Chris Weston (Principal, European Client Advisory)
Marc Dowd (Principal, European Client Advisory)

Cloud computing and storage has been with us for many years and many words have been written about the pros and cons of migrating to cloud technologies in that time. We have arrived at a point where “cloud-first” is a common strategic theme and “cloud-native” applications are the most likely design for most purposes. However, many organisations have substantial computing platforms that they own and run themselves and a significant proportion of these are planning to keep some, or all of that capacity. Thomas Gordijn of the IDC company Metri and Chris Weston of IDC’s Digital Advisory team look at the situation from the perspective of CIOs considering their options.

Is There Pressure on CIOs to Migrate their Services to Cloud?

There is certainly some pressure from some software vendors, where they can see the benefits of a subscription model over less predictable upgrade decisions by their clients, and that is being manifested in more attractive licensing for cloud services.

However, managed services providers that deliver a wider range of IT capabilities have less of an imperative, especially where they are providing or supporting underlying infrastructure where they have invested in their own high-capacity hosting environments. Newer entrants to the managed services market are less likely to have this hardware layer and have minimal investments in their own environments. They will be far keener to get their customers to a cloud model if they are not there already. So, there are similar inducements for clients to move more into the comfort zone of these providers.

Traps for the Unwary

A cloud migration can seem like a no-brainer, but there are key things to be considered when making this move. Things to consider before signing off on this process are:

  • Pricing models based on pay per use
  • Discount models (reservation of resources versus switching services on and off)
  • Performance requirements of components in the cloud (guaranteed versus available resources)
  • Infrastructure as a Service (IaaS) versus Platform as a Service (PaaS) hosting environment
  • Software as a Service (SaaS, combined Software, and hosting) subscriptions managed based on other volume metrics

Whilst flexibility in a cloud services agreement is part of the benefit, the costs can rise uncontrollably if not managed very carefully and the process can be a ratchet mechanism that is very difficult to reverse. If you need the flexibility, build it in. Otherwise, it may be more sensible to forecast your requirement and negotiate a better deal based on a fixed provision. Flexibility is not free.

It’s also important to manage how your migration is conducted. A common issue occurs during migration pilots, when proof of concepts and tests are built for good reasons to test new concepts and implementations. However, scaling down these environments and cleaning up all components used in the cloud is often done at the end of the migration and sometimes not at all. You can be paying for a component you once used in a proof of concept for a long time if you are not on top of this aspect.

Another thing to look out for is the innovation and continuous improvement clauses in your contract with your provider. If this has been met, and both sides have benefited from these innovations being delivered then there it is likely that services ready for the cloud have already been migrated. However, experience tells us that these are not always put into practice, which can result in accumulating innovation debt and technical debt over the contract period.

When you are finally there, and your new environment is in production, it might seem like the end of the project. However, after a few months, an assessment of the performance data from he new environment in production, against a baseline taken from your prior model, will provide insights to understand whether your project has hit the expected mark in terms of functionality, technical performance and cost. The assessment will provide you with further optimisations and cost saving initiatives to further improve your new cloud environment and make the most out of the advantages and flexibility it provides.

Will Pricing Models Change in Future?

The likelihood is that we will see several options coming available as consumption-based charging for cloud services becomes more prevalent for applications as well as infrastructure and platforms. Where managed services are in play, the fixed cost element will certainly remain since even though the traditional items such as servers, storage and backup are rolled into the cloud service, integration and orchestration will replace these activities. Integration and orchestration are activities which are less directly related to volume of the underlying infrastructure and a fixed cost model is better suited. We also expect to see more focus on maintaining the processes to keep cloud environments aligned to business demand, making sure that technical and functional requirements are met and that the end-to-end service is meeting expectations.

Actions for Those Considering Migration Now

  • Monitor available options in the market and compare with the offering of your current vendors, with a particular focus on their product and delivery model.
  • Don’t neglect the need for continuing innovation and work with your chosen vendors to project their future roadmaps onto your own improvement programmes. This should be a part of the contractual conversation, in line with the innovation and continuous improvement clauses.
  • Your business case for cloud migration should be an honest one with all the pros and cons weighted fairly (functionality, technology, and cost) – you may find that cloud is not the most effective option in all cases.

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