7 enterprise cloud strategy trends for 2023

There’s no denying the fact that cloud technology is headed in many different directions, all aimed at providing rapid, scalable access to computing resources and IT services.

Yet as cloud technology evolves, many organizations are becoming more thoughtful and intentional in their transformation journey as they look to close the gap between simply running on the cloud and creating enterprise-wide value, observes Cenk Ozdemir, cloud and digital leader at business consulting firm PwC. “Organizations are really focused on achieving the elusive ROI of cloud that only a minority have been able to secure,” he says.

Here’s a quick rundown of the top enterprise cloud trends that promise to lead to greater ROI through innovation and enhanced performance.

1. AI/ML takes center stage

All the major cloud providers are rolling out AI/ML features and products, many designed for use with their core cloud offerings, says Scott W. Stevenson, technology partner at national law firm Culhane Meadows. He notes that most providers are also using AI/ML to improve provisioning of their own services.

While no one wants to be left behind if the promises of AI/ML hold true, there are varying levels of concern about reliability, security, and bias, particularly on the customer side, Stevenson says.

“There’s little doubt that adoption will continue at a fast pace overall, but larger enterprise customers — particularly in highly regulated industries — will be more measured,” he observes. Yet Stevenson doesn’t expect to see many enterprises sitting on the sideline. “It may be that the lessons they learned when migrating to cloud solutions in recent years will serve as a partial road map for adoption of AI/ML technologies — although on an accelerated timeline.”

Technology-driven organizations that prioritize innovation and digital transformation will be the most likely early AI/ML adopters in the cloud, says Michael Ruttledge, CIO and head of technology services at Citizens Financial Group. “Additionally, organizations that are data-driven and rely heavily on data analysis and insights will be able to leverage the best AI/ML services from different providers to enhance decision-making, automate processes, and personalize customer experiences,” he predicts.

Ruttledge notes that his enterprise’s cloud and AI/ML transition is driving stability, resiliency, sustainability, and speed to market. “Our AI/ML capabilities are increasing our ability to stay lean and drive insights into our internal and external customer services,” he says.

2. Industry clouds fuel innovation

Industry clouds are composable building blocks — incorporating cloud services, applications, and other key tools — built for strategic use cases in specific industries. Industry clouds enable greater flexibility when allocating resources, helping adopters make strategic choices on where to differentiate, explains Brian Campbell, a principal with Deloitte Consulting. “This ecosystem is evolving rapidly, driving the need to consistently monitor what exists and what works.”

By leveraging the ever-expanding number of cloud players serving industry-specific business needs in a composable way, industry clouds provide an opportunity to accelerate growth, efficiency, and customer experience. “Allowing for further differentiation on top of these solutions forges a close collaboration between business and technology executives on where to focus differentiation and resources,” Campbell says.

Enterprises looking to lead or stay ahead of their industry peers drove the first wave of industry cloud adopters. The success experienced by those organizations generated a rapid follower wave sweeping across a broader market. “Industry clouds are also leveling the playing field, so midmarket clients now have access to advanced capabilities they no longer need to build internally from the ground up to compete against their larger global competitors,” Campbell says.

3. Modernizing core apps for the cloud

Most large enterprises have sought quick wins on their digital transformation and cloud adoption journeys. They’ve brought smaller, less critical workloads to the cloud, containerizing legacy applications to make them more cloud friendly, and have adopted a cloud-first strategy for any new application development, observes Eric Drobisewski, senior enterprise architect at Liberty Mutual Insurance.

Yet an early emphasis on quick wins has left many vital business applications and related data stuck in enterprise data centers or private cloud ecosystems still in need of eventual migration. “Often, these workloads are tightly coupled to costly hardware and software [platforms] that were built at a time when all that was available was a vertically bound architecture,” Drobisewski explains.

Drobisewski warns that continuing to maintain parallel ecosystems with applications and data splintered across data centers, private clouds, public clouds, physical infrastructures, mainframes, and virtualized infrastructure is both complex and costly. “Simplification through modernization will reduce costs, address operational complexity, and introduce horizontal scale and elasticity to dynamically scale to meet emerging business needs,” he advises.

