Cost savings: One of the biggest cloud fallacies

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Weigh six advantages of storage as a service
Over the past six years, enterprises have learned that running business applications in the cloud can't be cheaper than running them in a data center. Thus, justifying cloud migration depends on advantages beyond saving money.

At the MIT Sloan CIO Symposium, a panel of experts focused on what they believe are key advantages cloud providers offer customers. This includes faster software updates to introduce new services or support, new products, and the ability to scale applications up or down as needed.

In the early days of the pandemic, some retailers took advantage of the agility offered by cloud providers to quickly scale up their pickup and delivery services. In another example, medical facilities are expanding telemedicine services to reduce face-to-face patient visits.

Fortunately, most companies have more time to plan for the move and prepare for the costs.

Subhadaa Reddimasi, head of cloud deployment at financial services firm Wells Fargo, said: "When you first use a cloud service, it actually adds to the cost. It's important to look at both the long term and the short term."

The panelists agreed that success depends on moving slowly to the cloud, starting with part of the workload rather than the entire application. The migration plan will include many elements, such as consulting, application development, training IT staff, and hiring people familiar with the cloud.

Cathy Horst Forsyth, founder and CEO of Strongbow Consulting Group, said successful companies first build a business case for cloud projects, then monitor and measure results that senior management uses to determine return on investment.

Ultimately, companies that successfully move to the cloud will get the highest return on the money they spend by optimizing their cloud operations to reduce costs.

"In broad terms, I would tell you that most of our customers right now are not talking about moving to the cloud to save money," Says Horst Forsyth.

However, enterprise customers often underestimate how long it takes to move a mobile application or from on-premise software to SaaS. They also miscalculated the rate at which traditional data center infrastructure would be replaced with cloud providers.

"You usually end up with two environments and two books," notes Horst Forsyth.

Sometimes, this mixture is not the best choice. Strongbow Consulting clients often find that cloud services do not save them money.

"Some people will admit they've done the math and seen the efficiency of traditional data center infrastructure," Says Horst Forsyth.

The importance of IT talent
Reducing costs often depends on the quality of IT talent within an organization. Effective talent strategies include training existing staff, hiring people with experience in cloud operations, and shifting IT culture to developing software, application security, and processes for managing cloud infrastructure.

"It really improves the skills of the whole organisation to think differently about the business and be open to new technology," says Horst Forsyth.

This includes new approaches to security. Jan Shelly Brown, a partner at McKinsey & Company, says cloud service providers (CSPS) offer more robust protection than many companies deploy themselves.

"From a security perspective, CSPS bring a lot of innovation," Brown noted.

However, this means that organizations must focus on training IT staff to deploy security when deploying cloud code. In addition, organisations such as banks and hospitals must use automated cloud controls to assure regulators that data is secure.

Cloud lock-in is another concern for businesses. Unfortunately, given the difficulty of moving corporate data out, they are unlikely to avoid this, says Wells Fargo's Reddimasi. If cloud providers fail to live up to expectations, the best strategy is to have a contingency plan for moving data.

"Readiness is an important part of controlling vendor lock-in," Reddimasi said.

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Cost savings: One of the biggest cloud fallacies