Benefits and Challenges of IaaS in the Enterprise

Infrastructure as a Service offerings can help cloud-powered enterprises save IT hardware and infrastructure costs, but there are limits.

By Dipti Parmar

By Dipti Parmar March 23, 2022

Infrastructure as a Service (IaaS) is the fastest growing segment amongst public cloud service delivery models – the total spend on cloud system infrastructure services is predicted to double from $59 billion in 2020 to $106 billion in 2022 as per a study by Gartner.

There is no denying the massive shift to cloud services overall. Driving it are the disruptions in business operations caused by COVID-19 and the emergence of technologies with complex use cases that mandate scalable and agile infrastructure as a catalyst for their evolution.

“The events of last year allowed CIOs to overcome any reluctance of moving mission critical workloads from on-premises to the cloud,” said Sid Nag, Research VP at Gartner. “Even absent the pandemic there would still be a loss of appetite for data centers.”

“Emerging technologies such as containerization, virtualization and edge computing are becoming more mainstream and driving additional cloud spending. Simply put, the pandemic served as a multiplier for CIOs’ interest in the cloud,” Nag added.

But why the renewed interest in IaaS which didn’t live up to its early hype and is still haunted – if not plagued – by organizational skills gaps?

Three basic reasons:

  1. An IaaS framework needs little CAPEX – ideal for lean enterprises and SMBs or startups that have recently crossed over into the enterprise category.
  2. IaaS is inherently elastic and lets businesses scale infrastructure on-demand without the need for purchasing or maintaining complex hardware.
  3. IaaS enables a significantly sized remote workforce that connects to businesses using modern DaaS solutions.

The first reason alone is leading business management to pressurize CIOs to evaluate migrating their data centers to cloud IaaS, according to Gartner.

“Efficiency-driven workload migration demands a different mindset and approach than agility-driven cloud adoption,” said Lydia Leong, Distinguished Analyst and VP at Gartner.

The greatest benefits are derived from cloud-enabled organizational transformation, yet such transformations are highly disruptive and difficult, according to Leong. “Moving to cloud IaaS without sufficient transformation may fail to yield the hoped-for benefits, and may actually result in higher costs,” she warned.

This ambiguity needs a closer look at the factors influencing IaaS adoption as well as the pros and cons involved.

The Need for IaaS

IaaS embodies the promise of software-defined flexibility and scale for the IT infrastructure – within a public, private, hybrid or multicloud environment. It leverages virtualization to give end users the ability to configure compute, storage, and network resources while leaving complexity to be managed by the cloud provider.

IaaS gives IT admins and developers the freedom to architect, deploy, automate, and manage applications and VMs, building a veritable “datacenter in the cloud” without having to buy a bunch of hardware.

Businesses use IaaS to enable a multitude of operational tasks and processes, including software development, application testing, web hosting, high performance computing (HPC), and big data analytics.

One of the fundamental real-world uses of IaaS today is in retail. Online traffic and transactions expectedly spike during the holiday season in November and December every year. Retailers can quickly ramp up their infrastructure and buy additional capacity to handle peak usage during these times.

And what greater testament to the power of IaaS than Amazon now being seen as a tech company more than a retailer – 52% of Amazon’s profits now come from AWS even though it accounts for only 12% of sales!

How IaaS is Deployed in the Enterprise

There are quite a few scenarios where IaaS enables leaner and faster enterprise operations:

  • Lift-and-shift migration – One of the most economically viable ways of migrating a workload to the cloud without refactoring the underlying architecture. Operations and management tools can be ported from the existing data center to the new cloud IaaS with no major modifications and little use of cloud-native features. While this might not deliver immediate cost savings, it certainly increases the scale and performance of the workload.
  • Cloud-enabled automation and DevOps transformation – All cloud migrations are not lift-and-shift. Enterprises in the middle of planned digital transformation prefer to take an agile approach to cloud migration. This involves using cloud-native technologies and DevOps-oriented tools for better standardization, “sanitizing” existing workloads and processes to make them more resilient, secure and efficient, and deploying infrastructure as code (IaC) to automate provisioning and management of infrastructure resources.
  • Web app deployment – IaaS is a complete infrastructural solution – including storage, networking, and web/application servers – to support app deployment. It also becomes simpler for organizations to scale infrastructure up and down when app usage is erratic or variable.
  • Software development and testing – IaaS makes it quick and cost-effective to set up and strip down software development and testing environments, resulting in faster integration, deployment and delivery of applications.
  • Storage, backup and recovery – While every enterprise needs a budget outlay for the storage, backup, and data compliance – whether on-premise, in a data center or in the cloud – IaaS allows for capacity planning and handling unpredictable storage demands.

