What is the Digitization Gap and How Can We Manage It?

It is no secret that organizations across verticals are rushing to adopt the cloud in various capacities in accordance with their digital transformation initiatives. Businesses and consumers now require fast, dynamic access to data from any device – and the cloud and cloud-based services offer these capabilities in a way that data centers cannot. As a result, most companies are running workloads in a public, private, or hybrid cloud, with 53 percent of organizations taking a hybrid approach to IT.

Technical & Operational Benefits of the Cloud

This broad adoption of cloud is benefitting organizations from both technology and operations perspectives. Organizations are pooling and processing more data than ever before, collected across IoT devices, applications and more. Cloud adoption removes the strain this places on IT teams due to its scalability, accessibility, storage and computing power, as well as low upfront infrastructure costs. Cloud use enables IT teams to keep up with digital transformation, deploying new tools and environments without having to spend time reconfiguring the network.

Cloud adoption has also been beneficial to employees in terms of operations. Easily deployed SaaS applications allow employees to utilize them on-demand instantaneously. As teams find tools that can enhance their efficiency through automation, AI, or other means, the cloud enables them begin consuming this service on a subscription basis, without having to install any new software.

Aligning Cloud with Business Needs

While increasingly moving workloads, applications, and software into distributed cloud environments offers some clear benefits, there is a certain amount of risk involved. Much like with virtual sprawl, cloud adoption without an effective management strategy yields a dense IT environment with limited visibility into business-critical assets. This is why it is essential that organizations look beyond technical and operational cloud benefits to align cloud adoption with business requirements.

The Digitization Gap

Many organizations do not realize the discrepancies that exist between the technology needs that cloud use satisfies, and the basic business requirements that it can jeopardize. On one side, the cloud meets technical needs with flexibility, agility, scalability, and more. On the other, practical business requirements demand visibility into what programs are being used and by who, what is the cloud budget, who is accountable for the budget, who is managing new services and retiring old ones, etc. This misalignment between how the cloud is used and how it must be managed is referred to as the digitization gap.

There are several factors that contribute to the digitization gap, which largely result from lack of oversight in cloud subscription and consumption. Three of the core contributors are:

  1. Shadow IT & Line of Business Purchasing

While the simple accessibility of cloud-based software can be one of its greatest attributes, it also allows employees to purchase software on their own, circumventing official procurement channels. While software purchases were once acted on by IT and procurement teams, today, individual departments have the budget and tools to subscribe to cloud services and deploy them within the corporate network. This creates a fragmented view of cloud assets by department and confuses who is accountable for its management. It is impossible to manage the software lifecycle, consumption, or spend if asset management teams are unaware of the service.

  1. Lack of Visibility into Use

As organizations increase software use, they need to have a holistic view of their assets and use within the cloud and the data center. If cloud consumption is not effectively monitored to understand who is using the services and how often, the organization may continue to pay for a service that few or no employees actually need.

  1. Metric Variation Across Providers

Each cloud provider reports on consumption and resources using different metrics. As a result, there is no centralized, normalized repository of consumption data for asset management teams to review to understand how each product is being used in accordance with budget and license agreements. Without a clear view into information such as purchase model, contract lengths, terms and conditions, or maintenance duration, teams can’t get a full understanding of how much the software currently costs, and how much it might cost in the future.

Risks of the Digitization Gap

Even with the benefits the cloud offers, these core challenges that widen the digitization gap will ultimately make cloud use a greater risk to the organization than asset.

First, lack of cloud management will likely lead to overspend, with 37 percent of IT decision makers citing unpredictable budget costs as the biggest pain point in managing cloud environments. Subscription-based cloud solutions and SaaS programs are not installed, but only consumed. This makes it difficult to track use, as the traditional method of comparing license allotment to installations does not work. This lack of visibility, especially as business units procure their own tools, can lead to over-consumption, with businesses getting additional bills from service providers that had not been accounted for in the initial budget.

The digitization gap can also cause issues with governance and compliance. Asset management teams must ensure that the use of cloud software does not compromise corporate licensing agreements. As shadow IT makes it difficult for management teams to know what software is in use, they cannot enforce contract requirements. This puts organizations at increased risk of a costly software audit. To maintain governance and mitigate these risks, organizations must ensure they have a plan and processes in place to aggregate software entitlements, inventory, and consumption within cloud and on-premises environments.

Finally, the digitization gap can cause issues with security. If employees are deploying SaaS solutions and storing private data within them, without the supervision of IT and asset management teams, the solutions may not receive necessary maintenance or patches which make them vulnerable. This may cause confidential data to be lost or compromised.

Closing the Digitization Gap

If the Cloud meets operational needs, but is constantly over budget or out of compliance, it will not be a sustainable solution. To successfully deploy cloud environments, organizations must close this gap through effective cloud management, enabling visibility into each cloud service in use. As organizations seek to close this gap to align technology and business needs, they should consider these steps:

  • Establish a plan for which workloads to move to the cloud
  • Identify key stakeholders across business units, procurement, and IT
  • Leverage automation to discover cloud resources
  • Aggregate and normalize cloud metrics across providers
  • Establish software and cloud budgets for each business unit
  • Regularly review budgets and consumption to optimize spend

Final Thoughts

Organizations have been quick to adopt cloud and multi-cloud environments to keep pace with digital transformation. However, it is important to note that adding more solutions without a system in place to manage their costs, maintenance, and compliance will ultimately slow the business down. To avoid these risks, organizations must close the digitization gap with a cloud management plan that adds visibility into procurement, spend, and governance across entitlement, inventory, and consumption.

Bali Kuchipudi

Product & Services Marketing Leader at PyraCloud and SoftwareONE Services
Bali Kuchipudi is the Product & Services Marketing Leader for PyraCloud and SoftwareONE Services. Previous to SoftwareONE, Bali had experiences at Dell/EMC and RSA in areas of cloud infrastructure and security.

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