Many organisations spend far more money on cloud-based digital transformation projects than they initially budgeted for. If you are one of them, then you may be experiencing what is now known as ‘cloud shock’.
Cloud shock refers to the realisation that you’ve spent substantially more on cloud-based projects than your initial plan.—And it’s the IT department that is first called upon to justify why the cloud bills are so unexpectedly high!
Why Organisations Migrate
The benefits of moving apps, services and workloads to the cloud are appealing. Cloud platforms such as Amazon Web Services, Microsoft Azure and Google Cloud, for example, allow complex business models to attain their goals very efficiently; allowing for faster technology development and competitive advantage. However, the downside – where cloud shock hits due to an under-budgeted and ungoverned cloud expenditure is also becoming an all-too-common story.
Organisations move to the cloud to enable innovation, cost savings, scalability, IT transformation, and ease of management. The benefit of the cloud is that organisations can run more efficiently. For some, this means increasing profitability and sales volume, for others, it’s a faster time to market and better customer experience.
The Common Pitfalls of Cloud Migration
Most of the common pitfalls experienced when migrating to the cloud tend to have a root cause in operating process shortfalls or a lack of executive or business support.
- Not analysing your apps for improvements first, before migrating them. You need to run a portfolio analysis; either with a consultant or on your own, to determine what apps are good for your initial migration.
- Forgetting or skipping doing a business analysis first. You need to know what the benefit is going to be. You need some analysis to see if it will actually save you money.
- Underestimating time and costs. When planned well beforehand, and deployed in a smart fashion, the cloud will make perfect economic sense not just for cost savings but also for enabling top-line growth.
- Not having the training that is needed. If all departments of your organisation do not know how to practice new desired ways of working, cloud projects lose momentum and stall.
- Not moving past the lift and shift stage. Much of the benefit of cloud computing comes from refactoring applications to improve performance and scalability. The actual benefit to the organisation is taking advantage of cloud services like mobile back-end services and performance management services.
Based on our experience of managing these projects for our clients, here are our top tips on preventing cloud shock:
1. Your migration plan needs a clear strategy, and a favourable timeline.
Reduce the number of variables and dependencies for your cloud transition, and have an assessment of your current cloud operational maturity; including people, process, and technology.
2. Do an inventory of your assets in order to decide what to migrate to the cloud.
Create a holistic view of your data center assets, IT portfolio, and their relationship to specific cloud assets and services. Define dependencies to ensure that nothing breaks during or after a migration. Visualise assets and dependencies in a single view.
3. Calculate your ROI
Foreseeing your cloud costs can seem like one of the many migration challenges, but it is not, IF you thoroughly understand the cost of migrating to the cloud, and deploy the right resources at the right cost, align cloud expenses with business needs, and leverage your transition to find efficiencies that reduce costs. Then review your workflows to figure out what resources may be discarded or reused.
4. Ensure compliance and security.
Your application migration strategy should be kept safe and secure. You need to find and fix security risks and compliance gaps across cloud production environments, and enhance the visibility of security and compliance within your monitoring platform.
It needs to be reiterated that these steps are not all about lessening costs, but mostly about lessening the impulse that many organisations are currently displaying, which is overspending on cloud services that are not directly driving business value. When monitored and managed efficiently, cloud spend enables asset managers to deliver new value to CFOs, and provide decision makers the assurance that they are investing carefully, and making the most of their subscribed services.
“Cloud Shock” is not so much about overspend in the delivery of a cloud migration. It is the ongoing operational costs where “Cloud Shock” really hits CIOs. That’s much more painful than overspend on the cost of delivery. Companies invest in cloud migration because they believe that over time it will save them money. And it can. Significantly. BUT if you do not know exactly what you are spending pre-migration, and what good looks like post migration, you are chancing it. Therefore, pre- migration, you need to know how many users you have on every system, and what that TCO (Total Cost of Ownership) is per month. You then need to set some specific benchmarks and KPIs for post migration to ensure you achieve the optimum outcome in terms of TCO and performance post migration.
The best advice is to not let the need arise unexpectedly. Position it as an expected event. Align your existing IT provision against business needs, so that you can review what you require against what’s available in the market, and make an informed decision. If this sounds like a lot of work, we are here to help. We have supported a number of organisations in preparing for, and moving services to the cloud, and can provide as much or as little support as you need.