Accelerate the Digital Transformation Pace with Hybrid Cloud

By Sebastián Menutti, Industry Principal, Frost & Sullivan

 

The Global Pandemic Accelerates Digital Transformation

COVID-19 will have a far-reaching effect on business communities in Latin America and the Caribbean. This crisis is seen as an inflection point in the drive toward digitization across businesses and public organizations. The connected, digital economy is helping enterprises, employees, and consumers remain engaged and do business, even as the virus continues to spread.

 

The current crisis has made it clear, more than ever before, that emerging digital technologies can potentially do a world of good. The growing dependency on conferencing and video meetings, e-commerce, digital learning, VR-based training, and business apps supporting remote workers cannot be dismissed as a blip and is likely to remain the new standard among companies worldwide.

It is crystal clear that one of the multiple lasting effects that this pandemic will have is the acceleration of digital transformation in multiple (if not all) market segments, as organizations realize the superlative importance of taking advantage of the main benefits of technology, such as flexibility and scalability, gained resources derived from IT outsourcing, optimized remote communications, business continuity, enhancement of employee and customer experience, etc.

Yet, there is one technology that is considered the key piece of the digitalization journey: cloud computing. According to Frost & Sullivan Cloud User Survey (performed over 240 Latin American-based IT decision makers responsible for purchases of IT infrastructure), 60% of enterprises claim that cloud is the most critical part of their digital transformation strategy.

 

 

The Progression of Cloud in Latin America and the Caribbean

The Infrastructure as a Service (IaaS) market in Latin American and the Caribbean achieved US$ 3.6 billion revenues in 2019, growing 34.1% year over year, according to Frost & Sullivan independent research. Although the advent of this technology fall behind initially, this region has been quickly catching up and benefitting from the lessons learned from more mature cloud markets.

Despite having different economies and social realities, countries in the region are experiencing similar cloud momentums. Unlike previous years, enterprises are frequently choosing cloud for strategic reasons, like supporting digital transformation initiatives and enabling organizations to take advantage of new technologies; rather than for tactical motivations—such as reducing IT infrastructure costs and hardware/software maintenance burden. This proves that the market is maturing, and cloud has started to be perceived as an enabler for competitive differentiation.  Undoubtedly, firms in every industry are being impacted by the digital disruption—that is, by the need to implement a business model and framework that is flexible, agile, and capable of addressing rapid technological and business changes. For those, the cloud is not only a key facilitator, but also the foundation for their transformation, clearing the way to adopt next-generation technologies, like Artificial Intelligence and the Internet of Things.

The demand for IaaS is growing at a significant pace, as enterprises look for greater agility and scalability in their IT infrastructure, in order to boost productivity for their employees and functional departments, innovate their business and remain competitive. As a matter of fact, 82% of Latin American IT decision makers believe that cloud allows their company to take advantage of new technologies, while 77% claims that cloud is essential to remaining competitive in their industry.

 

Hybrid is Becoming the New Normal

Decision-makers hesitate to trust all their workloads to the public cloud. When asked about restraints to cloud adoption, security still tops the list, followed by concerns about application migration and performance. As a result, workloads that involve sensitive or private data, require low-latency or high‑performance compute environments, or are highly customized, are most likely to remain on premises. This is rapidly consolidating the need for hybrid environments which today are used by a third of enterprises in Latin America and the Caribbean (yet this number is expected to increase to 62% by 2021, according to Frost & Sullivan research).

Despite the popularity of the hybrid cloud model, enterprises still find it difficult to choose the optimal deployment model for their workloads. Nevertheless, having had a late start in the cloud is likely what enabled businesses in the region to learn from the experiences and do’s and don’ts; in fact, companies in Latin America and the Caribbean have lower repatriation rates (bringing a cloud-deployed workload back to an enterprise-managed environment) than the United States or Europe.

Yet, providers are increasingly challenged by ever-rising customers´ expectations. Businesses have high hopes when managing their hybrid environments. Common security management, increased visibility across the environment (with the ability to query department or project usage), and compliance reporting are all areas that IT looks to streamline through a hybrid orchestration and management platform. Moreover, the path to a hybrid environment will likely require connectivity enhancements and spur investments in emerging technologies such as SD-WAN and 5G.

Nevertheless, there is no doubt that the future involves hybrid cloud developments, and this scenario is likely to be consolidated over the next few years. Providers that want to remain relevant in the marketplace must provide a comprehensive value propositions that is centered on flexibility and hybrid environments, and can adapt to each customer´s specific situation.

 

Conclusions and Recommendations

Frost & Sullivan research shows that a high increase in usage of almost all types of cloud deployments is expected in the next two years in Latin America and the Caribbean. Moreover, in the face of the COVID-19 crisis, businesses are expected to accelerate their migration initiatives even further. Companies will move more applications to the cloud, to make them more accessible for home-bound workers and customers, and they will increase compute and storage capacity to accommodate greater traffic. More than ever, enterprises will turn to cloud service providers, system integrators, and managed services providers who can help support their business operations in this period of need.

Today, business leaders are turning to IT to enable the business and drive top-line revenue. Although enterprise IT departments face several challenges, all kinds of opportunities are available to them to address these issues head on. To do that, IT leaders and professionals need a clear understanding of the options at their disposal and to be able to assess whether these options can help IT to focus less on hardware and more on digital transformation and other strategic initiatives that deliver real business value.

Therefore, enterprises are in desperate need of effective, future-focused and business-oriented CIOs and IT leaders. The truth is that the role of IT leaders has also evolved: from the traditional choice and implementation of technologies to its strategic management and optimization of the business opportunities that appear in the digital age. Digitization is now a shared responsibility between IT and the different business areas, and the CIO is positioned as the orchestrator of the digital world. Today is the era of the CIO, as companies are relying more and more on technology to drive business outcomes.

These are times of both immense challenges and growth opportunities. We still cannot foresee exactly how the life of people and organizations will be in the coming months and years, but it is clear that the digital transformation is moving forward, stronger than ever. To be up to the task and grasp these opportunities, IT decision makers need to remain up to date with the latest trends and innovations in order to become transformation advisors and be able to accompany their internal clients in their digitalization paths.

The post Accelerate the Digital Transformation Pace with Hybrid Cloud appeared first on Blog VMware Latinoamérica.

Fuente: VMware LATAM

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