Understanding Cloud Migration Benefits
The term “cloud migration” refers to the process of moving an organization’s IT hardware and software resources from their own premises to a cloud computing environment managed by themselves or a third party. Cloud migration is becoming increasingly popular as companies recognize the many benefits of this way of implementing systems.
According to Gartner, the cloud is an enabler for digital business, and organizations looking to migrate to the cloud are attracted to the technical resources and packaged solutions being offered. The benefits go beyond the technical considerations, however: Organizations also look to cloud migration to leverage the limitless capacities available that address common IT constraints and to take advantage of innovative capabilities to drive the achievement of digital strategies. Innovation speed and cost savings are also essential considerations that motivate the move to the cloud.
In this article, we look at the key benefits that enterprises can gain from moving to the cloud. We also highlight potential associated risks tied to these benefits.
Key considerations and challenges in cloud migration
To determine the right cloud migration approach, organizations need to identify candidates for migration (such as workloads, functions, or solutions) as well as migration criteria (rationales for moving). This understanding can then dictate the right type of migration, which could be either one-off, evolutionary, or “big bang.” Gartner describes a “five Rs” model of common migration types, including rehosting (“lift and shift”), revising (“lift, tinker, and shift”), refactoring (changing architecture based on cloud-native capabilities), rebuilding (designing a new cloud-native capability), or replacing (moving to a new different cloud-based service).
While determining the migration criteria, it is vital to consider certain aspects and challenges related to the entire transformation. For a start, depending on how soon the migration is expected to be completed, the complexity of discovering hardware and software and understanding their dependencies can make or break the entire exercise. Failing to have a comprehensive understanding of inventory and application dependency mapping, especially in rehosting or replatforming scenarios, can break applications as they are being migrated. The result is typically downtime, poor performance, and/or compliance gaps that will undermine the benefits to the organization.
The organization typically also requires a cost-benefit analysis of the essential services that need to move to the cloud and the required sequence for doing so. For example, it could make economic sense to move variable workloads—such as servers used by developers that are shut down at night or ones processing monthly or quarter batch workloads—rather than consistently high workloads. It could be cheaper in the long run to keep the high workloads on their existing hardware.
Summary of cloud migration benefits
We have identified five benefits of cloud migration that capture the essence of what enterprises hope to achieve when they trade their existing on-premises infrastructure for a cloud service provider’s offerings.
|Avoiding upfront capital expenditures
|Rather than investing in capex to run and maintain data centers, cloud migration lets organizations shift their focus to the less intensive operational expenses of building and deploying services.
|Enhancing speed to market
|The cloud offers unparalleled speed in making environments and platforms available in minutes.
|Leveraging best-in-class capabilities
|Cloud providers have superior technology and knowledge that is readily available for implementation.
|Enabling immediate scaling based on demand
|Cloud migration can enable the ability to optimize capacity to match business or customer demand automatically.
|Meeting compliance requirements
|Cloud providers have environments that readily meet regulatory and statutory requirements.
Cloud migration benefits in detail
Let’s take a look in more detail at the five benefits summarized above.
Avoiding upfront capital expenditures
Setting up an enterprise data center requires companies to put up significant amounts of money for the needed facility, equipment, utilities, and staffing. Based on a survey carried out by the Uptime Institute, a Tier III data center is estimated to require $10-12 million up front. To make matters worse, high inflation is dramatically increasing capital, talent, and operations costs annually, so these costs will only go up.
Migrating to the cloud allows an organization to forgo this expense by only needing to rent the actual computing instances or services they require at any particular time. This frees up substantial funds that can be invested in more important areas, such as innovation, acquisitions, and business development.
By taking advantage of the pay-as-you-go models that cloud service providers (CSP) offer, organizations benefit from reduced financial planning and evaluation cycles, which supports agile solution deployment. A study from Nucleus Research revealed that the ROI from the cloud is four times higher than on-premises, and recovery of the cost of investment is 2.5 times faster. Enterprises can also use free tiers of services for experimentation, such as AWS Lambda’s 1 million free monthly requests or GCP’s e2-micro–Compute VM.
