Matthew Lynn, Director of Cloud Computing, APJ, Akamai Technologies.
Businesses are rethinking – even questioning – their original cloud investments and are feeling the pressure of bill shocks and other challenges associated with hyperscaler embedded environments.
According to Matthew Lynn, APJ director of cloud computing at Akamai Technologies, many companies are struggling with “cloud fatigue.”
Akamai is a cloud company that enables and protects life online. On any given day, it supplies 15 to 30 percent of the Internet.
“It is increasingly common that cloud does not necessarily deliver on many of its original promises. If we go back 10 years in time, many companies said, ‘I need to move all my IT to the cloud, and I need to do it on one platform.
“In addition, people originally thought that the cloud would reduce costs. Yes, it has brought a lot of agility and speed to IT operations, but at the same time customers have realized that it came with a significant financial penalty. It may have looked great at first, but as organizations get bigger, that cost has become a key factor.”
Akamai, for its part, is focusing on three key tech pillars — contact delivery, security, and cloud computing — and is aggressively bolstering its presence in the cloud arena in the wake of its acquisition of Linode, which creates a distributed computing platform from cloud to side.
Lynn said many companies are reevaluating their cloud options — a move spurred in part by the multi-cloud momentum — driven by multiple factors, including affordable pricing, minimizing downtime and data loss, and avoiding vendor lock-in.
“There is a dynamic shift today as more companies begin to realize they need to move to multi-cloud infrastructure – and they need to put some struggle into their underlying infrastructure strategy to have multi-cloud capabilities.”
Complicating matters further, according to Lynn, is the fact that there is a “cloud oligopoly” that has a stranglehold on the industry.
“Although many people think there is a lot of competition in the market, in fact there is an oligopoly and we see margins (of hyperscalers) increasing – from 18 to 30 percent in recent years.
“No doubt the cloud computing giants are fighting to protect their fat profits. More and more IT companies are transferring a large portion of their costs and their COGS (cost of goods sold) to these dominant providers – and it holds back their business.”
According to Lynn, cost remains an important factor. “Cloud bills typically increase about 30 percent year-over-year.
The largest cloud publishers have taken action to contain rising costs. Airbnb, Drop box and Netflix recently stated that they have significantly reduced their cloud computing costs by bringing some systems on-premise or distributed across multiple cloud providers. Airbnbnotably reduced cloud costs in 2020, saving $63.5 million.
“For large organizations – especially in this climate – a theme of growth at all costs no longer runs through the environment. Many of these high-tech companies now need to rethink how they drive margins and profitability across the business.”
So, what’s the answer to these growing and ultra-restrictive challenges suffocating the industry?
Explore alternative cloud options, Lynn said, and start planning for the future to ensure companies don’t get locked into a single provider and can maintain control of their destiny.
“Use alternative cloud solutions that offer simplicity, cost-effectiveness and open source, and make it simple, affordable and accessible for developers to use cloud computing,” he said.
And the message comes at the right time, as cloud computing spending in Australia is expected to reach $20 billion by 2025, according to GlobalData.
Businesses of all sizes will want to invest in the cloud to drive their transformation projects while automating business processes, leveraging digital channels for better customer interactions, and empowering their workforce to work remotely.
“At Akamai, we want to shake up the market. We have a new cloud computing offering in Linode, which also adds a lot of simplicity, cost-effectiveness, ease of use, open source and distribution to that whole story.
“There is now an increasing amount of open source technology and tooling that enables organizations to build, run and secure applications from the cloud. Instead of having to use all the proprietary features of an existing cloud provider, there are now tools such as Kubernetes, Terraform, and Ansible, and a number of others that allow organizations to do that in an open source manner.
The beauty of open source functionality means the freedom to choose, Lynn explains.
“Many customers feel very locked into their existing hyperscale clouds. Linode is very focused on open source technology because it allows users to move their cloud workloads to the most effective location.”
But expect it to be a journey, not a quick one. “For many organizations it is not necessarily a simple transition. But we encourage them not to be complacent. Don’t sit there and keep using the same toolsets. Think about how you’re going to build some strife in your area in two to three years.
“Start thinking a little differently about delivering the right workload from the right infrastructure.”