The Value of Cloud Migration
Cloud is a once-in-a-generation technology that can enable entirely new business models. As such, when building a business case, you must measure its value differently than the technology it would replace.
Typically, total cost of ownership (TCO) and return on investment (ROI) models have been used to understand the value of IT, and many leaders use this same mindset when approaching Cloud.
For the past decade, cloud has largely been viewed as a chance to reduce CapEx. Decision-makers see cloud migration as a cost-avoidance exercise to be used as a typical hardware refresh, with timelines correlated to typical hardware lifecycles.
This view does not provide the full picture of cloud economies of scale, nor does it capture a full understanding of the business impact of a cloud investment’s potential contribution to growth, such as:
- Scalability and security benefits of Cloud
- The freedom to refocus IT staff from mundane maintenance to more strategic tasks centered on business value
While migrating to the Cloud can certainly help reduce IT costs, it would be wrong to approach it as a cost-saving exercise. Instead, think of it as an opportunity to optimize your IT spend and to realize the value of your IT estate.
The value of Cloud lies in the flexibility and capabilities it unlocks and the opportunities it creates, allowing your business to more quickly innovate and respond to your market r. To fully recognize this value, leaders need to shed the CapEx-centric mentality thatIT costs are a necessary evil and instead embrace cloud infrastructure as a catalyst for business enablement.
The New Case for Cloud Migration
Now that we have established that Cloud isn’t just a hardware replacement but is also a “business enabler,”, let’s dig a little deeper.
A true understanding of the value of Cloud requires us to expand the scope beyond IT to the technology’s impact on helping achieve wider business objectives. Here are five ways that an accelerated move to the Cloud can provide tangible benefits and value.
1. Increased Productivity
At the top of the list is the ability to increase productivity and decrease costs. Companies that are investing in cloud services are generating more value per employee than those that are not.
Well, for a start, your team can rely on your cloud provider to keep the lights on, meaning they can be less concerned with potential downtime and more involved in strategic, value-driving initiatives for the business.
The decentralized and on-demand nature of the Cloud also helps facilitate collaboration and agile working practices. Your developers can cost-effectively experiment with new features and products, allowing your company to rapidly adapt and respond to your customers and market.
2. Adoption of New Technologies
Speaking of the on-demand nature of the cloud, your Cloud Service Provider (CSP) gives you access to a whole new toolkit where, at relatively low cost, you can experiment and develop new products and services. This allows you to explore new business models utilizing technologies such as intelligent automation, machine learning, blockchain, IoT, and predictive analytics. This can be done quickly (in a matter of hours rather than over a period of months) in a relatively low-stakes environment, with instant market feedback.
3. Crisis Continuity
In times of crisis when data center accessibility is limited, employee safety is at risk, and hardware supply chains are disrupted, maintaining a data center becomes very challenging – especially if you need to make urgent changes to your infrastructure. Companies that are in the Cloud can scale their environments, add virtual desktops, increase VPN capabilities, manage remotely, and reallocate resources based on rapidly fluctuating needs.
4. Rethink Obsolescence
The market moves faster than technology becomes obsolete. Traditional technology refresh lifecycles are normally five to seven years. Businesses need to change their concept of obsolescence from a financial perspective to a market perspective. A financial perspective forces the business to wait based on amortization tables, sitting idly while the market evolves and its competitors respond.
In the Cloud, old models for thinking about obsolescence as a function of usability, supportability, and the cost of replacement no longer apply. The hardware you bought to support market needs five years ago may technically still work and does not “need” to be replaced. But the market you bought it for has changed, rendering that technology obsolete to market needs.
If you measure the cost of migrating to the cloud against a standard seven-year hardware amortization table, you are missing out on the real opportunity cost that a long-term hardware purchase will lock you into.
5. TCO + Missed Opportunities = Cloud Costs
The cost to move to the Cloud cannot only be measured in terms of traditional TCO: you also need to understand what the opportunities are for productivity and innovation. These measures must be taken into account. By not moving to the Cloud or by moving slowly you may be able to justify lower costs, but you will be less competitive than other companies that are reaping the benefits of the Cloud.
Read this blog on the Opportunity Cost Of Not Moving To The Cloud for more information.
When it comes to adopting new technology, hesitation and uncertainty are understandable. But bold ambitions require bold steps. The key is to stop viewing IT as a cost center, grasp the economies of scale, and understand the transformative nature of the cloud. Then the opportunities to optimize, improve, and drive value to your business start to crystalize.
Still not convinced that it’s time to move to the cloud? Read our ebook: Is it time to break up with your data center?