Published on the 06/11/2025 | Written by Heather Wright
Falling behind or waking up?….
After more than a decade of cloud adoption, local organisations are reporting a dip in perceived cloud maturity, with many organisations questioning the return on their investment.
Datacom’s sixth annual Cloud and Infrastructure report show while cloud computing has delivered tangible benefits in agility, scalability and customer experience, just 50 percent of organisations in New Zealand, and 48 percent of Australian respondents, say cloud has delivered the benefits expected.
“We’re seeing a shift in how organisations perceive their cloud maturity — not necessarily because they’re falling behind, but because they’re becoming more aware of the complexity involved.”
The culprits? Complexity, skills gaps, financial immaturity and integration and governance issues creating friction and inefficiencies.
And while organisations are struggling to find the ROI they’re seeking, they’re also reporting less confidence in their cloud maturity. In 2020 roughly three in four Kiwi organisations and two in three Australian organisations rated their cloud maturity as ‘effective’ or ‘very effective’.
Fast forward to this year, however, and that number has dropped to just one in two across both countries, with financial maturity in New Zealand down from 76 percent in 2020 to just 50 percent in 2025 (albeit up slightly on last year’s 45 percent) and operational maturity taking a hit in Australia, dropping from 66 percent in 2020 to 51 percent this year – but again, up from 2024’s 40 percent showing.
But Mike Walls, Datacom director cloud, doesn’t see this shift as a failure, but instead a sign of growing awareness.
“We are seeing a shift in how organisations perceive their cloud maturity – not necessarily because they’re falling behind, but because they’re becoming more aware of the complexity involved.”
He says the rapid pace of change in cloud platforms and services means leaders are recognising what they don’t yet know.
“That’s a positive step. But to keep pace and stay secure, it’s essential. To invest time in strategy, not just managing the day-to-day, but making deliberate decisions that strengthen capability and deliver long-term value.”
That’s a sentiment echoed by Russell Page-Wood, Datacom’s regional director for cloud, who says to succeed, companies need to embrace cloud as an operating model, not just a technology solution.
“Over the last decade, the key shift in the cloud landscape hasn’t been the technology itself, but how organisations choose to use it,” he says, noting early adoption was focused very much on ‘lift and shift migrations’ where legacy systems were moved with minimal modernisation. Without rethinking architecture and ways of working, the report says the benefits of cloud are limited.
“Today the focus is on leveraging platform-as-a-service and cloud-native architectures to innovate and build faster, rather than simply re-hosting legacy applications,” Page-Wood says. That’s a model, he says that paves the way for a broader shift toward product-centric delivery models, helping businesses focus more directly on creating tangible value.
But the report suggests many organisations remain stuck in the early stages of cloud adoption. In Australia, on-premises infrastructure remains significant at 43 percent, with 22 percent of organisations preferring to ‘retain in place’ rather than modernise applications. In New Zealand, where on-premises accounts for 37 percent of infrastructure, refactoring (22 percent) and re-platforming (18 percent) are more common, but still show a significant portion of organisations shying away from cloud-native transformation.
The report notes that challenges are multifacted, with skills shortages, integration complexity and financial immaturity as recurring themes. Vendor lock-in or limited portability, hybrid and multi-cloud complexity and difficulty optimising resources, are playing a hand, and total cost of ownership surprises and a lack of visibility are eroding confidence in cloud financial models.
The way forward
The answer may lie in platform engineering, FinOps and a renewed focus on cloud-native design. Page-Wood advocates for a shift in mindset: “The most successful organisations are those that treat cloud as a business enabler, aligning cloud strategy with business outcomes, not just IT goals.”
AI-driven app modernisation also has a role to play.
Lou Compagnone, Datacom director of AI, says AI is starting to transform the economics of app modernisation.
She cites the use of AI agents by Datacom’s own engineering teams to help write code for some of its large app modernisation projects, enabling them to rebuild legacy systems at ‘unprecedented speed and scale’, ultimately reducing costs and accelerating delivery.
“This shift means organisations can finally tackle long-standing technical debt with confidence, using automation, developer tooling and scalable AI workflows to unlock modern platforms and deliver real business outcomes,” Compagnone says.
Local organisations are also adopting containerisation at a fast clip, with 40 percent of Kiwi and 43 percent of Australian organisations already using it or expecting to adopt it within the next 24 months.
“By allowing multiple applications to run on the same physical or virtual machine, containerisation reduces overheads and improves use of resources compared to traditional virtual machines, enabling greater deployment flexibility across platforms.”
