Skills gaps & costs mean over 40 per cent of NZ organisations lagging in cloud adoption.

With powerful new in-region data centres set to come online in 2024, New Zealand businesses and government agencies are primed to accelerate their cloud migration.  

That’s vitally important for the nation, with numerous studies concluding that cloud adoption enables cost savings and innovation that contributes to economic growth in a significant way.

Whether it’s the private cloud arrangements that are currently predominant, public cloud, or a hybrid cloud approach, the fundamental shift from on-premises infrastructure to cloud platforms is crucial to competitiveness as an export-oriented nation. It also allows New Zealand to accelerate the uptake of rapidly evolving technologies such as artificial intelligence.

But the State of New Zealand Cloud Transformation 2023 report from cloud specialist CCL, part of Spark Business Group, (capturing insights from 476 IT decision makers) reveals many organisations are yet to find their feet in the cloud – with 42 per cent of those surveyed for the report either not using cloud infrastructure or software, or in the planning stages of their cloud migration.

Cloud confidence gap

In fact, in 2023, respondents to the CCL survey consider themselves less mature in their cloud adoption than a year ago – a perception that may well be down to a shift in what is considered advanced when it comes to all things cloud.

“What was once deemed cutting-edge may now be overshadowed by even more innovative solutions and cloud deployments,” the CCL report notes.

New Zealand’s skills gap in the cloud space is flagged by respondents as the top barrier to adoption, closely followed by the complexity of managing cloud spend. A determined industry-wide effort to address gaps in capability and resources is required.


Daniel Parsons, CCL Head of Digital Transformation.

However, as CCL Head of Digital Transformation, Daniel Parsons writes for Spark Business Group’s Insight Engine, the cost issue can be addressed now for well over half of New Zealand organisations that are already using cloud platforms, and those who soon will be.

The big shift involved in moving to the cloud from a cost perspective is the one from IT investment dominated by capital expenditure - hardware and infrastructure, to operational expenditure, which is largely consumption-based cloud, and SaaS (software as a service) subscriptions.

“It’s the variability of cloud that can make it harder to forecast budgets. But, in the same way yoautour electricity bill goes up in winter and down in summer, it’s possible to establish a baseline of what the costs are likely to be each month,” Parsons points out.

Bill shock common

When you take into account the cost savings of no longer needing to purchase and maintain your own infrastructure, the cloud is more often than not a cost-effective alternative. But bill shock among companies newly established in the cloud is very common.

“Added complexity occurs with hybrid cloud, where CIOs operate a mix of clouds to get the best environment for their applications,” says Parsons. “Companies who do multi-cloud financial management well will focus on the applications they are running and the outcomes they are getting for their end-users.”  

The key is putting in place solid, robust reporting to allow visibility into costs. That requires a different approach to the one companies pursued when hosting their own servers, or using an Infrastructure as a service (IaaS) arrangement.

“It’s incredibly powerful because once you have an intimate knowledge of your costs, you can make better business decisions.”

For example, Parsons points out, “it might be that IT go to the marketing team and explain the cost of archiving a hi-resolution marketing campaign is $1000 a month. As this cost is coming out of marketing’s budget, they can then decide if this is worth the investment.”.

“It could be a software product manager, managing a cloud-based mobile app, able to tune both the throughput of the platform, as well as optimise the costs of delivering the service,” he adds.

Better business decisions

Having that visibility in costs in real-time enables better business decisions. Companies can then take advantage of the elasticity of cloud platforms, scaling usage up and down as required, while being able to accurately forecast cost implications.

It sounds simple, but every organisation with operations in the cloud has its own unique circumstances to deal with. The importance of managing cloud-related costs in the wake of cloud migrations has led to the rise of FinOps (a combination of finance and operations), which shifts financing management from annual, quarterly and monthly reporting to continuous reporting and governance.

“This can be extremely empowering for people if it results in them being able to make decisions about how money is spent without having to go through gateways and governance structures to get budget approvals,” Parsons says.

As cloud initiatives increasingly come out of project mode and enter business as usual in Aotearoa, managing cloud costs and maximising efficiencies becomes a top priority, not just for the IT team, but for every part of the business.


 Insight Engine from Spark Business Group is a great starting point to help you understand how to manage your cloud costs and make the most of your place in the cloud. Register to receive cloud insights in your inbox.