Cloud migration can offer your organization new levels of agility and efficiency. However, without careful planning and management, it can lead to some unexpected costs.
Conversations regarding the finances of cloud migration have changed. A few years ago we were talking about IT cost-centric business cases. However, now we see more and more customers wanting to have business value-driven discussions – where ROI is not solely defined by the costs of the underlying IT infrastructure, but rather what that infrastructure enables the business to achieve.
The efficiency and agility that can be gained from the scalable, on-demand cloud platforms underpin the business value of cloud migration.
It is no longer a case of ‘whether to invest in cloud or not’, it’s more ‘how much should we invest in our cloud?’.
Despite the impact of COVID-19 dominating the business landscape, enterprise appetite for investing in public cloud has continued to grow.
According to Forrester research, the global cloud infrastructure market will grow by 25% to $120 billion in 2021 as businesses turn to technology in their pandemic recovery.
Gartner also predicts that worldwide, cloud-dedicated IT spending will increase by 18% – $304.9 bn up from $257.5 bn last year.
It’s clear that enterprises do not have a problem spending money on public cloud.
It is difficult to put a final figure on cloud migration cost. However, while many organizations focus their energy on understanding the complicated world of cloud economics, there are several hidden, unexpected costs of cloud migration that many are unaware of.
Skills Gaps
To fully realize the value and scale of cloud, your IT organization needs cross-functional teams – likely embracing DevOps Practices – that are constantly upskilling on cloud native tools, architectures and performing new functions such as Cloud migration, machine learning and security.
This requires investment in cloud education programs, to upskill existing employees. It also means investing in recruitment and onboarding programs to attract and integrate new talent.
This investment should not stop at your IT organization. Operating effectively in the cloud requires new skills and understanding across your entire business.
Ripple effect
Cloud transformation won’t just impact your IT team; its effects will ripple out to other teams in other departments across your business. You need to recruit new talent and embrace more agile ways of working – your Human Resources team needs budget and strategy. Are your Finance, Procurement & Legal orgs aware and prepared for new financing and compliance models in the cloud?
Communication gap
A common blocker on enterprise cloud adoption initiatives is organizational friction. Cultural change comes as part of the parcel with cloud migrations. The shift from legacy IT approaches characterized by linear, waterfall processes, to more agile, enabling processes can be disruptive if not managed.
As such, cloud migrations need buy in across the leadership team providing clear communication on direction and robust governance that enables the organization to operate effectively.
Dual running costs
Migrating to the cloud is not a linear process. The switch from on premise to on cloud isn’t immediate. It is inevitable that, at least for some time, you will be running concurrent systems – incurring costs on cloud whilst building and testing etc. while your legacy system is still operational. Your migration strategy and budget needs to reflect this.
Cloud sprawl
The best thing about the cloud is that anybody can provision resources immediately at the click of a button. The worst thing about cloud is that anybody can provision resources immediately at the click of a button
While the democratization of cloud could be seen as a positive enabler of more agile working practices, it can lead to ‘shadow IT’ and the potential issues with security, reliability and effectiveness. Idle or over-provisioned resources can very quickly lead to a very expensive ‘cloud waste’ bill.
If left unchecked, cloud sprawl can put a severe strain on your budget and ROI. That is why robust cloud governance should form an essential part of your strategy when planning your cloud migration.
Outsourcing can only achieve so much
Bringing in a trusted cloud partner to oversee your cloud migration is an excellent way to ensure the unexpected costs above are avoided – or at least mitigated.
However, outsourcing your cloud migration can only do so much.
This is not an easy thing to say. After all, as a consultancy that has over 10 years of experience migrating some of the world’s largest, most complex enterprises to the cloud, we take pride in ensuring our customers are delivered the maximum value from their cloud.
A good rule of thumb is to safely assume that you are naturally going to underestimate the impact (and thus costs) that cloud migration will have on your business. It will require continual investment across your entire business to support both the technical and cultural transformation that is happening around you.
However, if the value proposition is clear, we have seen first-hand how enabling access to the latest cloud technologies spur innovation, new ideas, and even completely new business models.
This will take time. There will be false starts. It will cost more than you think. But it will be worth it.
Does your organization need help with its cloud strategy? Our consulting team has helped lead successful cloud transformation initiatives in some of the world’s largest, most complex enterprises. Find out how our Advisory Services will help you build momentum towards transformational outcomes by clicking here.
