Earlier this year, Gartner predicted that worldwide IT spending would increase by almost 10% in 2025.
It may not be enough.
Between 2024 and 2025, the volume of data created and stored will rise from 149 Zb to 181 Zb, enough space to store five and a half trillion 4K films.
According to Akamai, over two thirds of UK organizations expect their cloud spending to rise in the next twelve months because of the need for more cloud storage, experimentation with AI and the impact of inflation.
The real challenge is that many IT budgets aren’t rising fast enough to cope with this, and according to the Akamai study, two thirds of businesses admitted that they would need to cut spending on staff or cybersecurity to adapt.
Multi-Cloud Evangelist at OVHcloud.
Risky Business
Every few years, we see a different wave of security threats to the enterprise, from DDoS attacks and the rise of APTs to supply chain attacks and the new wave of ransomware.
The recent surge in ransomware temporarily brought down organizations including Marks and Spencer, the Co-op and the British Library, showing that hacker groups are able to level powerful attacks at some of the most well-known names in the industry.
Furthermore, as we saw recently, the UK government will prohibit many organizations from paying ransomware demands, including datacenter operators, energy, emergency services, transport and some utilities providers. This will put organizations across the country under incredible pressure to make sure that their cybersecurity estate is in order.
In the wake of ‘Liberation Day’, many organizations have also been re-evaluating how much of their data is stored with providers overseas. Data that is hosted by an organization headquartered in America, for example, is subject to US law, which means that it may be used for economic or political intelligence purposes.
At the same time, many organizations are locked into long-term agreements with hyperscale cloud providers using proprietary systems, which does not allow them enough control or transparency to stay agile.
In fact, this move started well before the geopolitical disruption of the tariff adjustments: the Dutch government recently commissioned a legal firm to investigate the risks of hosting data with non-European organizations.
Amongst its conclusions were that ‘We qualify central government’s use of the cloud as worrying. The services provided to citizens and businesses, as well as central government’s operational continuity, are exposed to too much risk.’
The report goes on to examine the risk of ‘shutdown’, and how any service interruption or policy change from a major hyperscaler could cause significant disruption to an organization, or even an entire country.
In short, it’s a bad time to be juggling or cutting budgets.
Tricky Business
One of the positive aspects of the early part of hype cycles is that they prompt a wave of innovation and experimentation with new technologies.
However, the other side of the coin is that these processes can also prompt organizations to think technology-first rather than challenge-first. If you’ve been at a major IT tradeshow in the last year, you’ll notice that at least three quarters of organizations were promoting new AI solutions, many with little business justification behind them!
Thankfully, we are starting to leave this era behind and see the implementation of formalized, hype-free, mature AI deployments across businesses. Of course, there is a strong need to understand how AI works and how it can benefit organizations everywhere, but this is true of any major and disruptive technology.
It was true for the development of the web, social media and ecommerce, and it’s certainly true for AI and technologies like blockchain.
And it goes without saying that AI isn’t cheap. Although we’re starting to see more competitors in the market, the latest Nvidia cards can be cost-prohibitive for many organizations, especially at the smaller end of the market.
AI model training consumes more power and needs better cooling than classical compute, which makes it more expensive to run as well as acquire. Although AI instances can run in the cloud, startups will often need higher-spec kit to iterate faster and bring new products to market more quickly than their competitors.
So how do we manage all this?
Cutting Cloud Costs
According to our own research, almost 80% of UK organizations are already using, or are in the process of evaluating or moving to multi-cloud, and the reasons for this are fairly clear. Half of the sample believed that running the right workload on the right cloud would give them more flexibility and agility, with almost forty percent citing cost-effectiveness.
However, multi-cloud is a long-term strategic exercise: complexity and collaboration are two concerns frequently highlighted by IT management. There is a need for strong cost-benefit analyses and an understanding of how moving workloads will impact stakeholders from across the business.
We also need to foster better collaboration, openness and transparency in the technology market. The CMA’s recent investigation highlighted inequalities in the cloud market, which restrict competition, and with AI built on the cloud, any inequalities in cloud will be perpetuated in AI.
In the long term, this prevents smaller players in both infrastructure and software markets from innovating as freely as they would like, because they’re locked into a technology roadmap dictated by a non-European hyperscaler.
Reducing cloud costs is absolutely possible. We recently helped AI datalake firm Hopsworks reduce its cloud spend by 62% without compromising on functionality or power, but many cloud providers still use proprietary standards and processes that lock users in.
The work of organizations like OpenUK, the Open Cloud Coalition, as well as open-source standards like OpenStack, has never been more important. Unless business can move their workloads between clouds without too much unnecessary friction, flexibility will be stifled and costs will soar, ultimately impacting organisational ability to combat cyber-threats – not to mention, staff headcount.
A Question of Balance
IT teams face a tough year ahead, but it is possible to balance cost, stay agile and keep innovating. This requires a highly collaborative and skilled organization with an emphasis on open systems and interoperability, not to mention providers that offer transparent pricing.
At the start of this year, the UK government announced its AI opportunities action plan, supporting the fact that globally, Britain is the third-largest AI market. AI does have the power to transform almost every part of our daily lives for the better, but it is hungry for both power and storage.
We can maintain our strong position in the AI market and keep our critical infrastructure secure. However, balancing this equation requires a balancing act of its own: a move to a more open, transparent and flexible cloud model. If we can successfully make this shift, then our industry truly has a bright future.
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