Economic pressures, AI reshape cloud strategy in Australia

ADAPT has released its 2024 Cloud and Infrastructure Edge survey, revealing changes in the primary drivers of cloud modernisation for major Australian organisations.

The survey, which included responses from 161 Australian Cloud and IT Infrastructure leaders, highlights a significant shift in priorities due to economic pressures and the adoption of Artificial Intelligence (AI).

According to Gabby Fredkin, Head of Data & Insights at ADAPT, Australian Cloud and Infrastructure leaders are under increasing pressure to modernise their technology. "Increasingly digitally-savvy Boards and CFOs are driving into every line-item of the balance sheet and working out where savings can be made as customers become more selective with spend, and IT costs aren't being spared the magnifying glass," said Fredkin. He added that while there is pressure to optimise costs through modernisation, it requires investments and skills that are not materialising quickly enough.

The survey identified the lack of funding, talent scarcity, and legacy systems as the top three barriers preventing cloud modernisation. The funding issue has gained prominence, moving up from the fifth position in the previous year's survey. Additionally, 63% of Cloud and Infrastructure leaders believe that modernising their technology stacks will significantly improve operational efficiencies over the next year, and 53% think it will drive down overall business costs.

Fredkin emphasised the role of understanding the organisation's technical debt in making IT funding decisions. "Unclear cloud costs as well as future energy needs are presenting a huge challenge to Infrastructure & Cloud leaders, particularly as a new wave of Artificial Intelligence is expected to amplify these issues," he stated. He noted that modernisation could help reduce technical debt by offering better app connectivity and a clearer understanding of the value of different applications.

Cloud and Infrastructure leaders reported a considerable expected increase in enterprise-wide computing capability needs over the next two years. They anticipate a 15% increase in computing needs within the 2024-2025 Financial Year and a 17% increase in the 2025-2026 Financial Year. Fredkin attributed these growing needs to the implementation of infrastructure supporting AI and the necessity to pay down technical debt. "While juggling technical debt, Cloud & Infrastructure leaders are trying to brace themselves for the impending AI wave that could mean exponential growth in their computing needs, threatening to send costs skywards," he explained.

The survey also indicated that 85% of Cloud and Infrastructure leaders foresee increased IT-related power needs in the coming two years, with an average expected increase of 22%. However, less than half of the respondents felt comfortable with their current power plans.

ADAPT's survey sheds light on the complex challenges that Cloud and Infrastructure leaders face as they navigate through economic pressures and the increasing demands brought on by AI and technical debt. The findings underscore the crucial need for strategic investment and a comprehensive understanding of technical debt to achieve successful IT modernisation.