Don’t let the cost savings cloud offers distract you from the broader benefits

Posted on 4 Nov 2019 by Jonny Williamson

The majority of cloud migrations are built around reducing overheads, an approach that overlooks the less tangible – but no less vital – competitive advantages the cloud provides.

Read any research into why businesses are adopting cloud and the number one reason is likely to be finance focused – ‘cost savings’, ‘reduced IT costs’, ‘improved cash flow’ and ‘quicker ROI’.

Because cost savings are positioned as the headline benefit, that’s what many businesses focus on – one drives the other in a virtuous circle.

New Product Development Doodle Concept NPI NPD Innovation - image courtesy of Depositphotos.

Yes, bottom-line savings are important, but they aren’t going to sustain an organisation indefinitely. That only comes from top-line growth delivered through product development, diversification, entering new markets and increased business agility.

Cloud supports all these strategies and more, but what’s crucial is identifying what it is you want to achieve – the business case – and then installing the correct governance to successfully deliver that objective.

An appropriate level of governance is absolutely critical, according to Dave Hills, a client director at cloud specialist Rackspace;

“Say, you have one team desperate for an environment to install an application to support a new product development, and another wants a new cloud region to support a new market. This makes for a resource and budget squeeze which can only be prioritised by deciding whether it is more important to enter a new market or launch a new product, or are both important?

“Objectives and priorities may differ between businesses, but the need for robust governance is universal.”

CROP - Smart factory and industry 4.0 and connected production robots exchanging data with internet of things (IoT) with cloud computing technology - image courtesy of Depositphotos.

Avoiding the common pitfalls

Alongside defining and obeying business priorities, governance also helps avoid the common pitfalls businesses fall into, such as a lack of navigation and working in isolation.

“Many businesses make migrating to cloud more difficult for themselves by not having a deep enough connection between what the overall business case is and what role each team, whether back office, IT or production, plays in achieving it,” Hills explains.

An objective alone is not enough, you need a detailed plan for how you’ll achieve it, including the resources and budget allocated, a structured, realistic timeline, the correct governance to make sure everything stays on track and a plan for what happens if not.”

The other trap businesses can find themselves in is making one team responsible for driving the migration, to the extent that other key stakeholders who need to be involved aren’t.

This can stem from IT still being viewed as a standalone department that upgrades and maintains legacy systems, rather than a capability that – when viewed correctly – can drive long-term competitive advantage.

WATCH ? – Why manufacturers are migrating their enterprise applications to cloud ☁️… ? 

If IT is still seen as a department, that’s a problem. IT needs to be seen as a capability that permeates every part of your organisation; and technology needs to be seen as an enabler to help the business compete more effectively,” Hills says.

Business priorities must be clear and linked to IT objectives, supported with the necessary governance and integrated planning to set realistic timelines, requirements (functional and non-functional) and budget.

What does good look like?

Two recent Rackspace customers offer an insight into how that can be achieved. The key driver for both businesses was building a standardised system that would simplify their operations and streamline their activities.

The first is a construction and engineering leader involved in the construction and maintenance of highways. The business had the skills to manage its own data centre, but the operational burden kept it from evolving in a strategic business partner.

CROP - Server Room IT Digital Technology - stock image

“They had the right strategy and governance in place, they had identified which applications they needed to support and which they were going to either retire or replace with a cloud-based alternative, and they had a timeline that was realistic but aggressive,” explains Hills.

The move from data centre to cloud provided the business with a 25% cost saving, as well as the flexibility and innovation inherent to the cloud environment. More importantly, instead of “keeping the lights on” at its own data centre, the IT team is now able to focus on forward-looking projects that directly benefit the business.

An automotive components supplier took the strategic decision to move app development their supply chain. They had six weeks to create a new application, or a new feature in an app already used in their supply chain.

Rackspace provided a DevOps model for the business where automated code could quickly create test environments for preproduction and production, or just as quickly take them down when not required.

“Their costs were optimised thanks to the ability to quickly spin up or spin down these environments, coupled with automated testing, and the time for launching a new feature into their application went from about six weeks to just four minutes,” Hills says.

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*All images courtesy of Depositphotos.