As companies worldwide face difficulties when dealing with multiple cloud platforms, leading to complications and headaches, Polish entrepreneurs are eager to avoid repeating their mistakes.
By Beata Socha
Even though it is still behind Western Europe in cloud adoption, Poland has been eager to switch to cloud services. Almost two-thirds of the respondents to a recent Deloitte study, which examined how financial directors in Polish companies view cloud solutions, have already begun or are about to start the migration to the cloud, while one-third are more advanced on their journey to the cloud (having migrated at least half of their resources).
And the cloud market seems only poised to grow. Microsoft has recently launched Azure Poland Central, the first cloud data center in Central and Eastern Europe, consisting of three independent locations around Warsaw, each with one or more data centers. The investment aims to support Poland's digital transformation by expanding the so-called Polish Digital Valley. According to IDC Research, Microsoft expects that the new data processing region will eliminate some barriers to cloud adoption and account for about 16.5% of new revenue ($45.7 billion) by 2026.
Eliminating barriers seems to be the mantra of the cloud industry these days. Unfortunately, many of these barriers are money driven. According to a Deloitte report, most organizations opting for cloud solutions do so not to gain access to advanced analytics, predictive models, and other cloud services. Instead, they are primarily looking for a cost-cutting option and to prepare for a downturn.
“The question about migration costs and cloud infrastructure maintenance costs are among the first you ask when you select your cloud provider,” said Wojciech Smolak, Senior Data Platform Engineer at Allegro, during Google Cloud Days in April.
Nearly half (49%) of Polish CFOs decide on cloud solutions to increase operational efficiency, according to the Deloitte report. Lowering operational costs was the second most important reason for employing cloud solutions, according to a recent Deloitte study “Where is cloud value? Polish CFO perspective.” Meanwhile, only 29% of CFOs consider increasing innovation as the driving factor.
It is hardly surprising that efficiency and savings are among CFOs’ top priorities, considering the financial and business instability they expect. After all, almost 70% of the respondents expect the market situation to deteriorate over the next 12 months. In response, they seek flexibility and efficiency in cloud solutions. It is much easier to scale up and down when you only pay for the use of computing power on the public cloud and don’t have to worry about the maintenance costs.
Price and transparent offer
Still, the cloud can be much costlier than one would think. “Our data stack migration to the cloud is nearing completion and one of the primary conclusions we have arrived at is that the cloud costs. Every step a developer takes when moving to the cloud carries cost,” said Wojciech Smolak. For an e-commerce business as big as Allegro, with data increasing at 7 TB daily, savings were among the top concerns.
As many as 54% of respondents considered the price to be the deciding factor for the decision of which cloud to choose, followed by a “well-tailored offer” (46%) and transparent terms of service (44%), according to a survey conducted in March 2023 by FOTC, a Google Cloud partner.
While price seems to be the top consideration, many decision-makers remain on the fence about moving to the cloud because of the specter of an unsuccessful transition. “Companies looking to utilize novel applications in the cloud fear mostly a failed implementation and insufficient tech support,” said Piotr Wieczorek, CEO of FOTC. “During the covid pandemic, companies utilized cloud potential in hybrid work. ... In Google Cloud Platform, we can see the strongest demand from healthcare, digital native, and gaming industries,” Wieczorek added.
Cloud with an insight
Hiring a cloud architect to prepare the company for a “lift and shift” to a public cloud is one option. Having an expert on your payroll often alleviates concerns decision-makers face when dealing with a technologically complex process. Using an outside expert is another possibility, usually a cheaper and more flexible one, which is why many organizations choose the “cloud & expert” option, a trend that advisory firm EY wants to capitalize on.
EY has recently opened a specialized cloud technology center in Poland – EY Cloud Enablement Center (CEC) at the EY Global Delivery Services (GDS) office in Wrocław. It is the second such center in the world after Phoenix, Arizona, US.
“Thanks to CEC, EY clients can access a deep industry knowledge base…an ecosystem of cloud services providers, solutions tailored to their industry and a wealth of cloud engineering talent, all under one roof,” said EY global cloud consulting leader Ragu Rajaram.
The need for proper expertise seems of paramount importance, as Polish companies are wary of repeating the same mistakes as western firms made over the past decade. In the attempt to avoid getting locked into the services of a single provider, many ended up using two or more cloud providers. According to Deloitte, this is the case of as many as 85% of companies, while a quarter use at least five different cloud platforms.
Many of them found themselves in a multi-cloud situation inadvertently by acquiring services from different vendors without an overarching strategy for redundancy and security issues. While shopping for better terms of service, they ended up in a “tangled web of cloud tools that are sometimes interconnected but just as often redundant,” Deloitte experts stated in their report.
In Poland, the majority of companies prefer the “hybrid cloud” solution, with key systems still kept within on-premises infrastructure. And even if less advanced and flexible, keeping a close eye on crucial components allows them to avoid dependency on public cloud providers, and a multi-cloud situation in particular.
Time to be smart about cloud
According to the Deloitte experts, companies may soon choose to centralize control over their cloud instances. One possible solution would be a “metacloud” layer over the multiple cloud infrastructures that communicates with them through standardized APIs. While technologically sound, the problem with a metacloud solution is that it does not serve the interests of public cloud providers like Microsoft, Amazon, and Google as it leads to the “commoditization” of their unique service offerings. It is therefore unlikely they would be inclined to offer it as part of their solutions. Another option to untie the knot of multiple cloud providers is to take the financial hit of a major overhaul and consolidate instances under a single banner, maybe even bringing some of the on-premises data centers back online.
It is therefore no wonder that Polish financial directors are wary of repeating the same mistakes as their western counterparts. With the anticipated economic downturn, it is crucial to approach the growth of the public cloud strategically.
