AI, sovereignty and costs drive hybrid cloud shift: Forrester

Cloud decisions need to consider more than just AI.

Organisations in Australia and New Zealand are increasingly choosing hybrid cloud arrangements as they balance AI-driven innovation with cost control and other considerations, according to a new Forrester report.

Dan Wright, GM cloud and connect at Atturra, is seeing the trend play out as customers reassess where workloads and data reside. A greater proportion of workloads and data are being moved into managed private cloud environments alongside public cloud.

“Rising hardware costs is making organisations question whether they want to continue owning and refreshing infrastructure themselves, while geopolitical events over the past 12 months have also put much greater focus on data sovereignty and where data is ultimately held,” Wright told CRN Australia.

AI is changing cloud economics

Cloud strategies need to assume AI is the default workload, not a future add-on, Forrester’s 2026 State of Cloud in Australia and New Zealand report recommends. But success is less about the speed of migration. It requires aligning cloud, AI and governance to long-term business outcomes, the report notes.

The research firm also said cloud strategy needs to consider data gravity, model lifecycle management and scalable AI infrastructure across public, private and sovereign environments.

Wright noted that AI workloads themselves can require significantly greater compute, memory and storage capacity.

“Organisations need to think differently about capacity planning and whether it makes economic sense to buy and continually refresh that infrastructure themselves, consume it through public cloud or use managed private cloud as part of a hybrid model,” he said.

There’s also the impact of AI on infrastructure costs, and it extends well beyond pushing up prices of GPUs.

“The enormous demand for AI infrastructure is also increasing demand for memory, storage and other components used in traditional servers, contributing to higher hardware costs more broadly,” he added.

Sovereignty and regulatory requirements shape cloud decisions

Sovereignty, governance and resilience considerations are also forcing organisations to be more deliberate in their cloud decisions, according to the Forrester report.

Wright agrees, noting that geopolitical events over the past 12 months have caused many organisations to take a much closer look at where their data resides, who ultimately has access to it and which jurisdictions their technology providers are subject to.

Organisations are treating data sovereignty as a strategic risk consideration rather than simply a compliance exercise, particularly for government, critical infrastructure and regulated industries.

It’s potentially good news for local providers, with greater demand for in-country cloud options.

“This is another factor driving interest in Australian-hosted private and sovereign cloud environments as part of a broader hybrid strategy,” he told CRN Australia.

Managing the hybrid cloud

Australian organisations report that cloud success depends on building operational muscle — adopting FinOps for cost control, applying standardisation and automation, and improving data governance and resiliency, the Forrester report noted.

Wright said a consistent operating model across multiple environments is needed. “The technology itself is rarely the biggest challenge,” he explained.

“Organisations need common approaches to governance, security, monitoring, service management, automation and cost management, otherwise each platform can become another operational silo,” he said.

“Done well, hybrid cloud gives organisations the flexibility to optimise workload placement for cost, performance, risk and control rather than being locked into a single infrastructure model,” he added.