Uncovering the hidden costs of cloud migration

The benefits of the cloud are in danger of being outweighed by an assortment of hidden costs

Most organisations are already aware of the benefits of cloud migration. It enables them to expand their business whilst using existing infrastructure and can have a positive impact on data growth and customer experience. 

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Not only that, but the cloud can also offer enhanced security and increase productivity, which is why IT leaders are all including the cloud as part of their digital transformation strategy, accelerated in part by the pandemic.

The cloud helped businesses through massive disruption, and having successfully continued operations, the cloud has shown resilience and the reason why cloud adoption will continue to grow, with spending on public cloud services expected to reach $396 billion in 2021, growing a further 21.7% in 2022 to reach $482 billion, according to Gartner, Inc.

But with all that the cloud has enabled, and continues to offer, could businesses end up burdened by hidden costs in the years to come?

Vendors can make their cloud offerings appear considerably more cost-effective than in-house solutions, but if business owners don’t need to take advantage of the complete technology that the cloud offers, the cost of adoption may be greater than necessary.

For example, there’s the risk of cloud outages that impact downtime (infrequent, but possible) so if you’re thinking about moving operations to the cloud, it’s critical that you’re aware of as many of the hidden costs as possible.

Unexpected costs of migrating to the cloud

Cloud migration is never a simple process. Pitfalls can wait either in plain sight - such as upfront monetary costs, often large but easily legislated for - or in the shadows. It’s these hidden costs that are the real debilitator. Without thorough planning or technical understanding, enterprises may find themselves far over budget and too deep to escape.

Hidden costs often appear in the form of operational and recurring expenditures, such as the pay-as-you-go cloud model offered by vendors. Without the required level of expertise within the enterprise, pay-as-you-go models may be misunderstood.

Enterprises can pay for vast amounts of cloud storage to house swathes of data. With no storage limit, data will continue to be stored on the cloud servers, bringing an incremental cost. What’s more, it’s likely that most of this data doesn’t need to be stored in the cloud. On-premise servers still have a role to play, while many enterprises are guilty of blanket decisions when it comes to data, rather than taking the time to sift through what’s relevant and important to maintain.

To shine a light on this blind spot, enterprises must ensure their in-house IT departments are brimming with relevant expertise. Existing employees can be upskilled to plug skills gaps, but sooner or later there will be a problem or a technology that stretches the department to breaking point.

Acquiring external talent at some point down the road is unavoidable, in the form of consultants, new hires, and vendor support. Due to the unpredictability of cloud migrations, both in terms of surfacing issues and in the introduction of emerging technologies, having the foresight to realise which specific skills are going to be required down the line is not always apparent, adding to this expense.

This unpredictability stems from the fact that organisations will want to tailor their cloud technology to integrate seamlessly with their existing set of systems. As the web of infrastructure expands, it becomes more difficult to maintain optimum performance levels because of the complexity that customisation brings. As deployments are scaled, their problems and complexities are also magnified, forcing the enterprise to invest in additional resources.

How to calculate whether you can afford cloud migration

Though the specific amount of hidden costs remain a mystery until they are encountered, that doesn’t mean that when devising a cloud migration budget, they shouldn’t be accounted for. Budgets should have the buffering capacity and be scalable, just like the cloud technology it will be invested in.

It's certain that the cloud migration journey is by nature unpredictable, yet there is one consistent element that can be counted on: change. The enterprise and cloud migrations are both dynamic. Performance requirements, changes in usage and market needs, vendor support packages, will all be affected at one point or another.

This acts as one of the major advantages and disadvantages of the cloud. On the other hand, on-premise infrastructures also suffer from these faults.

Enterprises can start their cloud journeys by taking an audit of current IT infrastructure costs in order to reveal what they are currently paying. Then try and estimate the potential cloud infrastructure costs. For this there must be an understanding of the network, storage, and database capacity required to run applications selected to operate on the cloud, Typically cloud pricing structures are quite complex, however, vendors are increasingly simplifying their offerings.

Weighing the pros and cons of cloud migration

With the costs of cloud migration identified, it’s up to the individual enterprise only to decide whether the journey is worthwhile. Budgets, industries, and priorities vary, but what is certain is that at least partial migrations to the cloud will bring a host of benefits that ultimately do make businesses more competitive.

For those struggling to finance migrations, it may be time to look for more cost-effective methods. Cloud migrations do not need to happen en masse. Internal inspections can dictate which applications will benefit the most from integrating with the cloud. If the value isn’t foreseen in transferring a certain application, then don’t.

Of course, risk is a factor in every decision, particularly one with high financial implications. Enterprises can complete a thorough risk analysis by uncovering the hidden costs of their planned cloud migration and comparing them to existing costs and their risk appetite. Risks can’t be eradicated but they can be accounted for.

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