Post Covid, more companies will ditch their servers

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Peter Griffin

As we enter a new pandemic lockdown many New Zealand businesses embrace their entrepreneurial spirit to launch new services and turn to those they implemented during past lockdowns.

A Wellington bakery that had previously only dealt with restaurants and catering companies offline pivoted to online, direct to home sales, using a cloud-based e-commerce system to start selling sourdough from its website. 

A major bank implemented a cloud-based contact centre suite in the space of a week so that its call centre agents could safely deal with customer queries from their homes.

One of our largest online education providers tripled its cloud computing capacity so it could cope with thousands of students making use of the platform for the first time. 

All of these companies scaled up their services or launched new ones without any additional on-premises infrastructure. Some didn’t have any to start with. In many cases, companies that were deemed “essential services” couldn’t get to their servers anyway and there were big delays in getting hold of new hardware during the lockdown. 

Ditching the servers

The cloud got many companies through in what was the first major test of the resilience of cloud services, in general, to adapt to the needs of millions of workers thrust into the virtual world. Many of them won’t go back and small and medium-sized businesses will increasingly eschew owning any on-premises infrastructure in favour of doing everything in the cloud. They won’t even have their own equipment hosted on their behalf in private cloud arrangements.

Such are the capabilities and cost efficiencies of public cloud platforms, the majority of businesses can now afford to take that step. Even prior to Covid-19, the so-called “serverless computing” revolution was well underway. 

Late last year, technology training and publishing company O’Reilly surveyed nearly 1,300 and found that 25 per cent said their companies planned to move all of their applications to the cloud in 2020. 

Just over one-third were already serverless, with 37 per cent saying they planned to adopt a serverless position in the future. 

What does that actually mean? Obviously, for those that go serverless, their applications still run on servers. It simply means they are relying on a public cloud provider to run all of their applications on standardised hardware. Some call it “function as a service” and I expect uptake of it to grow sharply in the next 18 months as companies embrace the change that Covid-19 has forced across the board.

Going serverless – the advantages

There are a number of advantages to ditching servers and letting someone else deal with the hassle of hardware, hosting and service.

Less maintenance – with no on-premises server infrastructure to maintain, a key IT function is removed and your team isn’t preoccupied with infrastructure and can instead focus on the apps and services your customers want.

Lower operating costs – The serverless offerings of public cloud providers, such as AWS and Microsoft Azure, generally offer plans allowing businesses to pay just for the resources they consume in terms of virtual machines, data hosting and bandwidth, removing the need for regular hardware upgrades and licencing costs. 

Reliability – Even the most proactive infrastructure manager can’t compete with the ability of the public cloud providers to guarantee uptime. The scalability of the public cloud is a huge advantage, letting you deal with spikes in usage and expand capacity in an orderly fashion. The same goes for server security where the big three have invested heavily in securing their data centres and online infrastructure.

Wisdom of the crowd – A lot of work in application development and APIs has been done to accommodate those who want to go serverless, so you can likely draw on the experience of others to help you optimise the majority of applications your organisation needs to run from the cloud. Emerging services, such as (IoT) Internet of Things device management are being designed from the outset to accommodate cloud deployment suited to the public cloud platforms.

Going serverless – the drawbacks

Vendor lock-in – The serverless offerings of the big public cloud providers, AWS Lambda, Azure Functions and Google Cloud Functions, are not interchangeable for a lot of applications and services, so shifting between them can be a costly and time-consuming process. Having all of your business with one company is most efficient but does make you vulnerable to changes in price plans or terms of service.

Lack of control – You will be dealing with an account manager or service desk for every significant change in configuration and for troubleshooting issues, so will rely on exceptional relationship management. Sometimes being able to access your own servers directly is just quicker and easier. 

App optimisation – The serverless approach doesn’t suit every sort of app. Computing processes that take a long time to run, for instance, may suffer reduced performance. Highly customised software packages may not perform exactly as they did on the server infrastructure they were developed for. 

Cost creep You may just be paying for what you use in the cloud, but it is easy for costs to escalate when you have virtually limitless room to expand. 

Distance – In the public cloud, your apps and data are likely to be hosted on servers in data centres in another city, maybe another country. That may have implications for latency and for data sovereignty. The arrival in the next 18 months of Microsoft’s own Azure data centres in New Zealand will help alleviate that problem to some extent. 

An economic imperative

Research group IDC predicts a dip in global IT spending of 2.7 per cent this year due to the economic fallout of Covid-19. A lot of IT infrastructure projects will be deferred. But a weaker economic outlook may also spur cloud and serverless adoption as companies consider the outlay required to add servers and data centre capacity versus outsourcing to a public cloud provider with more predictability around cost.

Interestingly, the O’Reilly research showed that around 60 per cent of companies that aren’t currently serverless, didn’t have plans to go that way in the next three years. It suggests that for a large number of organisations, having their own infrastructure and DevOps functions or a hybrid set-up, is still the preference, particularly for larger organisations and public sector agencies running mission-critical applications.

Still, for the many small and medium-sized Kiwi businesses adapting to life in uncertain economic times with the lingering threat of further Covid outbreaks, the serverless option is a compelling one, letting the focus shift to application development, which is where the value really lies.

If for no other reason, it forces an organisation to take a cloud-native approach to every aspect of its business, which can pay off handsomely when it comes to putting the customer first and innovating to create new applications and services.


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Peter Griffin

Peter Griffin has been a journalist for over 20 years, covering the latest trends in technology and science for leading NZ media. He has also founded Science Media Centre and established Australasia's largest science blogging platform,


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Microsoft is a technology company whose mission is to empower every person and every organisation on the planet to achieve more. We strive to create local opportunity, growth, and impact in every country around the world.

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