Business challenges are often neglected when companies migrate to the public cloud. Addressing them is a prerequisite for rapidly capturing value from a cloud strategy.
Everybody is Rushing to the Public Cloud
Companies are rushing to the public cloud these days, in search of 5 key promised benefits: Higher cost efficiency, increased scalability, faster time-to-market, greater innovation potential and reduced technology obsoleteness risk.
Consequently, the public cloud market is growing rapidly with worldwide spending on public cloud services expected to increase by 20%+ in 2021. Large public cloud providers, such as Amazon Web Services, Google Cloud and Microsoft Azure, dominate the market and are continuously seeking to develop improved offerings to attract businesses to their platforms.
Often companies ask their IT departments to drive their cloud transformation effort. They are asked to address well known IT challenges, e.g., large effort of refactoring and migrating applications and data, new hybrid IT operations setups and insufficient inhouse cloud engineering skills. But what about the business side of a cloud driven transformation?
Business Challenges are Often Overlooked
According to our experience, there are 3 major business challenges that often hinder the success of public cloud migration:
Unclear value creation: Whilst the cost side is relatively easy to understand, it is difficult to quantify and validate the top and bottom line impact of using public cloud, e.g., what is the EBITDA impact of pushing software faster and more continuously to our customers using public cloud DevOps tools? Where can we use readily available commodity features in the cloud and where do we need have a unique market proposition? How do we decrease the dependency on one supplier and prevent losing control of, e.g., our product launch schedule, or being subject to large fee increases?
Fear of non-compliance & poor security: Often it is unclear, despite continuous promises, how cloud providers handle legislation, compliance and cyber security, e.g., how do we ensure that our data is stored and handled in a regulatory compliant location and way by the cloud supplier? Which cyber security measures are in place to protect us from unauthorised access, are we alerted timely and how is it handled?
High business disruption risk: Interference with daily business operations during transformation is a huge risk which can cause significant loss of revenue & EBITDA, e.g., how do we mitigate disruption risk on core applications during cloud migration? How do we ensure customers are not disrupted when migrating their application and data to public cloud?
It is vitally important to be aware of these business challenges when thinking about cloud migration and place them at the forefront when developing a cloud strategy.
Any Public Cloud Migration Must Have the Business Objectives at Heart
Failure to tackle these business challenges will put the business benefits of the public cloud migration at risk and should therefore be methodically addressed. As seen in illustration 1, we propose you approach these challenges head on by developing these key business capabilities for cloud migration:
Illustration 1: Key business capabilities for succeeding with public cloud migration. Source: Oleto Associates.
Clear case: Quantify expected business benefits so public cloud migration effort can be assessed before making the go/no-go decision. These benefits should be combined with the investment case made for the migration effort including future expected O&M costs once fully implemented. The result is a dynamic business case which should be regularly updated and used to monitor benefit realisation and return on investment.
Compliance & cyber security governance: Remain updated on the critical legislative requirements for data and security compliance and have an ongoing, constructive dialogue with the cloud vendor about how each requirement is handled, including who is responsible for doing it. Furthermore, a governance model and guiding principles should be designed which ensures all non-compliance issues are addressed by the proper agent, at the proper level, at the proper time.
Contingency & continuous learning: Ensure ongoing data and service availability, including recovery for all customers and internal users during migration and subsequent operations. Maintain a real-time overview of service availability throughout migration and design an escalation model for effectively addressing potential downtime issues and data loss in collaboration with public cloud vendor. Enable clear lines of communication with customers during migration and formalise learning capture setup to improve future migration efforts.
The need for these 3 key business capabilities are evident across sectors. As seen in one example, a large actor in the service industry wanted to migrate their entire application landscape to the public cloud in hopes of generating significant cost savings in IT O&M. During migration it became evident that the targeted savings would not be successfully achieved since the increase in cost of security and compliance would offset a large part of the expected savings. To further assess this issue, the business case was scrutinised and it was discovered that the case for migration would not generate any significant value for the firm. As a consequence the public cloud migration was rolled back and a legal dispute with the vendor ensued.
About the authors: This article was written by a team of consultants from Oleto Associates, a strategy consulting firm based in Denmark. For more information please visit www.oleto.com
May 2021