It’s worth noting that while this benefit makes a lot of sense from a bottom-line perspective, in cases where existing capital expenditures on technology have been significant, organizations may need to go through significant changes to their budgeting, forecasting, and financial controls. This may result in some level of resistance, particularly where significant valuations were tied to the on-premises technology or if long-term vendor relationships are threatened. The ITIL® 4 Acquiring and Managing Cloud Services publication advises that a formal organizational change management framework may be required to address these fears upfront.
Enhancing speed to market
The less time it takes to turn an innovative idea into a product, the more likely it is that an organization will be a market leader and can extract the most profit before its competition copies the idea. Migrating to the cloud provides capabilities such as virtualization and self-service options that allow for the fast creation, modification, and deployment of infrastructure, features, and solutions—often in a matter of minutes rather than months. In addition, the use of cloud APIs allows for the quick and easy sharing of data and functions across multiple applications without having to make significant changes to code.
SaaS solutions can be made available for configuration and use within minutes, letting enterprises quickly adopt new product features and address problems promptly. Innovative companies adopting approaches like The Lean Startup can quickly release minimum viable products (MVPs) on cloud environments to users to quickly get feedback and then optimize in subsequent iterations. The agility that comes with cloud migration is a strategic advantage that enables organizations to respond speedily to changes in their operating environments and realize value faster from their go-to-market strategies.
The need for speed must always be tempered with control; otherwise, organizations may experience challenges such as a failure to extend the right level of governance and ensure responsible use of the cloud technology. Loss of control while running at breakneck speed to release new products to customers may result in long-term negative issues from a compliance perspective.
Leveraging best-in-class capabilities
Migrating to the cloud offers organizations the chance to access top-tier technology and expertise without having to go through the long research and development route. Major CSPs have invested billions of dollars in their cloud environments and associated partnerships, giving them access to the latest and greatest in infrastructure and software. For example, just this year, Microsoft announced a multi-year, multi-billion-dollar investment in Open AI, and access to the capability that ChatGPT offers is now available through cloud integrations.
In addition, these CSPs have the financial muscle to attract top talent from across the globe, train them, and pay them a premium. The ability to harness the latest digital technologies and features at a relatively low cost is thus readily available to organizations that choose to migrate to the cloud.
CSPs have also designed their cloud environments with robust resilience mechanisms, including multiple data centers that are segmented into availability zones, interconnected with multiple redundant high-bandwidth links, and enhanced with automated backup and failover features. Companies setting up their own on-premises data centers would struggle to meet the availability and resilience service-level agreements (SLAs) of over 99.99% that these CSPs can deliver.
The benefit of innovation via cloud migration should be tied directly to achieving strategic goals and objectives. Organizations have to be careful that they don’t make the use of new cloud-based technologies and tools an end in itself. Beware the “shiny new thing” curse, where no business value is attained despite adopting new capabilities such as AI.
In addition, bear in mind that technical expertise appropriate for high-value cloud services comes at a premium cost. Enterprises might struggle with changes in remuneration scales when seeking to attract talent that can help them maximize the benefits of specialized cloud capabilities.
Enabling immediate scaling based on demand
Matching capacity to demand is one of the biggest challenges in managing on-premises data centers. These environments are designed to carry peak loads, and, according to a study by the NRDC, it is estimated that average server utilization is less than 20%. Migrating to the cloud allows organizations to match capacity to demand more efficiently, so they can provide high-quality services in a cost-effective manner without having to overprovision resources. Environments can be configured so that instances and resources are automatically spun up or down depending on traffic conditions, providing maximum flexibility and adaptability while optimizing expenditures.
The scaling ability offered by migration to the cloud is not just limited to a local perspective: it can be implemented internationally. Major CSPs provide global reach through their interconnected data centers around the world and have invested in edge computing and caching technologies that enable clients to offer their cloud-hosted services to customers with low latency. The speedy launch of services like media streaming or gaming across the globe can only be done effectively through the cloud, and the ability to quickly offer global services is a strategic capability that organizations cannot ignore.
