The Cloud Conundrum

Once upon a while ago, the cloud promised resilience, agility, and cost efficiencies galore.

Australian organisations embraced it full tilt, moving applications and data into new environments with all the enthusiasm of a hungry family rocking up at a fancy all-you-can-eat.

The shift was significant. But these days, the cloud is routine. Vanilla, even.

And while the transition may be done, is the real transformation unfinished?

Fresh from tackling the topic with technology leads in a series of breakfast forums, Steve Anderton, Brennan’s Head of Customer Solutions, and Simone Bennett, Brennan’s Cloud Practice Lead, sat down to digest The Cloud Conundrum.

Where does Australia’s cloud float today?

If the first wave of cloud adoption was about moving, the second is about improving.

And as technology leads shared candid views on an evolving landscape shaped by AI workloads, new regulatory pressures, and a sharper scrutiny on the relationship between investment and value, one clear takeout was that leaders are no longer asking whether cloud is the right destination. They are questioning how to ensure it delivers what was promised.

“Organisations moved because the business case made sense when evaluating against running and operating your own data centre. But what was often missed was the transformation. And that’s where you recognise the most value and see the real returns. That’s where the benefit is realised in cloud.”

Steve Anderton, Head of Customer Solutions, Brennan

Technology teams have improved cost control and infrastructure management. Yet many applications remain untouched, monolithic, and difficult to optimise. The return on cloud is visible in pockets but still uneven overall.

Adaptive cloud thinking takes hold

For several years, an undertone in the market has been a repatriation narrative, of a growing interest in moving selected workloads back on-prem due to runaway spending, skills shortages, and compliance pressures. But the forums told a different story.

“The main thing we heard was that most people are not repatriating on mass,” said Simone Bennett. “They’re just re-evaluating certain workloads or electing not to move some. Migration still far outstrips exits.”

Instead of retreating, leaders are becoming more deliberate. The mantra is workload placement that aligns to business value. Performance where needed; predictability where critical; and flexibility where innovation matters.

Edge computing is also an increasingly significant part of the conversation. Data must sometimes stay close to where it is created, particularly with the rise of IoT devices and operational data at remote sites.

“Edge was on people’s radars,” Steve explained. “Putting compute and storage closer to the data source is an increasingly important consideration.”

Simone added a note of clarity. “If you want the correct label here, it’s adaptive cloud. Stretching Azure to the edge and connecting to IoT. That is what Microsoft is investing in.”

AI everywhere, but not yet grounded

AI was naturally a hot topic for the roundtable sessions and is now the strongest force pushing cloud evolution. But excitement was tempered by uncertainty and expectations on several fronts. Leaders want to experiment. Teams want guidance. Boards want value, automation, and a competitive edge. Everyone wants outcomes.

“At least half of every discussion was AI,” Simone said. “How do I do it. How do I secure it. How do I optimise and manage the cost. The reality is AI requires stable foundations. Data must be clean, well-governed, and readily accessible across environments. Legacy architectures simply can’t support intelligent workloads at scale.”

The emerging principle: AI has its place, but not everywhere. Investment should be targeted to the use cases that truly unlock advantage.

“Organisations need a vision for AI that includes policy, governance, stewardship, and change,” Steve explained. “Operating models must be capable of incorporating AI tools and agents without jeopardising security or performance.

Human oversight matters

Both Simone and Steve encouraged a grounded approach to AI in operations. AI agents can accelerate tasks and unlock new possibilities, but they are not expert colleagues.

“You have to treat AI like an eager but junior staff member,” Steve noted. “Train it. Review its work. Give it tasks but have guardrails with humans in the loop.”

Simone emphasised the cultural stakes. “There’s research that when you treat AI like a human, team morale and output go down. AI is enthusiastic and it should take the grunt work. But it shouldn’t replace people or dictate direction.”

Digital sovereignty rises to up the agenda

With the world having what might be called ‘a moment’, more organisations are re-evaluating where data resides and who can access it. Geopolitical tensions, privacy legislation, and the reality of state-level cyber activity are reshaping infrastructure strategy and planning, with data residency becoming a hot topic.

“People are starting to realise that the old gentleman’s agreement – that if your data is in Azure, that the US government won't look at it – is a handshake that companies really can't entirely rely on anymore.”

Simone Bennett, Cloud Practice Lead

“As a result, we’re seeing a growing interest in Australian-only models, sovereign software, and sovereign teams” Simone says.

Steve connected the thread to a broader shift. “Sovereign workloads. Sovereign data. Sovereign people managing it. That is what organisations are preparing for based on shifts in regulatory requirements and geo-political uncertainty.””

And figures from Gartner predicting digital sovereignty strategies will be commonplace within the decade back up that view. But the shift is measured rather than drastic. Organisations are selectively moving or locating specific workloads to satisfy regulation or reduce risk. Few are committing to a full reversal.

And this is where AI and sovereignty intersect. Sensitive data tied to regulated workloads can't simply be pushed into any cloud-hosted model. The operating model must adjust. So must the architecture.

Australian organisations, particularly those serving citizens directly, are contemplating sovereign cloud components earlier, and more seriously, than anticipated.

Architecting for resilience, not fear

Recent outages from major providers sparked plenty of discussion but not panic. The takeaway was not to abandon cloud but to architect better within it.

“It’s like insurance. No one wanted to pay for back-ups. Until they found out (the hard way) they needed back-ups.”

Simone Bennett, Cloud Practice Lead

The renewed emphasis is on multi-region redundancy, resilient DNS strategies, and well-architected principles that have always been recommended but not always prioritised.

Customers are discovering that technical debt does not wait politely for budget cycles. It accumulates continuously. Cloud requires continuous maintenance, optimisation and enhancement to keep value moving forward.

Where leaders go next

The mood across the country was realistic yet determined. Migrating was never the finishing line, merely a staging post.

“Transformation is the key theme. When budgets are coming under so much scrutiny, aligning to the outcome and business value that will be realised has never been as important.”

Steve Anderton, Head of Customer Solutions, Brennan

The advantages of cloud remain strong, the appetite for innovation remains healthy, and the need to modernise is unavoidable. The approach is shifting to what will truly matter in one year: agility, sovereignty, security, efficiency, and AI-ready capability.

Australian organisations are moving into Phase Two. It is precise. It is value-led. And through adaptive cloud strategy, better architecture, and guided transformation, it is achievable.

By treating cloud as a dynamic platform for progress, not a destination, organisations can shape a more resilient and intelligent future.

The migration is largely done.
The transformation is beginning.

To find out more about how Brennan can help you navigate cloud complexities to achieve gains, contact Brennan here.