Published on December 14, 2023, 6:49 am

With the rapid emergence of AI tools from major cloud vendors, there is a new consideration for CIOs when it comes to their cloud strategies. The risk of cloud concentration, or consolidating on too few or even a single major cloud vendor, is becoming increasingly important. This risk is not only about vendor lock-in but also about the potential opportunity costs of AI lock-in.

Gartner’s recent quarterly risk reports highlight the significant emerging risk of relying on a handful of cloud vendors for enterprise infrastructure. The concentration of applications and businesses on a single cloud provider increases the potential impact of business continuity failures. Executives are concerned about a “wide incident blast radius,” vendor lock-in, and possible regulatory compliance failures.

CIOs face the dilemma of choosing between different AI technologies offered by different vendors. For example, if Google’s Gemini AI technology proves to be superior to Azure’s OpenAI Service, but a CIO has invested heavily in Microsoft’s cloud, they could have limited options in the long term. This kind of risk keeps CIOs up at night.

Many IT leaders recognize the risks associated with cloud concentration but stress the importance of having well-thought-out strategies to mitigate these risks. Bob McGowan, CIO of Regeneron Pharmaceuticals, emphasizes the readiness of SaaS partners as a concern. He questions how well they are prepared for failure and business continuity.

Ciena CIO Craig Williams sees control over leading AI platforms by the three main cloud vendors as a significant issue for IT leaders today. He advises caution and suggests proceeding with care when it comes to pure AI tools and avoiding vendor lock-in where possible.

John Marcante, US CIO in residence at Deloitte, advocates for selecting an architecture that does not rely too heavily on proprietary services offered by specific vendors. While having multiple cloud providers may create complexity, it can also help enterprises understand what it takes to switch application workloads among different providers.

Gartner’s ranking of cloud concentration as the fourth risk among C-suite executives highlights the concerns around this issue. However, industry consolidation has also increased market choice, allowing CIOs more options beyond just AWS and Azure. Even Oracle has transitioned to become a full-service cloud provider. CIOs can consider alternatives like single-tenant cloud solutions or colocation companies to diversify their options.

Despite the risks, many IT chiefs believe that companies have faced similar issues with on-premise data centers and that hybrid strategies can mitigate risks. Companies should architect their solutions for high availability and business continuity regardless of whether they are using on-premise or cloud solutions.

When it comes to AI, CIOs are focusing on leveraging existing SaaS tools with AI capabilities before exploring proprietary or open-source AI accelerators or models. The choice of who to do business with is driven by use cases and the need for flexibility in cloud strategies to capitalize on optimal offerings.

In conclusion, the risks of cloud concentration are real and relevant to CIOs’ cloud strategies. Mitigating these risks requires careful consideration of vendor lock-in, readiness of SaaS partners, and selecting architectures that provide flexibility. The emergence of AI tools adds another layer of complexity, but smart decision-making based on use cases can help secure successful outcomes for businesses.

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