Your hybrid IT strategy and budget implications to consider

The approach you take to existing on-prem resources will dictate the size and pattern of your hybrid IT investment. We examine three primary options and budget scenarios.

From small startups to large corporations, cloud computing has arrived, as the 32,000 attendees who crowded the latest Amazon Reinvent conference made abundantly clear. But despite the enthusiasm that enterprise IT organizations display for public cloud, many are grappling with the question of what to do with the infrastructure and applications still residing in their data centers.

The approach you take to existing on-premises resources will dictate the size and pattern of your overall IT investment. At a time of increased expectations for IT delivery—without the requisite increase in budgets—it’s critical to understand the budget impact of your hybrid IT strategy. Here are three primary ways to approach the issue and the budget impact of each.

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1. Go bimodal

One obvious hybrid IT strategy is to choose cloud for new applications that are well-suited for the environment while leaving existing on-premises applications as they are. A majority of IT organizations are pursuing this approach today. If this strategy reminds you of Gartner’s bimodal IT model, that’s no accident. Most IT organizations want to achieve the benefits of cloud computing, particularly for their digital initiatives, but aren’t in a position to disrupt existing environments.

Some caveats: Many organizations assume that existing application architectures and processes are transferable to cloud environments. The issue here is that applications built with static infrastructure assumptions are difficult to scale on cloud platforms. If you pursue this hybrid approach, expect to invest in cloud training, DevOps process upgrades, and new application architecture approaches. All this requires experimentation and learning.

The investment pattern associated with this approach is a small incremental spend beyond existing budgets. Since most of the application portfolio continues to operate on-premises, there is little additional spend here. The budget increase is associated with new applications deployed to the cloud. Because the yearly incremental add to existing application portfolios for most IT organizations is small, there is little near-term investment required in this hybrid approach.

2. Embrace public cloud

Another approach to hybrid IT is to go all in on public cloud. GE is one example of a company that is moving away from on-premises infrastructure as much as possible. Another example is financial services provider Capital One, which is so enthusiastic about Amazon Web Services (AWS) that it gave away 25,000 Amazon Echo Dot devices at Reinvent.

This approach is expensive. Rewriting applications to be "cloud native” is a complex and costly exercise. Even if the effort is carried out over several years, it requires significant investment in application restructuring.

Some organizations considering this approach seek to avoid the heavy cost of rewriting so many applications and look to move them unchanged to the cloud. This so-called lift-and-shift strategy avoids a lot of the cost of application rewrites, and may be perfectly satisfactory for applications that don’t experience high load variability or need only occasional updates.

The lift-and-shift approach doesn’t mean there’s no investment required, however. Money will need to be spent on training people in the new cloud environment, migrating data, and transferring the applications—not to mention the significant project management effort this will require. Also, immediate cutovers rarely end well. You will probably need to run cloud and on-premises versions of each application in parallel for a certain period of time. 

In other words, lift-and-shift isn’t free. Compared with the incremental migration approach outlined above, going all-in on public cloud requires more investment, and sooner. The scale of the investment will vary depending on how thoroughly the portfolio is transformed into cloud-native applications.

3. On-premises transformation

Some companies want cloud economics and convenience but can't move workloads to the public cloud due to security or regulatory concerns. One answer is to implement a hybrid environment that provides a private cloud on premises. Today, numerous private cloud technologies deliver the immediate resource access and easy scalability of public cloud. 

What does this approach mean in budgetary terms? Obviously it requires investment in private cloud software infrastructure. It might also require new hardware, depending on the existing environment. And it will require investment in implementation and employee training.

The scale of the investment will be driven in part by how thorough the organization wants to be in terms of its application portfolio. Do you only run new applications in your private cloud, or do you move older applications into the new infrastructure as well?

This approach requires two investment tranches. The first is the cost of creating the on-premises cloud environment. This is an unavoidable, upfront cost. The second tranche is associated with the cost of placing some of your application portfolio on the private cloud infrastructure. The budget impact will vary, depending on how many applications you choose to migrate.

Of the three approaches outlined here, on-premises transformation is likely to be the most costly. However, it's probably your best bet if you want the benefits of cloud computing—and let’s face it, everyone does—but are constrained from using public cloud environments.

Hybrid cloud: Tactics versus strategy

In the first phase of cloud adoption, tactical considerations dictate whether an application gets placed in a cloud environment. Now that we know cloud computing will be a core component of the IT infrastructure mix going forward, many companies are taking a more strategic approach to app deployment decisions.

All hybrid IT strategies have financial implications. The budgetary impact can vary significantly, depending on what kind of cloud computing environment an IT organization wishes to use, and also on how much of the total application portfolio it wishes to place in that environment.

Most IT organizations have existing infrastructure that cannot be discarded overnight, even if that were desirable. For the foreseeable future, all IT organizations will need a hybrid strategy, and they will need to understand the budgetary impact of their chosen strategy. 

Hybrid IT: Lessons for leaders

  • At a time of increased expectations for IT delivery, without the requisite increase in budgets, it’s critical to understand the budget impact of your hybrid IT strategy.
  • Compared with an incremental migration approach, going all in on public cloud will require more investment, and sooner. 
  • On-premises private cloud can be the right solution for companies that can't move workloads to a public cloud due to security or regulatory concerns. 

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