That said, while the ability to scale is very desirable from a business perspective, organizations that have not adequately prepared for rapid scaling may encounter the risk of cloud sprawl. Uncontrolled or unmanaged use of cloud resources without proper visibility or governance can result in escalating costs and compliance gaps, which might be detrimental to the achievement of strategic goals. For example, unwarranted spinning up of instances or failure to monitor API traffic may result in some awful surprises when the bill arrives.
Meeting compliance requirements
Beyond the obvious need to serve their customers, organizations are now faced with a myriad of other stakeholders whose interests need to be considered when deploying digital services. These include government agencies, with their legal and regulatory requirements (such as security and data privacy laws), industry groups with standards and requirements (e.g., ISO standards and PCI-DSS), and nongovernmental bodies that champion different rights and issues. The governance of IT services must address these needs to maintain compliance and let the organization continue offering services. Meeting these requirements may require a significant investment in governance mechanisms such as security controls, which may prove difficult for organizations with on-premises environments.
The major CSPs have the financial muscle and technical expertise to meet compliance requirements, such as advanced security controls and certifications that are regularly vetted by these agencies and bodies. They are also able to set up dedicated environments to serve the unique needs of these stakeholders, such as the AWS GovCloud or Azure for US Government for handling classified and controlled information. Migrating to the cloud offers organizations the opportunity to address the needs of these stakeholders by riding on the CSPs’ setups.
While CSPs may have the relevant compliance credentials, at the end of the day, compliance will always be a shared responsibility. As such, customers migrating to the cloud should not expect that the CSP will be responsible for handling their access controls, patching, or data protection mechanisms. Such a misunderstanding can lead to vulnerabilities that could be exploited by malicious actors, resulting in cyber-attacks that may result in lost/corrupted data, a loss of customer confidence, and regulatory penalties.
Organizations must take time to clearly articulate the specific benefits that they seek when migrating to the cloud. An analysis of both upsides and downsides is critical when making this strategic decision, and an evolutionary plan can aid in providing full value realization while mitigating the risks involved, including vendor lock-in.
In creating its plan, the organization needs to develop a vision of how it would look after migrating to the cloud, and analyze which services, processes, or features would be best delivered in the cloud. A prioritized plan, together with a risk analysis, would then be used to decide the sequence of migration as well as any mitigations to be put in place. Afterward, an iterative approach would be used to execute each migration, with feedback from lessons learned incorporated into the next phase.
The need for full visibility of the current on-premises environment to ascertain the true benefits of migration cannot be understated. Failure to accurately account for on-premises configurations during migration can lead to undesirable impacts on functionality, performance, and security, which could end up as technical debt that impedes future velocity and transformation initiatives.
Cloud migration offers many benefits that can significantly transform businesses and their operations. Organizations can allocate resources more efficiently and effectively by trading upfront capital expenditure for operational expenses. This enables them to enhance their speed to market, allowing for faster deployment of products and services and giving them a competitive edge.
Leveraging best-in-class capabilities provided by cloud service providers empowers businesses to access cutting-edge technologies and expertise without the need for extensive in-house infrastructure and resources. This enables organizations to stay at the forefront of innovation and continuously improve their offerings.
Immediate scaling based on demand is another significant advantage of cloud migration. With the ability to quickly and easily scale resources up or down, businesses can meet fluctuating customer demands and optimize their operations. This flexibility allows for efficient resource allocation, minimizing costs during slower periods and ensuring smooth operations during peak times.
Cloud migration provides a streamlined approach to meeting compliance requirements. Cloud service providers often have robust security measures and compliance frameworks, ensuring that businesses can adhere to industry-specific regulations and protect sensitive data. This eliminates the need for organizations to invest heavily in compliance infrastructure and expertise.
Embracing cloud technologies can enable businesses to become more agile, innovative, and resilient in an increasingly competitive market. It is a strategic move that empowers organizations to adapt and thrive in the digital era.
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