Moving from on-premises data centers to the cloud, for example, involves a lot of financial considerations, such as the movement from CapEx-heavy asset-based architecture to OpEx-heavy as-a-service models. Moving to the cloud can also require new ways of working, training for staff, hiring more people with specialized skills. By applying cloud economics to the cloud migration strategy, businesses can take a more holistic approach to address these other aspects of cloud migration, working across various functions such as Finance, HR, IT, Sales, to go beyond merely optimizing costs to truly maximize the business value of cloud computing.
Not All Cloud Strategies are Created Equal
While upfront planning is important, sometimes it’s not enough. Businesses often forecast cloud spend based on historical data and existing ways of working. This backward look can prevent the company from taking full advantage of all the cloud has to offer because the business is considering how the cloud can improve existing operations rather than how operations will change with cloud and what’s needed to support those changes.
The emphasis on cost-benefit analysis through cloud economics is especially important when venturing into unknown territory. Businesses need to be sure they’re investing appropriately, taking necessary risks while avoiding unnecessary ones.
Data center exits are a great example of the kind of balance businesses need to strike with cloud strategy and how difficult it can be. Because hybrid and multi-cloud data centers can be more affordable, accessible, scalable and efficient than physical data centers, not making the switch as soon as possible can seem like throwing money away. But there are potential costs associated with data center migrations that may not be immediately obvious, such as how new pricing models could affect the business model, or increased downtime as employees and customers adapt to new applications or operations.
A cost-benefit analysis can help the business work through these considerations and break down the entire cloud migration into stages, then prioritize those stages to maximize ROI and guide investments based on returns. As the project progresses, cloud economics can help the business adapt to new challenges by reallocating resources accordingly, such as slowing investments in one area to prioritize another that has become more urgent, or pushing ahead despite challenges because what seems like a rough patch now aligns with the business’ larger goals.
From Reducing Costs to Maximizing Value
Cloud economics encourages businesses to look deeper and further ahead, beyond cost-reduction and short-term goals to consider the underlying business interests to such goals and the steps necessary to achieve them. How can the business be more efficient? What changes are necessary? Will switching to cloud support those efforts, or is some other technology better suited for the task? These questions shift the focus from reducing costs to maximizing value. By identifying the business goals and the cost of those goals, the business teams are able to make more informed decisions about what’s truly best for the business.
Wipro FullStride Cloud uses cloud economics when working with clients to create a holistic cloud strategy that focuses on how to maximize the value of cloud computing to drive specific business outcomes. This is a cross-functional process, using FinOps to maximize business value throughout the organization and its cloud environment. By creating a tailored approach for each company there is opportunity to identify areas of overspending and opportunities for efficiency, enabling them to find opportunities for reinvestment in other areas. This requires analyzing where change needs to take place including identifying how various areas of an organization should work together, breaking down silos.
For example, Wipro led a cloud cost optimization and avoidance advisory for a client with all workloads already migrated to Azure Cloud. By increasing cost visibility and defining priorities for cost optimization, the client was able to implement smart shut-downs and start-ups, which helped increase efficiency and reduce costs by 28% per week on average. Another client, a leading German energy company, was able to avoid an additional $3 million per year in cloud spending by reducing its Azure consumption and resizing its cloud infrastructure.
Whether businesses are just starting a cloud migration, re-evaluating their approach, or looking to maintain the success they are achieving, cloud economics is an essential strategy because it keeps the business focused on the costs and the benefits of the program. These factors will change in time, so it’s important that businesses continue to monitor their investments and their goals in the cloud, and adjust their approach as needed to strike the desired balance.