CIO.com Virtual Roundtable: Optimizing the Economics of Cloud Migration Within the Enterprise

By the end of 2021, analysts at IDC expect 80% of enterprises to have put mechanisms in place to shift to cloud-centric infrastructure and applications.
64% of infrastructure spending will revolve around investments in cloud technologies by 2024.
Sophisticated economic analysis is required to determine what workloads should be moved to the cloud, how the migration should be managed, and what contingency plans should be put in place if organizations decide to move certain applications back on-prem.

By the end of 2021, analysts at IDC expect 80% of enterprises to have put mechanisms in place to shift to cloud-centric infrastructure and applications. By 2024, approximately 64% of infrastructure spending will revolve around investments in cloud technologies. While these investments offer the opportunity to deliver significant returns on investment, success will hinge the architecture strategies that effectively guide the cloud migration process.

To explore the full economic ramifications of cloud migration CIO.com co-hosted a virtual roundtable with James Farhat and Doug Schneider from ACTS. Over a dozen senior business and technology leaders from around the country gathered to discuss the evolving business cases that are driving the integration of cloud resources into enterprise infrastructures.

Here is what they had to say:

After years of debate and discussion on the issues that are driving cloud adoption, the last year appears to have accelerated plans to modernize IT infrastructures -- which increasingly implies a move to public cloud resources. That said, it was clear from the very beginning of the discussion that sophisticated economic analysis is required to determine what workloads should be moved to the cloud, how the migration should be managed, and what contingency plans should be put in place if organizations decided to move certain applications back on site.
Right off the bat, the issue of legacy systems -- and more specifically: customized code -- emerged as the sticky wicket that is jamming many organizational efforts to move toward cloud environments. As one executive who had responsibility for external-facing applications explained: “We have years of application development that have been specifically designed to address the needs of our customers. There is nothing commoditized about them.” This high level of customization can become downright hostile to co-existence with commoditized public cloud environments. He made clear that the barriers to cloud migration are far fewer for colleagues working on internal software deployment projects that leverage commonly used -- or commoditized -- applications.
This led to a discussion on the merits -- and perils -- of pursuing lift-and-shift strategies for legacy applications that are difficult to convert into modern containerized microservices. As another executive observed: “There has been a lot of discussion about whether we just lift-and-shift to get everything into the cloud faster, and then go back to fix things later for optimization.” It is a strategy, observed another participant, that will not be resisted by the big hyperscalers. “However, if the process is not managed properly, it can mean that enterprises end up paying twice -- once to lift-and-shift and then again to go through the process of optimization. If we don't refactor and optimize code, all we're doing -- by moving to the cloud -- is paying someone else for functions we already do.”
That is precisely why it is so important to engage in an economic analysis that takes the entire end-to-end cloud migration process into account, explained James from ACTS. “It is critical to build comprehensive business case models that are specific to each organization. These are not trivial decisions and there is no magic. It requires a careful inventory and assessment of the existing application portfolio. It is all the more important to do this analysis when there has been a lot of custom development. The good news is that there are tools available that can help perform the analysis, assess what code is amenable to conversion into microservices and containerization. But the tools have to be applied in the context of careful short- mid- and long-term economic analysis.” [NOTE: We explored the benefits of the CAST tool...more on that below]
Doug, from ACTS, concurred, adding that accommodating custom code in enterprise infrastructures can make sense if the correct content is in place. “I'm a big believer in custom code if it provides a strategic advantage and a differentiating capability. If it gives you an advantage over your competition -- you should absolutely keep it.” For most organizations, however, there is plenty of territory that can be smoothly moved to cloud environments.
More importantly, noted another participant, the move to cloud creates a fundamental opportunity to transform the role that IT plays in advancing the mission-critical objectives of the organization. “We don't do any TCOs or any kind of analysis at a tactical level. We are more focused on the new technology capabilities that we will gain by moving to different cloud providers. We are engaged in understanding the relative merits of having workloads in AWS versus Google versus Azure. We have adjusted our IT strategy to pick and manage a set of technologies that advance our business needs by enabling our teams and improving the customer experience.” Many in the room agreed, with the largest organizations represented in the room acknowledging that they have ended up having important applications in all these environments.
One of the key economic justifications for embracing comprehensive cloud initiatives has revolved around the enhanced analytics and automation capabilities that allows IT to make their organizations more agile and nimble in the marketplace. As Doug pointed out, it requires a new mindset that focuses on harnessing the power of enterprise technology -- including cloud resources -- to generate revenue and improve customer experience.
That said, pointed out James, the cloud economics question doesn’t always present a very clear answer. “It's like a layer cake. Depending on your situation, the type of business you are in and the business models of the enterprise. It's important to peel that onion, which is why ACTS focused on this critical aspect of the cloud-migration planning and execution process.”
Over the course of the chat we discussed how ACTS has partnered with CAST to deliver the workload and application assessments. ACTS’ Cloud Business Case Modeling analyzes and rationalizes IT footprints to support informed cloud transformation decisions. The modelling process provides tools and consulting support needed to generate a full business case and roadmap for desired future states.

For more information or to inquire about roundtable participation, please visit www.CIO.com.