4. Making the most of the multicloud hybrid-edge continuum

The multicloud hybrid-edge continuum marks a crucial step forward for enterprises looking to drive ongoing reinvention by leveraging the convergence of disparate technologies. “Enterprises must focus on defining their business reinvention agenda and using the cloud continuum as an operating system to bring together data, AI, applications, infrastructure, and security to optimize operations and accelerate business value,” says Nilanjan Sengupta, cloud and engineering lead with Accenture Federal Services.

This trend will enable organizations to steer clear of an overreliance on a single public-cloud provider, Sengupta says. “It satisfies a multitude of business demands while unlocking innovation advancements in data, AI, cyber, and other fields, aligning capabilities to mission and business outcomes.” Hybrid architectures are rapidly becoming the only viable option for most organizations, he notes, since they provide the flexibility, security, and agility necessary to adapt to rapidly changing business needs.

The multicloud hybrid-edge continuum will impact CIOs and their enterprises by forcing them to address several key issues holistically, such as determining the right operating model, integrating and managing different technology platforms, finding the right talent, and managing costs, Sengupta says. “CIOs will need to develop strategies and roadmaps to transition to hybrid cloud environments, while also fostering a culture of agility and continuous innovation within their organizations,” he adds.

5. Reaping the rewards of cloud maturity

After years of aggressive adoption, the cloud is now firmly embedded in the IT and enterprise mainstream. “Cloud maturity is not something an organization gains overnight, but when taken seriously, it becomes a distinct competitive advantage,” says Drew Firment, vice president of enterprise strategies and chief cloud strategist at online course and certification firm Pluralsight.

Firment believes that cloud maturity typically starts with creating a Cloud Center of Excellence (CCoE) to establish a clear business intent, and gain experience with a single cloud before adding others. “Once an organization masters one cloud environment and is firmly established in the cloud-native maturity level, they can begin using other cloud providers for specific workloads,” he explains.

For example, Firment says, a customer service application might be built on Amazon Web Services while leveraging artificial intelligence services from Google Cloud Platform. “The goal is to align the strengths of each cloud provider to better support your specific business or customer needs.”

A purposeful and deliberate approach to a multicloud strategy gives CIOs and their organizations great power, Firment says. “While many technologists in 2023 will be focused on investments in multicloud tools like Kubernetes and Terraform, leaders will be focused on investing in the multicloud fluency of their workforce.”

6. The rise of FinOps and cloud cost optimization

Cloud FinOps offers a governance and strategic framework for organizations to manage and optimize their cloud expenditures transparently and effectively.

“By implementing a holistic FinOps strategy, an organization can drive financial accountability by increasing the visibility of cloud spending across the organization, reducing redundant services, and forecasting future cloud expenditures, allowing for more accurate planning,” says Douglas Vargo, vice president, emerging technologies practice lead at IT and business services firm CGI. “Driving more visibility and fiscal accountability around cloud costs will enable organizations to refocus that spending on innovation initiatives and realize more business value for their cloud investments.”

Organizations that effectively deploy FinOps governance and strategies will reduce cloud costs by as much as 30%, Vargo predicts, enabling them to re-invest those savings into innovation initiatives. “An effectively executed FinOps framework will improve the ROI of cloud spend and open up funding for other expenditures such as increased innovation funding,” he adds.

7. Hyperscalers adjust to slower growth

The three major hyperscalers — Amazon Web Services, Microsoft Azure, and Google Cloud Platform — have grown rapidly over the past few years, observes Bernie Hoecker, partner and enterprise cloud transformation leader with technology research and advisory firm ISG. Meanwhile, many enterprises have accelerated their digital transformation to meet the emerging demands created by remote work teams, as well as to provide customers with improved digital experiences.

“In many cases, however, enterprises overinvested in IT and cloud capabilities,” he notes, “and they’re now focused on optimizing the investments they’ve made rather than moving new workloads to the cloud.”

Yet enterprises weren’t the only overinvestors. “The Big Three hyperscalers also are going through some rightsizing after each of them overhired during the pandemic, and are now forced to deal with some bloat in their workforce,” Hoecker says. He reports that Amazon recently cut 9,000 more jobs in addition to the 18,000 they announced in January. Microsoft laid off 10,000 employees in January and Google, among other cost-cutting measures, has dismissed 12,000 staffers.

Cloud Computing, Cloud Management, Hybrid Cloud, Innovation, Private Cloud, Technology Industry