Crisis of Confidence in the Cloud? Don’t Panic: It’s Normal

July 17, 2018

When did you first hear the term ‘cloud’? Apparently, if you ignore the data center models of the 1960s, ‘cloud’ was first mentioned in a 1994 Wired article entitled Bill & Andy’s Excellent Adventure II, in connection a distributed programming language called Telescript. Compaq might have been paying attention: the term appeared in an internal document there in 1996. 2006 seems a decent candidate: Google’s then-CEO Eric Schmidt used the term at an industry conference, while in the same year Amazon created its Amazon Web Services subsidiary and introduced its Elastic Compute Cloud (EC2). It could easily have been around then, for me.

If it was 2006, then that’s 12 years ago already. While the web, application service providers, storage service providers and SaaS have all come a long way since then (and, in some cases, gone), it seems only in the last three or four years that businesses have launched themselves into a headlong rush to “cloud everything.”

The Cloud Rush

This rush has superseded the rather steadier and mostly more measured approach to cloud that prevailed for the first eight years. Why might this be? Perhaps the ‘digital native’ generation – comprising individuals born after 1980 – have now achieved critical mass in decision-making positions at enough ‘early majority’ and ‘late majority’ organizations? Perhaps the technology has simply matured? But it’s certainly a relevant question, because of what I think we might see over the next few years in respect of faith in the cloud.

I anticipate faith in “the cloud” rapidly reaching a peak in 2019 – before collapsing in 2020. Then I see a recovery in that faith from 2022, built on better business analysis, more realistic expectations of the cloud and, in the end, a proper appreciation of hybrid cloud environments, which is where we’ll end up. Essentially, what we’re witnessing – and I see evidence of it every day – is something like Gartner’s Hype Cycle in action, for the cloud. And we’re currently climbing swiftly towards the peak of inflated expectations.

The current dash for ‘full cloud’ infrastructures is driven, I believe, by what has become a critical mass of digital evangelists. Perhaps it’s those digital natives I mentioned earlier, who believe absolutely that everything can and should be digital, and transformed. These evangelists – unintentionally aided and abetted by vendors and services providers, keen to make hay while the sun shines – are now able to convince their leaders at will that ‘going full cloud’ will all result in amazing business transformation and lower costs. The faith of the evangelists is absolute: we hear all too frequently that ‘everything must be in the cloud’.

But it’s also true that, equally frequently, we see insufficient objective assessment of what the actual business requirement is; and, because of this general failure to assess business requirements with sufficient objectivity, mistakes are being made. Eventually the consequences of these mistakes are going to tip the faith curve over from the equivalent of the peak of inflated expectations into the downhill portion of the curve that Gartner calls the trough of disillusionment. My expectation is that, within around 12-18 months, faith in the cloud will come under some serious pressure, from several different sources, leading to a collapse in confidence in the cloud right at the top of organizations.

A Vote of No Confidence

Let’s start with the very top. CEOs will start to feel the heat from their boards, having placed huge bets on digital transformations that have subsequently failed to deliver on the promise. As a CEO, you set the direction, make the decisions, and either reap the rewards or pay the price. It’s hard to come back if it’s the latter. If it’s something as fundamental as digital transformation that hasn’t yielded the expected benefit, then you will pay a price.

CFOs will be reporting that the cost savings they were told they could count on have failed to materialize – or, worse, that costs are actually higher because of unexpected and to some extent uncontrollable costs. What costs are these? Data egress costs, for example: we have come across instances where the, say, 9 cents per gigabyte data egress costs weren’t understood or even anticipated, never mind underestimated. It’s important to note that while these costs can be modeled and estimated, the actual cost is down to what users do – and that might not match the model. The cost issue isn’t going to help CEOs defend themselves, either.

Finally, at some point between now and peak cloud, there will be a monstrous data loss. It will be such a huge loss that CISOs will be forced to acknowledge that full cloud environments, as they stand, provide insufficient security, governance and control. With severe financial punishment on the table for data privacy failures, this will further hit confidence at senior levels.

The result, I suspect, will be an overwhelming, crushing weight of doubt and loss of faith at the top level, manifested as a realization that ‘full cloud’ is not necessarily the amazing business panacea they were led to believe.

I think this loss of faith might last for two or three years while new ways forward are found. Now, I certainly don’t expect organizations to go into reverse or to try to return to pre-cloud environments. However, I do imagine that that they will rein in sharply (especially on their digital evangelists), and that they’ll take stock before adjusting their infrastructures and applications to meet better-analyzed needs. This will be awkward and uncomfortable for those who vocally advocated full cloud.

Eventually – I’m expecting around 2022 – digital moderates will be able to persuade their CEOs, CFOs and CISOs that, actually, better business analysis and hybrid cloud environments can and will give them the outcomes that they originally expected. In Hype Cycle terms: from about 2022 organizations will haul themselves up that portion of the curve that looks like Gartner’s slope of enlightenment. And, then, I think, everyone will be in the right place, thinking the right way and doing the right things to create the right environment for their business. The faith curve will reach the equivalent of the plateau of productivity as faith and confidence reach, once again, the level that we have currently long hurtled past.

Is this a doomsday scenario for cloud customers and cloud vendors? It is not: every organization affected will adjust on its own timescale, and the process will constitute an opportunity for those that can help them to recover. And for your business: forewarned is forearmed. Many organizations will do it right. Just make sure yours is one of them.

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The Agile Network
Justin Day