3 reasons cost isn't the best motivator for moving to the cloud

This article was co-written with Roel Hodzelmans.

Cloud hype is all around you—you're told it's critical to ensuring a digital future for your business. Whether you choose cloud, hybrid cloud, or hybrid multi-cloud, you have numerous decisions to make, even as you continue the daily work of enhancing your customers' experience and agile delivery of your applications (including legacy applications)—likely some of your business' most important resources.

In this series, we explain three pitfalls everyone should avoid when transitioning to hybrid multi-cloud environments. In part one, we defined the different cloud types and explained the differences between hybrid cloud and multi-cloud. Here, in part two, we will dive into the first pitfall: Why cost is not always the best motivator for moving to the cloud.

Why not?

When looking at hybrid or multi-cloud strategies for your business, don't let cost become the obvious motivator. There are a few other aspects of any migration strategy that you should review when putting your plan together. But often budget rules the conversations.

When giving this talk three times at conferences, we've asked our audience to answer a live, online questionnaire about their company, customers, and experiences in the field. Over 73% of respondents said cost was the driving factor in their business' decision to move to hybrid or multi-cloud.

But, if you already have full control of your on-premises data centers, yet perpetually underutilize and overpay for resources, how can you expect to prevent those costs from rolling over into your cloud strategy?

There are three main (and often forgotten, ignored, and unaccounted for) reasons cost shouldn't be the primary motivating factor for migrating to the cloud: labor costs, overcapacity, and overpaying for resources. They are important points to consider when developing a hybrid or multi-cloud strategy.

Labor costs

Imagine a utility company making the strategic decision to move everything to the cloud within the next three years. The company kicks off enthusiastically, envisioning huge cost savings, but soon runs into labor cost issues that threaten to blow up the budget.

One of the most overlooked aspects of moving to the cloud is the cost of labor to migrate existing applications and data. A Forrester study reports that labor costs can consume over 50% of the total cost of a public cloud migration. Forrester says, "customer-facing apps for systems of engagement… typically employ lots of new code rather than migrating existing code to cloud platforms."

Step back and analyze what's essential to your customer success and move only that to the cloud. Then, evaluate all your non-essential applications and, over time, consider moving them to commercial, off-the-shelf solutions that require little labor cost.

Overcapacity

"More than 80% of in-house data centers have way more server capacity than is necessary," reports Business Insider. This amazing bit of information should shock you to your core.

What exactly is "way more" in this context?

One hint comes from Deutsche Bank CTO Pat Healey, presenting at Red Hat Summit 2017. He talks about ordering hardware for the financial institution's on-premises data center, only to find out later that usage numbers were in the single digits.

Healey is not alone; many companies have these problems. They don't do routine assessments, such as checking electricity, cooling, licensing, and other factors, to see how much capacity they are using on a consistent basis.

Overpaying

Companies are paying an average of 36% more for cloud services than they need to, according to the Business Insider article mentioned above.

One reason is that public cloud providers enthusiastically support customers coming agnostically into their cloud. As customers leverage more of the platform's cloud-native features, they reach a monetary threshold, and technical support drops off dramatically.

It's a classic case of vendor lock-in, where the public cloud provider knows it is cost-prohibitive for the customer to migrate off its cloud, so it doesn't feel compelled to provide better service.

Coming up

In part three of this series, we'll discuss the second of three pitfalls that everyone should avoid with hybrid multi-cloud. Stay tuned to learn why you should take care with moving everything to the cloud.