New report reveals AI impacting cloud platform choices.
By Datacom’s Director of Cloud Mike Walls and Associate Director of Infrastructure Products Daniel Bowbyes.
With lingering economic uncertainty and ongoing cost pressure on businesses, it’s no surprise that many are looking to cloud platforms to help spur growth, manage costs, and attract new customers.
Datacom’s fifth Annual Cloud Report draws on a survey of 738 organisations across New Zealand and Australia, revealing businesses are attempting to make the most out of cloud platform investments while navigating the complex landscape of cybersecurity and artificial intelligence.
The last five years of research have given us insights into the efforts being made by Australasian businesses to modernise their infrastructure, reduce technical debt, and migrate to the cloud – and where their priorities lie. So, after the hard years of Covid-19 disruption followed by inflationary pressures and sluggish consumer demand, where do we stand?
Many businesses have made great strides in modernising their IT platforms, with a specific focus on cloud computing. Developing those platforms is the top tech-related priority for New Zealand organisations this year. Two-thirds of their computing workloads are now occurring on public or private cloud platforms with just 27% processed by on-premises infrastructure.
Modernising to enable growth and better service customers is underpinned by a preference for re-platforming/factoring and software as a service (SaaS) strategy over a simple lift and shift of workloads to cloud.
Going hybrid needs a strategic approach
The research observes the continuing trend towards locating application workloads on a case-by-case basis. Businesses are adopting a hybrid cloud approach, seeking a flexible mix of platforms and services that provide the best performance, efficiency and cost-effectiveness.
However, only 35% of New Zealand organisations have formalised a hybrid cloud strategy. Asked to identify what needs to change to derive real benefits from their IT platforms and infrastructure, respondents home in on skills and training, governance of cloud use and implementing the right cloud structures as key priorities. This reflects a growing understanding that cloud is a new mode of operating rather than just a destination.
Constrained budgets and ongoing skills shortages continue to prevent organisations from making the most of their cloud investments. Nowhere is that more evident than in the cybersecurity realm. For the third consecutive year, cybersecurity remains the top technology priority for Australian businesses, and among the top three for New Zealand firms, only 20% of whom believe they have “sufficient budget investment” in security.
Around half of respondents across both countries acknowledged that their organisation lacks a cloud security strategy. This disconnect between recognising the importance of cybersecurity and actually implementing robust strategies presents a significant risk that businesses must address urgently.
AI use cases emerging
Artificial intelligence (AI) emerges as another major focus area in the report, with significant budget allocation for AI development and integration expected to continue over the next 12 months.
The investment in AI comes with some concerns. Over half of the respondents in both countries expressed concerns about data security related to AI adoption. This apprehension is driving a preference for private cloud platforms to implement AI, as organisations seek to maintain control over their data and algorithms. Stories about data leakage and sensitive company information ending up as training data for large language models (LLMs) have spooked company leaders.
Despite these concerns, AI use cases are rapidly expanding beyond basic tasks like meeting transcription. Businesses are leveraging AI for sophisticated applications such as data processing and customer experience, security response and anomaly detection, and financial forecasting. This underscores the potential of AI to drive innovation and efficiency but also highlights the need for robust security measures and ethical guidelines.
The Australian Government’s proposed mandatory guardrails for AI, which are currently out for public consultation, and our own Government’s plan to take a risk-based approach to overseeing AI warrant a more comprehensive approach to developing and deploying AI responsibly.
Finally, while sustainability remains on the list of priorities for business, IT decision-makers and teams are not routinely included in sustainability decisions and activities – an oversight given the potential for technology to help deliver real organisational change.
TRA research shows that 57% of New Zealand organisations factor their IT use into sustainability efforts. That’s a positive trend, but there’s room for faster progress. Organisations need to be clear that sustainability is not just a ‘nice to have’, as evidenced by the New Zealand Financial Markets Authority now requiring our largest companies to publish greenhouse gas emissions disclosures.
The cloud revolution has now morphed into business as usual. But with top-line growth the No 1 priority across the region, businesses can do a lot more to leverage cloud platforms to deliver efficiency gains and power innovative new services that can help them achieve that sought-after growth.
Download the full cloud report.
