Cloud Migrations: Look Past the Mirage of Cost Savings

It’s time for all cloud service providers to look beyond the mirage of cost savings as the raison d’etre of cloud and embrace cloud-intelligence as a core strategy in a cloud-native world.

Survival in a rapidly changing, digital world depends on service providers’ software delivery capabilities. Delivery capabilities drive customer delight (or frustration), enable business agility, and ultimately hold the key to the service providers’ ability to compete.

Cloud-native software and delivery models (agile, DevOps, cloud-intelligent approaches) have set the bar higher for customer experience and expectations. These are imperatives service providers cannot ignore, hiding behind the price tag as justification.

Also see: Digital Transformation: Definition, Types & Strategies

What Does Cloud Intelligence Look Like?

According to a McKinsey study (2021), 75% of cloud’s predicted value is derived from cloud-afforded innovation.

As McKinsey puts it, “The emergence of this immense value pool comes at a time of increasing competitive pressure on companies. Fast-moving digital players are creating a fluid business landscape and accelerating the pace of change. For CEOs, cloud adoption is not just an engine for revenue growth and efficiency. Its speed, scale, innovation, and productivity benefits are essential to the pursuit of broader digital business opportunities, now and well into the future. Yet an overly narrow view of cloud-value economics and where value exists, often keeps companies from achieving the desired outcomes.”

What McKinsey found is that evaluating cloud adoption for the cost not only misses the point; it stifles the possibility of creating value.

Also see: Why Cloud Means Cloud Native 

How are Cloud Intelligent Companies Capturing Value?

Cloud intelligent companies operate on a different wavelength from legacy organizations. Below are just some of their distinguishing patterns of behavior:

• Decentralizing decision making. Those that crave agility cannot retain constricting hierarchical structures. To keep up with the rapid rate of cloud computing change, organizations must learn to rescind centralized control (which is not always easy in legacy enterprises) and delegate decision-making to lower levels of the organization and team.
• Adopting a culture that encourages experimentation and innovation. Adopting cloud and tools like canary testing reduces the cost, risk and time to innovate.
• Establishing tailored cloud strategies that address specific business goals. For example, building a strategy to ensure future rapid delivery of innovative and differentiated products and services.
• Focusing on the people and process aspects of cloud transformation. Don’t focus on just the technology. In cloud adoption projects that failed to achieve their goals, a substantial portion of blame is invariably laid at the door of the people and organization that did not change.
• Freeing up developers’ time. Organization must allow developers to focus on what they should be doing i.e. building new experiences and features instead of spending time on non-functional activities. This can be achieved several ways, such as:
• • Automating duplicate, time-consuming, manual complex and monotonous tasks.
  • Building optimized pipelines.
  • Reducing the time needed to prototype new business ideas.
  • Investing in a standardized, automated cloud platform that improves productivity and delivery.

Beyond the Mirage of Cost Savings

Clearly cloud costs must not be ignored, but viewing a strategical transformation purely through the lens of cost ROI is a rookie mistake. Organizations that do not adopt cloud will not fare better in the long term; they will soon find themselves facing rising costs from bloated IT organizations forced to devote resources to repetitive manual tasks.

CSPs must look at the broad definition of Return on Investment and not be blinkered by the dollars. And they must make this change soon – or risk demise at the hands of disruptive, agile competition.

Also see: Best Practices for Multicloud (That Cloud Providers Prefer You Not Know) 

About the Author: 

Oren Betzaleli, GM, Amdocs Cloud