Everything You Need to Know to Invest Wisely in the Cloud

If you’re looking to upgrade your data management system to the cloud in the near future, you’re not alone. Companies worldwide spent nearly $84 billion on cloud storage technology in 2022, a substantial increase from the $70 billion spent in 2021. Total spending is expected to increase to over $375 billion by 2029, representing a paradigm shift in off-site data storage for businesses of all sizes across the globe.

The Serious Impact of Cloud on Business Operations

Moving data to the cloud has a serious impact on how a business operates. Ninety-four percent of company leaders report better security resulting from their cloud migration. Others note the greater efficiency offered by having data operations available remotely in our increasingly virtual world.

However, it’s important to note that a cloud transformation doesn’t inherently bring cost savings, and some business owners are already wise to this challenge. Executives and managers list managing cloud spending as a primary concern, and estimates suggest that about one third of cloud spending goes to waste.

With the potential for pitfalls clearer than ever, leadership teams must ensure their cloud migrations are set up for success from day one. This requires being educated about the different types of systems that are marketed as cloud software. It also requires understanding the company’s needs for scalability.

Understand the Newness of Cloud Technology

Part of the challenge stems from the relative newness of cloud technology. Even experienced IT staff may not fully comprehend the differences between single-tenant and multi-tenant cloud systems, or what it means to be “cloud-hosted” vs. “cloud-based.”

Yet understanding how these two types of technology operate is crucial. Both for eliminating waste, maintaining costs, and ensuring investment in digital cloud transformation becomes a long-term, sustainable endeavor.

The Problem With Single-Tenant, Cloud-Hosted Systems

Not all cloud systems are built equally. A single-tenant cloud-hosted system, for example, is no more than a legacy system that is backed up on the cloud. In other words, these systems are typically in-office servers that offer few advantages beyond allowing data to be accessed remotely.

For some companies, this may be enough. Simply having remote access to data can facilitate remote work in the short term, and be effective for companies that aren’t dealing with large amounts of data and don’t need to scale over time. Yet single-tenant systems can become very expensive over time, and often don’t account well for long-term growth.

What to do When Cost is a Key Concern

When cost is a key concern, single-tenant systems come up short. Co-locaters and ETLs are required to get these servers up and running, creating a substantial upfront cost and additional maintenance charges later on.

These types of servers also aren’t scalable by nature. Software has to be uploaded one server at a time, creating challenging latency issues and hindering innovation. Essentially, single-tenant systems have the same limitations as legacy on-site systems.

Scalability is a primary concern when it comes to implementing a single-tenant cloud system. Because these servers must be replaced every few years, each one becomes an additional cost as operations expand. Companies that don’t include this reality in cost analyses may see a lower-than-expected ROI.

Too often, business leaders minimize their need for scalability, but where there’s data, there’s always a need to scale. This failure to plan ahead has played a large part in 74% of companies moving their applications back on-site after attempting a cloud migration.

Choosing the right cloud software requires company leaders to plan ahead and be honest about the potential for future growth.

User Access

Single-tenant systems necessitate that users access each server one-by-one to retrieve vital data for basic day-to-day operations. This a tedious method of accessing information that only worsens as more single-tenant servers are added.

That’s not to say that cloud-hosted systems don’t have their uses. Companies like Walmart or Microsoft may opt for single-tenant systems precisely because they resemble their legacy on-site systems.

These companies have the size and resources to functionally create their own cloud, continually adding more servers as needed. However, their business model won’t be replicable for most companies — especially as more and more tech will be built on multi-tenant infrastructures.

Improving With Multi-Tenant, Cloud-Based Systems

For companies that want to save money over the long-term, multi-tenant systems are more functional than their single-tenant counterparts. If we think of single-tenant systems as a community of single-family houses, multi-tenant systems are more akin to condominiums.

With single-tenant systems, everyone needs a key to access each individual “house.” Each new addition represents a significant increase in both money and time, as well as resources. In contrast, multi-tenant systems give users access to the entire building. Each floor can be customized to the scaling needs of the organization.

Maintenance With a Multi-Tenant Cloud System

Maintenance for a multi-tenant system also requires less time and human capital than accessing each individual single-tenant server one-by-one. It’s the equivalent of having an on-site maintenance person in a high-rise building — versus having to contract a maintenance worker for each home in a neighborhood.

Long-term costs are lower; users spend far less time pinging IT for the regular maintenance required with single-tenant systems. Staff who would otherwise be handling ongoing maintenance and technical support issues are now available to work on more creative and complex work.

Perhaps best of all, updates are applied seamlessly and immediately, with no time required by single tenant-systems to maintain security and compliance.

Successful Cloud Migrations

Moving the bulk of an operation’s data to the cloud is no small task, but the right choice of system can make a difference. While single-tenant migrations are complicated by ongoing costs and frequent needs for system updates, the ongoing cost savings provided by multi-tenant systems make the upfront expense of user training comparatively minimal.

With successful cloud migrations on a multi-tenant system, users can take advantage of a single customizable dashboard that offers insight into all applications available. This avoids the need to switch between applications, thus saving time and increasing productivity. What’s more, a smaller team can handle more of the work, as fewer IT staff members are needed to maintain multiple single-tenant servers.

The benefits of a potential cloud migration don’t necessarily mean the process will succeed. Executive buy-in is essential to ensuring that a cloud migration runs smoothly and stays on-target, without resulting in the sort of scaling back we’ve seen recently with some company’s unsuccessful migrations.

But, with cloud-based multi-tenant systems, the achievable benefits of higher productivity and lower costs can act as a lodestar. It can give leadership a path forward and a reason for implementing the migration in the first place.

Leadership Success

Securing buy-in from leadership also requires that teams understand cloud migration as a long-term strategy. As companies grow and expand, they both create and utilize more and more data.

This, under a single-tenant strategy, would represent more spending on servers and their required maintenance. With multi-tenant systems, this expansion presents less of a cost burden than an opportunity to scale.

What About Hardware Costs, Customization, and Flexibility?

For businesses that are more focused on hardware costs, customization, and flexibility, multi-tenant systems offer one overarching benefit: Data access. These firms can do more with data available to staff from any location — without the need to manually request access from multiple different instances across an ever-increasing number of single-tenant systems.

When the focus is on maintaining scalable costs for a long-term solution, cloud-based migrations with multi-tenant systems provide the infrastructure needed for a customizable future.

In short, business leaders should keep a few essential considerations in mind when shopping for cloud software:

Featured Image Credit: Photo by Ivan Babydov; Pexels; Thank you!