The Business Case for Cloud Modernization

Cloud migration is the process of moving a company’s digital assets (applications, infrastructure, databases, services, and IT resources) to the cloud to enable strategic and transformation growth, yet some approach it the same as most technology efforts—siloed and transactional. The cloud migration journey is cost and time-intensive, but alone it does not deliver transformative outcomes. Its transactional—often it gets scoped down to a lift-and-shift engagement and becomes not much more than a data center move.

A cloud modernization approach requires a mindset shift. It goes beyond the migration of applications and infrastructure in the cloud to look holistically from the business outcomes point of view. It leverages cloud architecture and capabilities to drive new business opportunities, develop new capabilities, process automation, accelerate product development, and increase the pace of innovation and learning.

Benefits of cloud modernization go beyond just cost reduction and speed:

• Cloud operating model: Most efficient cloud operating models leverage analytics, automation, and AI with savings of approximately 30% to 50% in ongoing run operations.
• Easy to consume (increased agility, flexibility, and productivity): Standardized services that can be provisioned in minutes in an as-a-service model, saving 50% approximately in start-up time.
• Ability to innovate faster: Deployment of ideas from inception to production becomes 4X faster.
• Cost reduction: When deployed correctly, organizations have realized cloud cost savings of 10% to 30%
• Secure and compliant: Security and compliance are built in at the core to protect application workloads and data.

Cloud modernization leverages a transformational mindset—with high business impact and centralized around dexterity, purpose, and vision to drive value. In organizations, lift and shift is the fastest way to move to the cloud. It’s also just the beginning.

Core modernization efforts often leverage the cloud’s evolutionary architecture to deliver new functionality, accelerate product development, gain agility, enable continuous optimization, and drive revenue growth.

Use cases include:

• Reducing data center footprint: Quickly transitioning from heavy CAPEX model to OPEX model by moving workloads in the cloud and reducing costs.
• Building next-gen cloud-native products: Leveraging the cloud’s IaaS and PaaS capabilities to build multi-tenant cloud native products.
• Test and development: Dynamic provisioning and scaling of test and development environments on a moment’s notice.
• Big data analytics: Extracting business value by tapping into vast quantities of data; processing high-performance computing workloads, which require large amounts of capacity on demand.
• Backup and disaster recovery (DR): Enables cost-effectiveness of backup and DR solutions at a much lower cost than the traditional backup and DR site with fixed assets, rigid procedures, and much higher cost.

Other than continuing with traditional in-house or vendor-hosted data center application and infrastructure environments, there is no clear alternative to cloud modernization.

Virtualization does provide a limited alternative from the infrastructure side (by pooling storage, network, and compute resources) but is no match for the cloud.

Enterprise-wide scaling, multi-tenancy, cloud bursting, writing cloud-native applications, security, containerization, out-of-the-box regulatory compliance, and the continuous addition of new services to the cloud as-a-service model makes it a unique proposition.

The costs that should be factored in when implementing cloud modernization are as follows:

• Modernization costs: Costs of running applications in the cloud is complex and requires careful assessment. The manual effort and hours required to perform the migration process successfully are anywhere between US$1,000 and US$3,000 per server and can even go up to US$15,000 for complicated cases.
• Cloud platform/tools costs: Most vendors offer attractive on-boarding pricing and a subsequent consumption-based pricing model. Customers pay for IaaS-based virtual hardware and SaaS applications as they consume them.
• Additional usage costs: In addition to the core platform, some vendors have additional charges for the number of external users accessing applications, cloud infrastructure required to host applications, API calls to external systems, and enterprise-grade support services.
• Cost of training and change management: Cloud modernization will have a significant impact on an organization. Time and budgets need to be allocated to the change management. Staff needs to be trained on using the cloud system to get maximum value out of it.

The following challenges and risks should be considered when implementing cloud modernization:

• Legacy Applications: Not every application can be moved easily to the cloud. Which do you keep, and which do you wreck and rebuild?
• Application modernization: What are your options for rebuilding applications, so they perform optimally in the cloud?
• Complexity of migration: Understand the complexity you will face when migrating and appropriately estimate the effort to get it done.
• Cloud management: Once you have moved your applications to the cloud, what’s the best way and who are the best people to manage them?
• Business support: Buy-in from stakeholders across the business and IT is essential for migrating at scale.

The focus of cloud migration is rapid modernization and adoption of digital assets in the cloud and a return on investment. It is feasible to see results from an initial project within 90 days and to get a clearer understanding of the scope and potential for these tools. To achieve this, we recommend the following 30/60/90 Plan:

30 Days: Define Your Strategy and Build Your Business Case
The first question is, “what does the business gain by moving to the cloud?” A move to the cloud is far from just a technology exercise. It needs to be rooted in business outcomes—specific objectives the company wants to achieve. Based on these objectives, the business needs to build a detailed cloud modernization strategy and business case for the move.

60 Days: Discovery and Assessment. What to move, where to move it, when to move it.
Understand the current business and IT lay-of-the-land (infrastructure, number of apps, databases, resources, governance, processes, dependency, mapping, risk assessments, business priorities, etc.). Analyze the collected information—prioritize the items based on expected business outcomes.

The leadership team should bring together all teams working on the project to integrate inputs and outputs seamlessly.

90 Days: Cloud Modernization
Here is where the heavy lifting occurs. Prioritized and short-listed trail-blazer applications are selected for moving to the cloud. Required architecture, roadmaps, new operating model, and detailed plans are laid out. The team is assembled to work on the execution.