The business benefits in each of these scenarios are undeniable.

The Business Advantages of IaaS in the Enterprise

Traditionally, setting up enterprise IT operations and creating new business opportunities mandated a huge monetary investment along with commitment to certain technologies. Companies needed to budget for on-prem servers, storage, software licenses and even real estate space. But with IaaS, the enterprise can mitigate all these risks, buy what they need “off the shelf,” and simply get down to business.

Scalability and Flexibility

  • The biggest operational advantage IaaS brings to companies is the ability to deliver on customer-centric strategies while achieving new levels of flexibility and scale, according to Steve McDowell, Sr. Analyst at Moor Insights & Strategy. “What the software-defined world has done is enable companies to start and scale very quickly,” McDowell said. “It allows you to deploy new services rapidly and enables businesses to leverage that technology to provide more tailored and customized services for customers.”
  • As seen earlier, IaaS environments ensure workloads such as websites and apps can handle spikes in traffic and usage via automatic provisioning and scaling of resources. Further, when the business expands into new locations, there is no minimum viable requirement for hardware infrastructure – data and applications are delivered to employees anywhere, anytime, enabling hybrid VDI deployments and unprecedented enterprise mobility.

Reliability, Security and Disaster Recovery

  • A key business driver in today’s world is service delivery. For present-day behemoths such as Uber and Doordash that operate at the intersection of technology and services, being available and responsive to customers at any and all times of the day is as important as having a workable core product. As consumers become more demanding, a high-speed and efficient backend, database and contact center is indispensable to business continuity.
  • IaaS lets organizations be secure in the knowledge that they’re protected from infrastructure failure to a great extent. IaaS equipment is hosted in highly available, secure and purpose-built data centers that have redundant data storage, servers, power and cooling plus network bandwidth and connectivity. Downtime and disruptions are minimized and backed up by service-level agreement (SLA) guarantees.
  • When it comes to data security, IaaS providers have their reputation at stake as much as that of the enterprise. They have fully enforced access rules, physical location security, multi-factor authentication, end-to-end encryption, data encryption at rest and other security guidelines in place.

Cost Optimization – OPEX over CAPEX

  • Another fundamental incentive for businesses to adopt IaaS is the shift from CAPEX to OPEX. Whether the organization is looking to improve IT performance, foster future growth, or close functional gaps in operations, a deep financial cost-benefit analysis is a critical first step.
  • Most IT infrastructure investments have a lifespan of three-to-five years before they cease to become growth drivers. Therefore, the price of dependability and performance that on-prem solutions or data centers offer has to be weighed carefully against the savings in hardware purchases, infrastructure maintenance (including staffing), real estate, energy and disaster management over this period. IaaS vendors and cloud MSPs might well turn out to be more qualified and experienced to manage the infrastructure in a holistic fashion with minimal-to-no disruption.
  • In some accounting scenarios, CFOs used to favor CAPEX for IT infrastructure assets to increase the book value of the company and make it attractive to investors up-front. In contrast, OPEX-based IaaS models even out the net profits and lower taxes of the company by recording infrastructure as an ongoing operational expense. Beyond the immediate gains in cash flow and cost optimization, cloud infrastructure leads to considerable financial freedom and certainty for the business down the line.
  • Significantly, IaaS has brought to light possibilities for collaboration between IT and Finance. Until now, datacenters had isolated IT from other business functions and many of their goals and activities remained siloed. The cloud has transformed these silos into cross-departmental synergies.

Challenges in IaaS Deployment

Despite the seemingly numerous benefits of adopting IaaS, as with any infrastructure deployment, reality doesn’t always live up to promises post deployment. Pitfalls include the illusion of scalability, misconfiguration and blind spots.


