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27 Sep 2017

Why are Future Winners Choosing Cloud Applications?


With Cloud-based Applications Development, you will get the best return on your investment. Here's a brief introduction, what Cloud-based App Development is about.

Samuli Ahola

This blog post was originally written by  and published in SC5's blog here. 

Return on Investment. The most fundamental of all business metrics. You don’t need to know tech-talk to understand that any app that you commission needs to result in profit.

Traditionally, development projects have seen most of the resources committed to the stuff that happens below the surface and behind the scenes – the things that the end-user never sees nor benefits from. Money, time and developers have been poured into the elements that simply make an app operational – rigid infrastructure, servers and stiff under-the-hood technology. Since the end-user and her experience is where the profit is made, in terms of ROI, the traditional set-up doesn’t really sound like a smart approach.

However, these are merry times for companies looking into digitalization. We are now approaching a new set-up: Cloud based app development.

 

That little lie made you read on, didn’t it?

The cloud isn’t actually new. Since the advent of AWS in 2006 the discussion about pros and cons have persisted and the approach to cloud has evolved. During the last 10 years companies have slowly migrated to the cloud with the forerunners being small tech firms and forward-looking business units in larger enterprises. It’s not until recently as enterprises have become increasingly comfortable with cloud technologies that central IT teams are also taking the reins to further drive cloud adoption. Today, according to RightScale 2015 report 93% of organisations are either running applications or experimenting with infrastructure-as-a-service. 82 % of enterprises have a hybrid cloud strategy, up from 74 % in 2014. The cloud, in one form or another, has become a given strategy and adoption is accelerating.

The top three benefits reported from the cloud are scalability, faster access to infrastructure, and availability. As organizations adopt cloud more broadly, they pick up even more value, and the challenges of adopting cloud decline. This value is the key to resetting the traditional ROI equation. Let me explain how.

 

What happens when you go Cloud?

Let’s look at the app development costs of yesteryear. Before cloud based development, a staggering 80% of development budgets were allocated to infrastructure set-up alone. To specify, most of the costs in any IT investments are labor costs, not hardware costs, a fact often forgotten putting the talk about cloud costs off stride. Still, this budget allocation perfectly represents an iceberg situation, where the unseen and under the surface elements made up for the majority. The stuff that could be seen above the surface, user benefits, most important features of the app itself, got a small slice of the budget.

sc5_lifting_iceberg.jpg

 

The Cloud is tackling the iceberg imbalance

The cloud has pretty much revolutionised how we compute: from freeing our previously under pressure computers from storage demands, to businesses now freeing their under-staffed and over-worked IT departments from outdated legacy systems. Yet, in terms of applications, the cloud possibilities may well outshine even the transitions seen within the personal computing and business system realms. In its simplest sense, Cloud app development is now handing time to developers. This is where we see the growing tip of the iceberg: more of a budget is being spent on the customer experience – the one thing that, above all else, brings in tangible turnover for the app owner and contributes to profit margins and boosts bottom lines.

Take a quick look around. Applications that have taken the world by storm haven’t done so because of the technology that backs them up. They’re not within the Google Play store top ten because of the servers that power them, nor the infrastructure that they rely upon. They’ve done so because they’ve invested in solving pain points for their users.

 

What are the remaining challenges of adopting Cloud?

While cloud adoption is growing and benefits seem clear, companies have not fully embraced it. RightScale’s findings state that 68 % of enterprises run less than a fifth of their applications in the cloud. The key worry in RightScale report was cloud security. The report also shows, however, that security worries have declined. It seems that the guys at central IT are starting to have faith in Cloud handling data and their view is getting more aligned with that of the business unit: be agile and fast.

Other perceived obstacles for adopting cloud are high costs of AWS and legacy issues. The costs of AWS can be high, there is no denying that. At peak times the cloud infra may get more expensive than the company’s own set-up. Turning the table around, however, you’ll find that with no peaks the costs are nil. Why keep shop when no one is at the door? When your users sleep, so does your infra, and there is no need to pay the clerk for night duty. This gets us back to the tip of the iceberg; cloud allows for companies like Zalando and Netflix to invest their R&D-superpowers in developing software for awesome user experiences instead of under the surface stuff. Your infra is a copy paste -exercise that once invested scales to other activities.

Read more: Do you know what your AWS Cloud really costs?   

The legacy issue is the main problem most companies face. Their organization, infra and internal systems do not bend to the cloud. Key here is not to dive headfirst. Using API solutions companies can transition gradually by moving one service at a time, while at last, e.g. keeping their own data in their own hands.

 

Should You Already Be There?

The future isn’t merely promising for those who choose the cloud for app development, the future is already here. Some of the world’s most innovative companies are harnessing cloud technologies, including Flipboard, Expedia and the already mentioned Netflix and Zalando to name but a few. Flipboard have been able to cope with their continued user growth, and Expedia have cut down time-consuming and costly test environment set-ups. Netflix improved their reliability levels (something that was previously a major bug bare for their clients); All of which goes to show that the Cloud has truly transitioned the focus and budget away from the backend, over to the frontend – where the customers are. So yes, this is exactly where you should be.

If you're interested in Cloud Applications Development, make sure to read more here. 

About Nordcloud

Nordcloud is a European leader of public cloud infrastructure solutions and services. Since 2012 we've completed over 300 deployments to help our enterprise customers gain the maximum benefits of the cloud including security, agility, scalability and overall cost-savings. As an independent cloud-native company, we are representing all globally leading cloud technology providers neutrally for the customers’ benefit. With a strong Nordic heritage, Nordcloud is headquartered in Helsinki with offices in Stockholm, Malmö, Oslo, London, Amsterdam, Poznan and Munich.

If you'd like to talk with Nordcloud to see how you can benefit from the cloud then contact us and we'll arrange a meeting for you with one of our cloud experts.
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