A recent Gartner report predicts that 28 percent of spending in key IT segments will shift to the cloud by 2022 and that more than $1.3 trillion of IT spending will be affected by the move to the cloud by 2022. IT leaders and cloud advocates often point to cost savings as a critical benefit of moving on-premises applications to cloud environments. And they are correct, but there is still a caveat: these savings are not guaranteed without guidance and expertise to achieve them.
In fact, without the right skills to manage migration and optimize operations in the cloud, organizations might see costs rise rather than fall. Staying on the right side of this equation takes experience managing multiple environments, adapting processes, and keeping pace with technological change.
When they are managed effectively, cloud transformations can yield cost savings in several areas. Our Aptum Cloud Impact Study found that organizations that adopted cloud technologies before the economic downturn were well-positioned to deal with the ongoing crisis. Nearly 48 percent of businesses revealed that they have been able to meet surging demand and offer critical services to their customers.
In addition, the study found that most business leaders are positive in their organization’s business continuity due to managed cloud services. The implementation of the cloud is also highly essential for long-term sustainability as well as profitability. As a result, cloud services provide business leaders with the confidence to maintain and adjust their business strategies as needed.
Companies can also expect lower IT staffing expenses thanks to the automation of installation and maintenance tasks via managed cloud services. When more complex technical issues arise, they can troubleshoot with the cloud service provider's help on consistently managed platforms under a single operator's control.
The cloud also makes business continuity advantageous and versatile. This traditionally costly and cumbersome overhead is embedded in the cloud model. Powerful features such as high availability across multiple regions and the ability to virtualize workloads make options such as multi-site fail-over far more affordable while reducing downtime costs.
Finally, the cloud can increase employee productivity. Instant access to applications on any device from any location makes work more flexible and introduces new collaboration opportunities that maximize employee value.
No wonder, then, that four in five respondents to Aptum's Cloud Impact Study said that cloud computing is essential to their financial security. Yet, 57 percent of organizations also admit encountering unexpected costs in the cloud. Cloud clearly drives many business benefits but can have a negative effect on the bottom line if not managed correctly, so can how companies prevent this from happening?
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The cloud's unexpected costs
One common migration misstep by inexperienced organizations is paying too much for instances thanks to poor capacity planning. Another is the inadequate governance of cloud services. Cloud infrastructure is easy to provision because it is software-defined, but if companies don't control employees' cloud-side resource provisioning, it can spin out of control.
Managing this cloud usage is crucial, but you can't manage what you can't see. Aptum's study found visibility and control in the cloud to be a challenge for four in five IT leaders. Left unchecked, this problem will intensify as companies expand their operations across multi-cloud and hybrid environments.
These snags don't just affect non-technology companies struggling to become cloud-native; they can also hit organizations for whom technology is a core competency. In 2019, year-on-year cloud computing costs reportedly soared by almost two-thirds for Adobe, which has tightly integrated the cloud into its customer-facing services. This included $80,000 spent on a cloud-based workload that ran for a week with no one knowing.
Another common mistake is trying to save money by simply re-platforming legacy systems into virtualized cloud environments - a practice known as 'lift and shift' - without integrating them fully into native cloud services. This limits not only an application's functionality but also its manageability in a cloud environment.
Some companies fail to discern appropriate workloads for the cloud before they migrate. Moving workloads to the inappropriate cloud due to legacy technical requirements causes cost and performance problems later. This will often prompt rushed repatriation to on-premises environments, incurring further costs.
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Optimizing cloud migration
Problems like these shouldn't deter companies from exploring opportunities in the cloud. The key to success lies in proper planning from inception to migration and beyond. Well-planned cloud architectures can deliver the promised cost benefits and other advantages, including improved performance, business agility, and robust security.
This planning is multi-faceted, including astute technical analysis and adept financial management that takes a view of the assets in play, the business services that the cloud must support, and the planned long-term investment in IT. This discipline, known as FinOps, is a cultural practice that goes beyond traditional IT accounting to include an innate understanding of the cloud's variable cost model.
Companies must establish a realistic timeline for migration that enables them to test and refine the services they move to the cloud, allowing them to impose the controls at each stage.
These controls will change in a cloud environment. Expect to embrace alternative approaches to performance management and service delivery. Expect a switch to agile development methods that can take advantage of the potential for automation in the cloud.
Companies not used to operating in this new environment find it difficult to keep up with the level of technological change. They must learn new technology strategies and skills as they migrate to the cloud and be prepared to keep learning. Cloud technology develops so quickly that every quarter seems to bring something new. Customers should not underestimate the importance of understanding these developments or the resources required to take advantage of them.
These are foundational needs that require new skills and, sometimes, profound process adjustments. They are why the most successful cloud projects that Aptum sees are transformative; champions approach these projects ready to embrace fundamental change.
The outcome of this mature approach to cloud transformation will be a shift in focus as companies move beyond the initial preoccupation with cost reduction. Having driven down IT expenses, companies will see the emphasis shift from cost optimization to value delivery.
This level of transformation spans technology and process. It requires skills that most organizations do not have in-house, which is where a seasoned partner can help. An expert managed service provider can guide and advise companies exploring the cloud for the first time, helping them develop a strategic plan that embeds cloud management processes, cost control, visibility, and performance optimization from the beginning.
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Marvin Sharp, Vice-president, Product and Strategy, Aptum