Cloud Smart in The Hybrid Era

IT admins and executives tend to take the inherent scalability of the cloud for granted. However, 33% of admins surveyed by Enterprise Management reported that scaling IaaS wasn’t as easy as expected.

“It’s very difficult, in an automated way, to determine whether something is a spike in demand for your website or your application or whether something is a malfunction of the system,” explained Lilac Schoenbeck, VP of Product Management at Rocket Software. For example, a DoS attack could appear to be a routine or sustained increase in resource usage. In this case, an automated mechanism for fast scaling would be highly counterproductive.

Also, immediate scaling of compute, storage, or network services might not always be possible. Even major cloud vendors need specialist teams and time to tend to change and support requests. 

“In order to grow the footprint of your website or your app, you’re going to have to shut it down and move it to a bigger space,” added Schoenbeck. That results in unexpected downtime or disruptions for customers and staff members.


Think Global, Act Local: Database Management Comes to Hybrid Cloud

With the level of access and control that IaaS offers admins, it is possible for both the customer and the provider to inadvertently overload their systems. 

“You can get overwhelmed with virtual machines if you aren’t careful, because it’s so easy to set one up but forget to take it away,” said Mike Meyer, CIO of Honolulu Community College, University of Hawaii. An excess of VMs over-provisioned by one customer of a provider could potentially degrade performance for the whole customer base if the infrastructure isn’t adequate.

Another risk is improper application of authentication or access policies while setting up a new server or storage bucket. This might leave potentially sensitive data vulnerable to unauthorized access. Security is always a shared responsibility between the client and the provider and all settings should always be double-checked on both ends for optimal data protection.

With IaaS, the provider controls the physical datacenter along with the servers, storage, networking, and virtualization. Therefore, the organization’s IT team will never have the kind of visibility they can get into an on-prem datacenter that’s fully under their control. Even the most transparent cloud vendors are reluctant to share details of their setup, for security as well as business reasons.

However, this limits the organization’s ability to detect and respond to anomalies and threats, or even identify all the vulnerabilities created by a lift-and-shift migration and non-cloud-native applications.

Meyer advocates digging deep and asking the right questions before choosing an IaaS provider, so that IT leaders know what to expect. 

“You should be asking questions like how many base servers are you running, how many are in a cluster, and how many clusters do you have?” he emphasized. “I would look for someone that will give you that kind of visibility into their infrastructure, because their infrastructure produces the environment you’re purchasing.”

Infrastructure in a Multicloud World

Today, 9 in 10 enterprises have a multicloud strategy in place while 8 out of 10 have deployed a hybrid cloud.

“The reality of enterprise IT now is that it's a multi-cloud world. Workloads can live anywhere and often do, and they ping pong back and forth,” echoed McDowell.


Redefining Workloads in Cloud Environments

He warns enterprises about ditching on-prem solutions completely and going all out with IaaS, dismissing the goal as unrealistic. 

“Planning for not just what type of cloud set up is needed today, but for the near and mid-term future, is of critical importance,” he said. “Hybrid solutions are the way to evolve once business needs, budget, and functionality requirements are all accommodated in a complete vision.”

However, not all CIOs will have the patience and the foresight to pace their deployments correctly. Cloud workloads, tools, and technologies are all still far from maturity, even though they continue to evolve at a rapid pace.

“It’s important to note that the usage and adoption of cloud that served enterprises well during the ongoing crisis will not look the same in the coming years,” declared Nag. 

“It will further evolve from serving use cases such as infrastructure and application migration to those that combine cloud with technologies such as AI, the IoT, 5G and more. Cloud will serve as the glue between many other technologies that CIOs want to use more of. It will be a disruptive market, to say the least.”

Featured image by Pxfuel

Dipti Parmar is a marketing consultant and contributing writer to Nutanix. She’s a columnist for major tech and business publications such as IDG’s, Adobe’s, Entrepreneur Mag, and Inc. Follow Dipti on Twitter @dipTparmar or connect with her on LinkedIn for little specks of gold-dust-insights.

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