Some cloud vendors are currently selling cloud and offering savings of as high as 70%. It is suggested that focusing on a headline operational cost saving figure underestimates the business transformation required as well as potentially significant setup costs that, when considered, rarely make the business case for cloud compelling.
Cloud offers a new economic and consumption model for IT and application purchases; however, what many are not highlighting is the business transformation and IT migration which has to accompany the purchase of cloud services to derive real business benefits. These can be time consuming, involve write downs of existing investments, process re-engineering, systems migration and structural changes.
Moving your IT systems to the cloud is not a simple ‘lift and shift’. It requires transformation (in technical parlance, ‘virtualisation’). This key step is often overlooked in the business case. The cost of a migration to a virtualised environment may outweigh the savings the cloud offers. Clients should look to plan and build for the cloud - not migrate large legacy systems to the cloud. The business case for the latter is seldom positive.
Deloitte recommends that businesses thouroughly assess the relevance of the cloud to their organization and where its impact can establish the most value. This requires building a strong business case with clear milestones and tracking its benefits.
Here’s a list of things to remember about using the cloud:
1. This is not just an IT cost reduction program; it is a business transformation
2. A clear business case is needed, with clear measureable deliverables
3. Security, privacy and business governance are important, so investigate what can and cannot be accomplished within the regulations – don’t believe everything you hear
4. Using the cloud is a journey and as such needs clear planning to choose the right partners. Not all cloud providers’ offers are the same
5. The cloud opens many new and exciting strategic options. Think about how to capture these options in your analysis
6. Although this is a business transformation, both IT and the CIO are crucial to success and need to be a core part of the team
7. Be clear in communications across all aspects of the business, both internally and externally, about the business benefits and expected outcomes.
Remember that the cloud exists for a good reason: it can be a pragmatic tool that can help your business better manage its IT requirements. But to make the most of the cloud, you need to do your homework and due diligence. Following these steps can help your organisation to take advantage of the best aspects of the cloud while helping to minimise your risk.
- Pragmatic Cloud Computing, Deloitte