementation—be it optimizing their existing cloud workloads or moving additional workloads. This increased attention on cost optimization and the rise of financial operations teams (FinOps) is also echoed in the Flexera state of the cloud 2022 report, where for the sixth year in a row, optimizing the existing use of cloud (cost savings) was the top initiative, followed by migrating more workloads to the cloud.
Organizations are considering cloud adoption plans holistically across their entire IT infrastructure to better prepare for what’s next. Of the organizations we surveyed, the number who have more than half of their workloads in the cloud will grow from 27 percent to 47 percent over the next 18 months with investments spanning both business-critical and non-business critical workloads. Furthermore, the survey found organizations with a cloud migration and modernization strategy are 58 percent more likely to be ‘cloud-only’ (all or almost all applications and workloads running in the cloud) three years from now.
2. Modernization is a key focus for digital transformation
82 percent of surveyed organizations said migrating to the cloud is a steppingstone towards digital transformation. Migration is about getting workloads to the cloud—and modernization is about refactoring existing applications and workloads to take full advantage of cloud-native technologies like Platform-as-a-Service (PaaS) or containers. Those surveyed told us 74 percent of workloads that have already migrated are candidates for modernization—modernizing workloads helps opens the door to digital transformation whether it’s speeding up product innovation cycles or personalized end-user experiences.
3. Hybrid and multicloud interoperability and integration are expected
Organizations continue to embrace multicloud and are looking for cross-cloud management and interoperability from their cloud providers. Underscoring our recent research on hybrid and multicloud earlier this year, customers surveyed want to retain investment flexibility along with best-of-breed cloud capabilities with 71 percent to continue implementing a hybrid or multi-cloud strategy.
Complexities of cloud-to-cloud integration, refactoring existing applications, and integration with legacy backends are a few of the barriers that can slow down cloud adoption. So, it’s no surprise that support from a dedicated migration and modernization team was ranked highest in surveyed customers’ wish list from cloud vendors. Post migration support, access to engineering resources, and help with technical skilling were other key areas that emerged from the survey. These findings present significant implications for cloud providers as they define programs and investments to assist customers during uncertain times.
How Microsoft Azure can help customers with cloud migration and modernization efficiently
We have been on our own digital transformation journey since Microsoft began migrating on-premises workloads to the cloud in 2014. We have been transforming our IT footprint using built-in tools and data insights that Azure provides to optimize costs (such as Azure Advisor, Azure Cost Management and Billing, and Azure Monitor) and reinvesting in modernization for business growth. Today more than 95 percent of our workloads run on the cloud, and while our yearly budget for Azure has remained constant since 2014, Microsoft has grown by more than 20 percent. Our own journey and learnings inform how we can empower customers to best meet their current and future technology needs.
Our customers choose Azure as their platform of choice to meet their goals today and to build for the future tomorrow.
Fiserv, a global fintech and payment company, improved their payment processing infrastructure to simplify operations bringing benefits such as risk reduction and cost savings. Perrigo, a worldwide producer and supplier of consumer self-care products for businesses, unlocked agility and flexibility through streamlined finance workloads to build a single source of truth for finance. The Bank of Angola became the first bank in Angola to embrace digitization by moving to the cloud to innovate and improve processes and infrastructure. O2 Czech Republic, the leading telecommunications company in the Czech Republic, saw a 30 percent total cost of ownership (TCO) savings for every workload they moved while enhancing security and scaling their entertainment business.
We continue to invest deeply in helping our customers do more with less and get the most out of their Azure investments with our solutions.
- Today we’re announcing a new total cost of ownership (TCO) or business case capability to help customers estimate how much they can save by migrating their Windows Server and SQL Server estate to Azure. This will be available within Azure Migrate, our free self-service migration tool that allows organizations to plan and execute their move to Azure. Try out this new capability and share your feedback.
- Customers can optimize their cloud investments with our unique offers and pricing benefits. With unique offers like the Azure Hybrid Benefit (save costs by reusing software assurance enabled Windows, Server SQL Server, Red Hat Enterprise Linux, and SUSE Linux licenses on Azure) and Extended Security Updates (free only on Azure), it’s up to 80 percent less expensive to run Windows Server and SQL Server VMs on Azure than it is with our main competitor. With Azure savings plan for compute, customers can significantly reduce resource costs by up to 65 percent compared to pay-as-you-go prices.
- The Azure Migration and Modernization Program (AMMP) offers customers the right mix of expert help to reduce migration costs and accelerate their move—including technical skilling, engineering resources, specialized partners, and cost-effective incentives so customers are holistically set up for success.
At Microsoft, we are committed to helping our customers be successful, drive strong business outcomes and get the most out of their cloud investments, especially in challenging environments like today’s.
Learn more about some of our updates and other key cloud trends in my fireside chat with Dave McCarthy, Research Vice President, Cloud and Edge Infrastructure Services at IDC, where we discussed industry trends around cloud adoption, and the whitepaper on “The Business value of Migrating and Modernizing with Microsoft Azure."
Dive deeper into our global survey findings and methodology by downloading the full report here.
Sources: Flexera 2022 State of the Cloud Report: Cloud Migration Stats—2022 Flexera State of the Cloud Report IDC.
The Business Value of Migrating and Modernizing with Azure, sponsored by Microsoft Azure, #US49665122 Published: 9/24/2022.