Vast numbers of organizations are turning to the cloud these days – and rightly so, as cloud computing offers many advantages. But what is the key to a successful cloud transformation? Rule number one: keep in mind that cloud adoption should never be a goal in itself, but a means to achieve your business objectives. That’s why every cloud journey should start with the development of a business case that identifies the value and the total cost of ownership (TCO) of the transformation.
of enterprise workloads run on cloud platforms by the end of 2020
When describing their desire to ditch their on-premise applications and run them in the cloud, many organisations mention a sense of urgency when it comes to embracing digital transformation, as well as a common belief that ‘cloud-first’ – often mistakenly understood as ‘only cloud’ – is a must. A quick, slapdash cloud app implementation, however, won’t make digital transformation happen. Moving to the cloud takes more than lifting and shifting existing applications and data; it’s a complex endeavor that requires additional processes and tooling. Moreover, cloud adoption only has potential if it helps achieve your business goals.
Replace the cloud-first strategy with ‘move smart by planning first’.
Your business case: what is the added value of cloud adoption?
Transforming your IT to leverage the benefits of the cloud requires thorough planning, a sound strategy and a well-documented and pragmatic roadmap that is based on your company’s unique strategy and goals. There are a number of different ways that cloud computing can drive value for your organization: it can help you grow your business, reach new audiences, explore new markets, become more agile, etc.
So, what is the added value that you want to achieve? In the first phase of your cloud journey, it is crucial to identify that value and map out how cloud adoption relates to your business goals. The benefits of the cloud are legion, helping you:
- Reduce your operating expenses and embrace new technologies with ease
Cloud facilitates a pay-per-use cost structure for IT services (as-a-Service or on-demand), which eliminates the need for upfront investments in equipment and applications. As you pay only for what you use when you use it, you can shift IT expenses from capital to operating expenses – which lowers the threshold to new, potentially disruptive technologies.
- Boost your focus on the core business and drive productivity
CCloud is the backbone of and provides easy access to innovative applications and new technologies like IoT and RPA, which will make life easier for your staff, boost their productivity and make your business smarter. Moreover, as cloud service providers manage your IT infrastructure, your IT team is free to focus on IT initiatives that generate real value.
- Become a more responsive, resilient business
Cloud computing is flexible and easy to scale up or down, allowing you to respond immediately to peaks in demand and release your cloud resources when demand drops.
- Speed up your time to market – and your ability to innovate
The deployment of new business infrastructure and applications via the cloud is near instantaneous, as it is no hassle to set up or configure the servers, platforms or tools you need. Moreover, application development in the cloud is faster too. In this way, the cloud helps you launch new products and services quicker.
- Collaborate and work smarter, anywhere
Cloud data and applications are available everywhere and at any time. This drives collaboration, engagement and interaction between colleagues, business partners and even customers around the world.
- Gain an edge over your peers
Cloud service providers regularly update their offerings and give their customers the most functionally complete, up-to-date, innovative technology available – so you are certain to gain an edge over your peers.
In the first phase of your cloud journey, it is crucial to identify the value of the move and map out how cloud adoption relates to your business goals.
Your business case: what is the TCO of cloud adoption?
In addition to pinpointing the value of cloud adoption, it is key to determine the financial impact of your cloud journey. Cloud adoption entails a number of challenges related to technology, security, change management, etc. that you’ll have to address.
So, what is the associated cost of tackling these challenges, and what cost savings can you expect by moving to the cloud? Factors to consider include:
- Cost control and contract management
There are a variety of pricing models used for cloud computing, so it’s key to compare them carefully and pick and choose the plan that works best for you. Many cloud solutions are offered as-a-Service (pay-as-you-go): you pay for use of the application, rather than purchasing off-the-shelf software. While this is definitely the most flexible model, it may not be the most cost-efficient one in the long term.
- License management
Initially, the concept of subscription licenses for cloud seemed to be a pay-per-use model. In reality, however cloud licence management is complex. Depending on the agreements between cloud and application providers, some licenses can be reused on cloud platforms, while others can’t. That makes it difficult to find the most cost-efficient approach.
- Lifecycle management
Cloud providers may have different support windows for technology stacks than the software vendors themselves. As a result, users may lack true long-term support, depending on which applications they are running on which infrastructural elements. This can be an important cost factor to consider, especially for legacy applications,.
- Compliance with international and local laws and regulations (e.g. GDPR)
Does your industry have specific compliance requirements? Where is your data stored and accessed and what are the local regulations? You must ensure that your provider can facilitate compliance with all your sector- and geography-related obligations.
- Vendor lock-in
When entrusting your IT and applications to a cloud service provider, you expect everything to go smooth. But what if you want to change vendors? How easy is it to move your infrastructure, data and applications to another cloud environment with minimal disruption – and without extra costs?
- Change management
Your journey to the cloud is not solely about technology, but also about processes and people. Cloud dramatically changes the user experience and requires you to adapt business processes to leverage new cloud capabilities. These changes have a big impact on the organization.
What is the associated cost of tackling the challenges related to technology, security, change management, etc., and what cost savings can you expect by moving to the cloud?
Balancing value and TCO in a readiness assessment
When building your business case for cloud adoption, you should take all the value- and cost-related factors above into account and prioritize them. At Cegeka, we can help you build your business case: in the first step of a readiness assessment, we help you quickly understand and gain insight into the value and TCO of your cloud journey and how to balance both. In the second stage, the assessment will then chart the risks of cloud adoption. We’ll explain all about that second step in our next blog post on the topic.