Mounting public cloud cost is driving cloud repatriation in the industry

• Faiz Shakir, MD - Sales, Nutanix India & SAARC, Nutanix speaks to Business Insider India on why a ‘public-cloud only’ approach is not the way forward for banks and large enterprises.
  
• Long-term cost implications of public cloud have emerged as a predominant discussion in the industry.

The banking sector recognises the need to be digitalized so it can achieve sustained growth in a market where the consumer demands everything-as-a-service. Cloud adoption is a critical factor enabling the transformation for banks. However, regulatory constraints, increasing costs and management complexities are compelling banks to reassess their cloud strategies.

Faiz Shakir, MD - Sales, India & SAARC at Nutanix, a cloud software and hyperconverged infrastructure solutions provider, talks to Business Insider India in detail about emerging cloud models.

Tell us how regulated industries, especially the banking sector players, are taking a relook at their cloud journeys?

Banks are certainly evolving in their cloud adoption journey. More specifically, cloud adoption today among banks is truly a hybrid multi-cloud model, where they are trying to get the best out of both worlds. Banks realise the need to be extremely agile, as fintechs and NBFCs ensure that the banks cater to the Gen- Z requirements. A recent Enterprise Cloud Index (ECI) report has revealed that 84% of enterprises in India prefer hybrid multi cloud as their ideal operating model, and that 58% are expecting to implement such environments within three years.

From a Nutanix perspective, this is one market we have done particularly well in. Eight out of 10 banks in India use Nutanix for their hybrid cloud journey. In the last 12 months, our partnership with players like AWS, Azure and Redhat has made us an integral part of organisations’ cloud adoption journey.

In addition to addressing regulatory requirements, how are hybrid cloud models enabling banks with agility?

Elasticity is a key outcome that banks are certainly expecting, especially to address big variations in resource demands. Many banks that we work with now have the capacity and the ability to move applications and resources to the public cloud in case of an elastic need and pull it back in when they don’t need that elasticity. This enables banks with agility and ease of operations. This level of agility is something banks could not have achieved if they were operating on legacy infra.

For example, a bank that runs a home loan mela for a couple of weeks will observe a massive shoot up in resource and workload demand. We work with banks to help them dynamically move certain workloads to a public cloud during these peaks in demand and bring them back to their data centers when elasticity is not required – all of this in a seamless manner.

Could you talk more about some of the Indian banks that Nutanix works with and how they are leveraging hybrid multi cloud for digital transformation?

Our work with RBL Bank, one of the fastest growing banks in India, is an apt case in point.

RBL, being a new age bank, caters to the Gen-Z crowd with a rapidly growing credit card base. They also need to ensure that business continuity is in place at all times. But their legacy systems were not built to address the growing digital needs. As part of their IT transformation program, the bank partnered with Nutanix in 2018 to leverage hybrid cloud models. At the end of the program, the bank was able to reduce its time to market to a few hours from a few days. It also saw a significant increase in credit card sales and call center efficiency. The bank’s IT downtime is virtually eliminated while ensuring that costs are under tight control.

You brought out the key aspect of controlling cost, which in a way is the elephant in the room. How are banks relooking at the public cloud from a cost point of view? Are organisations unable to achieve economic benefits as they mature in their public cloud adoption journey?

Cloud repatriation – shifting away from public cloud to on-premise infrastructure - is a reality. Nutanix has been talking about it at a very early stage – that cloud repatriation is going to happen. In the last few years, the largest companies were made to believe that they could only be agile if they were ‘public cloud-first’ or ‘public cloud-only’. So, a lot of companies moved in that direction and a lot of those companies have come back and rethought through that journey. I am not implying that public cloud is not the way forward. I think public clouds are fantastic. But “public cloud only” is certainly not the way forward.

Several of the banks that we work with have gone the repatriation route after having moved lock, stock and barrel to the public cloud initially. Cost is the biggest driver of cloud repatriation and hybrid cloud is becoming the de-facto choice for organisations in that context. Repatriation across verticals, and more so in banks, is massive. At Nutanix, we deal with these queries on a daily basis. Even the new-age, digital-native companies – for example, the fintechs, NBFCs etc – who are ‘born in the cloud’ are going to move to hybrid cloud. With the mounting costs and the prevailing economic conditions globally, they would be compelled to re-look at these factors.

It's such an anomaly if you look at it. What is going so terribly wrong with public cloud costing?

Long-term cost implications of public cloud have emerged as a predominant discussion in the industry. As organisations scale their cloud adoption and advance to matured usage, the initial benefits start to fade. As companies start consuming more public cloud services, it starts to have a major impact on their cost of revenue, according to studies. Unfortunately, there is no way to regulate this. Then there is also a massive reality of shadow IT. Cloud usage is typically not controlled by the CIO’s (chief information officer) office. So managing and controlling the entire thing is a challenge. Public cloud is great as long as you have those guardrails, you can manage it well and you know exactly what you need. But leveraging public cloud for a longer duration, particularly for predictable applications, does not seem to be cost effective.

For example, organisations on the public cloud end up paying the same cost for their test and dev (development) applications as they do for their highly-critical production applications. Nutanix have had customers who have saved up to 2.7X over three years by choosing a hybrid cloud model as opposed to a public cloud model only.

How has Nutanix evolved from being an HCI (hyper-converged infrastructure) company to a hybrid multi-cloud enabler.

We pioneered the concept of HCI and have been steadily evolving over the years to stay relevant in a hybrid multi-cloud world – which to me is the ‘hyperconvergence of clouds’. Today, we provide the bridge to enable organisations to seamlessly leverage any cloud, any applications, any hardware, any hypervisor and on any platform. Our partnership with players like AWS, Microsoft and Red Hat has been a massive driving force for Nutanix adoption. Today we are using the ecosystem to be that much more critical to our customers as opposed to being a one-trick pony in HCI a few years ago. While HCI is still a critical factor for our business, I would say we are equally relevant in the cloud space with our alliance partnerships.

Our subscription model, for example, has seen significant uptake and we believe it is the way forward.

SEE ALSO :

Binance ceases off-chain fund transfer with WazirX after ED raids

How Russia-Ukraine war helped this Thane-based company become a multibagger