Lesson 3: Cloud Alone Does Not Equal Cost Savings

Our last lesson in the Cloud Journey is an important one! Moving to the cloud alone does not equal cost savings. 

Here are some financial considerations for you to ensure your migration success.

Know how you will measure financial success

Yes, you should move to the cloud, but financial measurements are complicated and there are numerous depending factors. In the long run, you can and should save money by moving to the cloud when comparing capital depreciation to the OPEX spend over time.
  • If you have just made a large capital investment in on prem infrastructure, the pay back will be much longer.
  • If the company is focused on EBITDA and therefore favors capital investments rather than OPEX, it will require a ROI and TCO to convince the CFO.
  • If you are you willing to schedule systems, optimize usage, and invest in building automation then the savings can be substantial.

Remember, the savings start after migration

Moving to the cloud can save a significant amount of money. However, you will need to get to the cloud before you can take advantage of cloud only offerings.
  • Because in some cases you will be running the same application in both places for a time, you will have a temporary increased cost.
  • Focusing your application teams on cloud readiness will take them away from key critical business projects for a period but remember things will get back to normal when the migration is complete.
  • Governing the spend will be a focused effort.

Cloud providers offer a lower cost environment

Cloud providers have scale on their side. If the environment you have purchased includes servers and virtualization software, chances are you are not fully utilizing it to its potential. The large cloud providers aggregate huge farms of compute and storage and therefore buy it cheaper and use it to capacity. AWS, Azure, and GCP are not building cloud platforms to be altruistic. In fact, these companies are building clouds to make money, but are just more efficient because of their scale.

Planning and adaption provide optimum savings

Build a roadmap to leverage cloud native offerings, automation, optimization, and hibernation. Once you have moved to the cloud or are setting up a new system, look to leverage transformational offerings where applicable. For example, platform as a service (PaaS), containerization, immutable infrastructure, and services. Lastly, take advantage of programs that are available from the cloud providers like enterprise discount plans, reserved instances, pay as you go, spot instances and storage tiers.
While there are many lessons to be learned from migrating to the cloud and continuing to manage in the cloud, three lessons that stood out to us are: measure three times and cut once, just move and then transform, being in the cloud alone does not equal cost savings. The cloud is very powerful, but it depends how you utilize it. Take the time to educate yourself and your team before, during and after the migration.

If you have questions about cloud migration or want to learn more, our team at cloudEQ is more than happy to help.  CONTACT US