Whilst it could be quite easily dismissed as a ‘buzzword’, digital transformation is something that businesses around the world need to be taking seriously. Indeed, the vast majority already are, with tech research company IDC finding that global spending on digital transformation infrastructure and services topped $1.3 trillion in 2017.
That spending is expected to hit $2.1 trillion in 2019 (40% of all tech spending), but where is all of that money being spent and what is it really achieving?

What is Digital Transformation?

Digital transformation is a blanket term that could loosely be used to describe any transformation that optimises a business and its organisational effectiveness via digital and IT services. The idea is to use digital technology to not only replace existing services but improve them by enhancing productivity levels, customer experience and more.

It also means different things (and poses different challenges) for different industries. For example – in the world of finance, digital transformation primarily relates to digital banking and mobile payments, whereas in the healthcare and insurance sectors, when we discuss digital transformation, we’re often talking about how patient data is stored and shared.

In all instances and in all industries, however, digital transformation always goes hand-in-hand with cloud solutions. In finance, cloud service migration is becoming more commonplace and the healthcare sector is taking advantage of cloud service flexibility to store patient profiles and create new services suited to demographics and based on previous patient history.

The Data Centre

Most modern business leaders understand that digital transformation is a necessity if they wish to be able to truly compete on a long-term basis in all areas – from attracting new talent to meeting customer demands and driving greater efficiency. However, without a solid foundation, any transformation (no matter how ambitious and well-planned) is surely doomed to fail. That foundation is always the data centre.

UK data centres are estimated to be worth $135 billion by 2025, with business investment in data infrastructure increasing by up to 11%. Indeed, as the adoption of new technologies and increasing digitisation of everything generates more data, dependence on data centres is only set to increase, with revenues expected to boom as a result. Jeremy Silver, CEO at Digital Catapult, said of the stats:

“The UK’s goal is to lead the world in creating innovative businesses, and continued growth of its data economy is vital in achieving that goal.”

However, one of the major hurdles faced by many businesses is ageing enterprise data centre infrastructure. IDC claims that the average data centre is 12 years old. These data centres were simply not built to accommodate perpetually scaling modern demands in terms of server space, power and cooling requirements. As such, any major digital transformation should begin by transforming the data centre itself.

As well as reduced costs, data centre modernisation can lead to greater IT agility and (as a result) a more solid foundation upon which to build your business’ digital renovation. However, building or transforming a data centre is not a small task.

Mercifully, organisations have a number of more flexible and cost-effective alternative options available to them. They can rent space from a cloud hosting provider, house their hardware in a colocation facility or opt for a hybrid cloud solution – splitting their resources between public clouds, private clouds,on-premise servers and data centre suites. Outsourcing to a colocation or public cloud host is the fastest way to get your resources online quickly and the upfront investment will be less significant.

Cloud Solutions as part of Phase 1

The latest research from the Cloud Industry Forum (CIF) discusses in great length the growing impact that digital transformation is having on UK businesses. Despite only 16% of organisations having a digital transformation strategy in place at present, the research identifies that this figure is expected to rise to 72% in only two years’ time. 80% of those surveyed with either an existing digital transformation strategy or a strategy in the pipeline, describe the cloud as being important to this strategy.

CIF CEO, Alex Hilton, believes that digital transformation and cloud computing go hand-in-hand. He explains: “It is very easy to see why cloud services are so important to the digital transformation agenda.” He adds:

“At its essence, cloud has allowed organisations to breakdown traditional barriers often associated with IT management by offering access to unlimited resources without the need for significant expenditure. Because of this, businesses are now free to adapt to market changes quicker and take more risks, safe in the knowledge that they are no longer bound by fixed IT constraints.”

A cloud solution means moving data and processing from on-premise servers to a cloud-based infrastructure and is often the first logical step on a business’ path to full digital transformation. Before a business starts to worry about AI, the Internet of Things and big data, it should first embrace cloud solutions as a gateway into bigger and more ambitious transformations further down the line.

Service providers already account for 44% of worldwide spending on core infrastructure technologies according to IDC and public cloud spending is always increasing. Indeed, service provider public cloud spending is set to increase at an annual rate of 19.4% throughout 2019, hitting a total global spend of $141 billion at the end of the year. 40% of this spend will be from SMBs, so it’s not just the big boys that understand the potential power of the cloud either.

Most businesses now are taking a hybrid approach to the cloud by spreading their resources between public clouds (for front-end applications) and private clouds (for sensitive data) with some also using on-premise data centres to handle less intensive tasks. The flexibility of hybrid cloud solutions has made cloud migration that much easier and it is more agile now than ever before.

It is important, however, to use colocation as part of a hybrid solution as colocation data centres are able to integrate multiple infrastructures into a single, optimally-functioning environment by providing a secure, private cloud with access to public clouds. Colocation data centres can also help enterprises deploy and manage a hybrid data centre.

Benefits of the Cloud

Cost – Regardless of their size, by migrating their operations to the cloud, businesses can save substantial capital costs through a reduction in spending on equipment, infrastructure and software. It allows them access to additional processing power for no extra cost and the vast majority of cloud contracts include the cost of system upgrades – new hardware and software. You’ll also save on the recruitment of additional IT staff and the energy consumption that comes with running your own data centre.

