Written by Lancom Communications, July 2021
What are you worried about most; The costs of migrating to the cloud or the costs of not?
The opportunity to reduce capital expenditure is one clear benefit when moving business workflows to the cloud, but is cloud computing a more cost-effective approach to IT overall? We've examined the costs you can expect from migrating to the cloud versus not, in the blog post below.
Research suggests that the global Cloud Computing Market will grow by NZD$657 billion by the end of 2025. Yet, despite the cloud’s reputation for being cost effective, many businesses remain hesitant to take the plunge and leave their legacy on-premises systems behind.
In 2020, Gartner predicted 80% of businesses would overshoot their cloud spend due to a lack of cost optimisation. An understandable, yet completely avoidable problem with the right cloud migration strategy in place.
Cost considerations are a major factor in any new investment, and when it comes to the cloud, it's no different. Cloud migrations come with upfront, one-off transition costs and ongoing cloud consumption costs. However, when you switch your business's IT to the cloud you can pivot your IT spend from a large capital expense model (CapEx) to an operational expense model (OpEx). The financial benefit is moving to what is usually a pay monthly model where you no longer need to stump up large amounts of money all at once.
But the cloud computing pay-as-you-go model can be difficult to scope financially if there is no long-term structure and strategy in place. We saw many examples of this during the height of the 2020 COVID-19 pandemic, when businesses needed increased cloud functionality urgently to keep critical workflows up and running. While cloud adoption sky-rocketed, many businesses were stung with unforeseen costs due to quick and poorly planned cloud migrations.
What costs are involved in a cloud migration?
Cloud migration costs will vary greatly depending on the size, needs and goals of your business. To accurately manage those costs and avoid unexpected expenses during your cloud migration journey, you need a sound cloud migration strategy. A cloud migration strategy will help your business to outline a long-term budget by establishing what business processes need to be migrated to the cloud, how they will be migrated to the cloud, and how they will be managed and maintained once in the cloud. By following a strategy from the outset, your business can protect its data, avoid any disruption and ensure a smooth transition to the cloud.
The cloud migration work itself can be approached in two ways; in-house or outsourced. Managing your migration in-house comes with its benefits if you have your own IT team. They'll know your business processes and already have a good understanding of your business's IT infrastructure. However, cloud computing requires specialist skills and if your IT team aren’t experts, they will need to upskill in your preferred cloud platform to avoid making mistakes. Using your IT team often takes longer and can impact existing projects and ongoing processes as your internal resources are being stretched and directed elsewhere. If your business has limited internal IT resources, none at all, or no cloud migration experience, outsourcing your cloud migration through the support of an expert will help you to minimise costly mistakes and reduce your cloud migration spend overall.
Does outsourcing a cloud migration save money?
When you enlist the help of cloud migration experts you can drastically reduce both the time and cost spent on your cloud migration project, whilst ensuring your internal team have the capacity and resources needed to keep other projects moving forward.
When you've got an expert in your corner, they have the experience required to know what you'll need and how much it will cost.
There are plenty of benefits to migrating to the cloud with an expert partner:
Expert knowledge of cloud infrastructure; they'll know the most effective approach to getting you set up in the cloud having learnt from delivering lots of previous projects.
Best practice cloud migration and maintenance methodology; they'll know the best way to get you to the cloud quickly and securely and keep things running smoothly once you’re there.
A team of specialists to scope your migration project accurately; they'll be able to give you a trustworthy overview of what your cloud migration will cost because they've done it lots of times before.
On top of the planning and the initial migration, ongoing maintenance and support are a big factor in determining your future costs of being in the cloud. Any business, regardless of size, needs to account for the cost of storing data in the cloud. That's a given. But there are other costs you need to consider like time spent doing updates, application integrations, disaster recovery, security and more. With a cloud partner, you'll get a cloud migration scope that accurately reflects the work you need to do and the budget you'll need to do it.
What costs are involved in staying on-premises?
On-premises IT infrastructures are long-standing for a number of reasons; they are well established, easily understood and have been tried and tested over many years. However, as technology advances many businesses are making the move to the more flexible alternative, the cloud. When it comes to evaluating the cost of whether your on-premises infrastructure is more cost-effective than migrating to the cloud, the first thing you should consider is time.
Time is a key part of the lifecycle of your hardware, and if your hardware is not nearing the end of its lifecycle, you could be dismantling something with plenty of ROI left in the tank. Time is also money when you are paying an individual or team to maintain your IT systems. When that person is the business owner or founder, time spent on IT issues is time not spent on keeping customers satisfied and growing the business. This is always difficult to measure and quantify but there is much more to consider in the on-premises vs. cloud cost equation. Other costs to consider are:
- Internal resource - on-premises systems require an individual, or a team of individuals to manage and ensure all IT infrastructure runs as it should. The costs of managing and maintaining on-premises IT varies depending on the size of your business. Medium to large scale businesses need to consider the costs stemming from the size and complexity of their infrastructure. A larger infrastructure requires more employees to manage it and therefore increases cost through employee salaries. Smaller-scale businesses on the other hand might lack the resource to employ IT professionals and should therefore look at who is spending time on IT. Often it is the business owner or founder who shoulders the burden of maintaining IT systems. What does this time spent on IT cost the business overall? How does this impact other business projects?
- Maintenance and management - on-premises IT systems require careful and ongoing management. For example, the continual cost of maintenance, tasks like installing updates, and management tasks like reviewing system performance, needs to be considered as it can greatly impact your IT costs over time.
- Security - when managing your IT on-premises the responsibility to ensure data is backed up and stored correctly is on you and your team. Any mismanagement of data, through data loss or a security breach, can be very costly, time-consuming and result in legal fees. When you’re with a leading cloud provider, there’s still a shared responsibility approach to security but you’ll benefit greatly from access to the latest technologies and services.
- Scalability - scaling quickly can be costly when managing on-premises systems as you'll need to pay upfront for additional hardware, space and staff to maintain and manage it all. The cloud makes scalability attainable to businesses of any size through the pay-as-you-go, OpEx model — a key reason many SMBs are making the move.
- Business efficiency - legacy, on-premises systems, are seldom updated and can prohibit employees from administering the most cost-effective and efficient businesses approaches. A cost advantage of cloud computing and serverless infrastructure is that your business will receive continual application updates that are included in your fees. In fact, cloud computing's continual development means your team can keep on streamlining business workflows and save costs overall.
Both cloud and on-premises IT systems come with their upfront and ongoing costs, however, when you migrate your business to the cloud you have the opportunity to switch your IT budget from a CapEx to an OpEx model. While this doesn’t necessarily mean your IT spend will be reduced – as each business’s IT infrastructure and computing needs vary – the cloud allows businesses to adopt a pay-as-you-go model, making IT spend much more manageable and cost-effective over time.
If you’re interested in learning more about how migrating to the cloud could help your business reduce its capital expenses, get in touch with a Lancom cloud migration specialist. They’ll talk you through our process, discuss your business’s pain points and explain our cloud migration packages – like our current free cloud migration offer. This package is designed for businesses who would like to migrate to the cloud and want to use their technology to create leverage and a real competitive advantage. Find out more about our free cloud migration offer.
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