Scaling – Scaling is that much easier with a cloud or colocation solution, as you don’t need to buy extra resources. Most cloud providers will allow your business to easily upscale or downscale their existing resources to accommodate your business needs or any changes. This will enable you to support growth without expensive changes to your existing systems. When it comes to digital transformation, easy scaling with minimal disruption is absolutely vital, so cloud and Data Centre solutions really is the key enabler of digital transformation.

Efficiency – Not only will a cloud solution enable your business to communicate and share more easily outside traditional methods, but it will allow more efficient collaboration between employees – allowing them to share and work on the same data at the same time.

Continuity – In the event of a data centre disaster, if your data was 100% on-premise then it might be lost forever. However, with all your data stored in the cloud, it is that much easier to back it up and restore it – avoiding downtime, keeping data and operations running smoothly and ensuring business continuity.

Flexibility – Cloud solutions enable you to access and process your data and resources quickly and securely from anywhere in the world, offering greater flexibility to your businesses and their employees. This flexibility also extends to how data is harnessed. Netflix, for example, spent almost a decade moving its services to the Amazon Web Services cloud to help deliver great end-user content when in high demand. Big data sets are created against user profiles, data which can be accessed to create new features suited to each individual – greatly enhancing the end user experience.

Security – According to the Cloud Industry Forum, 75% of business owners are concerned about data security and 56% about data privacy during the decision-making process to move to the cloud. However, because cloud service providers are often used by so many disparate businesses, their security is generally that much more advanced than a typical on-premise data centre. They will use data encryption, key management, strong access controls, and security intelligence in addition to regular security audits and these security costs are shared across all users in the cloud, making them that much more cost-effective.

Challenges of the Cloud

There are, of course, innate challenges that are faced by any organisation migrating their services to the cloud, with security and the concern that valuable data might be ‘lost in the shuffle’ amongst the most obvious fears. There are also industry-specific challenges to consider, but the vast majority of these challenges can be circumvented by utilising the best practices for cloud migration. To learn more, visit our blog – Hybrid Cloud Management in 2019, to discover key aspects of Cloud Management Strategies including cloud conservation, budgeting and governance. You can also refer to the Cloud Migration Tips section, below.

Stable Cloud Connectivity

With a hybrid cloud solution, it can also be difficult to make sure various providers are connecting seamlessly, without causing disruption. The Telehouse Cloud Interconnect exists for just this purpose – an ecosystem, securely connecting top public cloud service providers such as Amazon Web Services, Microsoft Azure and social media content providers in a seamless fashion via over 750 carriers.

The Interconnect encompasses a dense ecosystem of clouds hosted within our 40-strong worldwide data centre portfolio, which is scattered across the globe in 20 cities and 12 countries and areas. It’s a one-stop solution that is truly essential for cultivating CSP connectivity that provides a secure and low-latency hybrid ICT model with digital transformation at its core.

As well as providing the necessary storage and connectivity needed to manage an IT infrastructure, a cloud provider is also there to advise and offer counsel on future-proofing. However, there are innate challenges faced by cloud providers such as security and governance. Colocation Data centre providers such as Telehouse, meanwhile, are increasingly being asked to support denser configurations through power and cooling requirements that are able to outstrip the capabilities of traditional on premise infrastructure and cloud providers.

By providing these capabilities, businesses can be confident that the necessary scalability and flexibility is in place to digitally transform their business to meet the needs of tomorrow.

Cloud Migration Tips

Dealing with legacy IT systems that are slow and costly to maintain is often seen as the Achilles heel of digital transformation and that’s because many businesses have been too quick to experiment with new technologies without changing the foundations. This leaves many businesses hard-coded into antiquated systems, which often don’t play nicely with more modern cloud platforms and can be a major hurdle when it comes to migration. The tips below aim to soften the blow, somewhat.

  • Research heavily to find out which cloud providers are best equipped to handle your migration. An organisation will spend on average $5.7 million every year on digital projects, but 90% of these projects end in failure and that’s often due to poor planning and a lack of research.
  • Don’t modernise ahead of the curve. Sometimes it can prove beneficial to hold fire and wait until the stars align, so to speak. This is particularly true of larger companies with decades worth of data to migrate.
  • Start small by migrating simple applications and work your way up to more complex projects. Also, make sure you are keeping track of what data and which processes are being split between private clouds, public clouds and on-premises data centres.
  • Legacy system migration can put employees on edge so make sure your staff are properly educated. Cloud migration will almost certainly make their jobs easier, so make sure to lead with that and help them to understand that moving to the cloud frees them up to do more interesting, innovative work, ultimately adding more value to the entire business.
  • Think ahead – examine your business goals and targets and using those goals, work backwards to decide on what migration approach to take.

The Future of Digital Transformation

Of course, the notion of digital transformation extends far beyond simply the implementation of technology. It’s also about necessitating cultural change and forcing decision makers to question traditional processes and procedures.

Digital transformation is so ubiquitous now that it’s touched almost every industry imaginable – from the obvious (finance and tech) to the less so (agriculture). Whilst it might mean different things to different industries, however, one fundamental thing is true for one and all – digital transformation is creating better value for customers and is making the way we conduct our business that much easier.

Cloud solutions underline this ideal admirably, and as long as businesses can temper their expectations and utilise the best providers and the best data centres to host their data, the future’s looking bright indeed.