Fast Track Your Cloud Strategy
CIOs consider moving to the cloud for a variety of reasons, including cost savings, scalability, and the ability to more quickly deliver or enable initiatives for the business. At the same time, the number of cloud vendors and products - from infrastructure to applications - is exploding. IT market research firm IDC predicts that digital transformation spending will consume up to 50% of IT budgets by 2023, with a large chunk of the spend going to cloud technologies. For many CIOs, the pressure to migrate to the cloud is forcing premature decisions about which cloud technologies to invest in. Instead of adopting a cloud solution “for technology’s sake”, make sure that it aligns with business demands for growth and innovation.
CIOs are striving for quick and cost-effective wins as they move to the cloud. Two initiatives can help fast track your cloud strategy. The first is shifting your IT infrastructure to an open, flexible, cloud platform that allows for hyper-scaling. The second is augmenting core systems (such as ERP) with cloud technologies that enable business growth and create a competitive advantage. These proven strategies provide opportunities for innovation that let you march with confidence to the cloud. They also help you avoid getting locked into an application vendor’s proprietary technology stack and provide flexibility for future growth and innovation. Let’s take a look at these two strategies in more detail.
Shift IT Infrastructure to the Cloud, But Pick Your Platform Carefully
Shifting IT infrastructure to IaaS (often called “lift and shift”) involves moving your business applications, customizations, and interfaces to a hosted service. It preserves existing application licenses and custom code investments, giving the same functional fit but at a lower total cost of ownership by keeping the application portfolio intact, just hosting it on a third party’s infrastructure instead of yours. Think of it as keeping everything you built over the years, just running it on faster hardware with lower cost of operations.
Moving your data center to the cloud can be the least complex and most cost-effective cloud strategy. IaaS frees the enterprise from owning and maintaining computer hardware, which makes it easier to keep your infrastructure current. IaaS can increase the enterprise’s ability to modernize by allowing IT to more flexibly adapt changes and by providing the agility to change faster. The timeline to deploy and go live on IaaS can be relatively short when compared to other cloud projects. Customers may potentially realize at least a 30% savings out of the gate.
Even though IaaS can cost less than operating an internal data center and can support hyper scaling the business at a much lower price, using an application vendor’s proprietary IaaS can be problematic. Instead of supporting best-in-class options for your level of business complexity, you are limited to applications that operate on- or integrate with the vendor’s technology stack. An application vendor’s IaaS can also cost more. The advertised IaaS pricing by the computing unit may be attractive but it typically doesn’t reflect secondary pricing components (e.g. storage costs) that add to the total cost of cloud infrastructure. Once other operational needs of running an application in the cloud are factored in, it can cost more to operate a vendor’s cloud infrastructure.
Industry analysts consider vendor-neutral IaaS providers like Amazon Web Services (AWS) and Microsoft Azure to be general-purpose providers capable of supporting a broad range of workloads while application vendor proprietary solutions such as Oracle’s cloud IaaS are primarily an infrastructure foundation for its other businesses. Using vendor-neutral IaaS minimizes the risk of getting locked into an ERP vendor’s cloud technology stack.
The ‘lift and shift’ of existing perpetual application licenses to IaaS reduces the need for certain operations skills (e.g. database, web and operating system skills) since many of the tasks associated with these skills will be automated in a cloud infrastructure model. Internal operations staff and budget may be freed up for reallocation to high priority business initiatives. When adopting an IaaS approach, review operations and support processes, staffing, skills, and budgets to understand where changes will be required. Conduct a roles/responsibilities assessment to identify the impact of the changes.
Fast Track Business Value by Deploying High Impact, Cloud-Based Technologies that Augment Existing Enterprise Applications
Most enterprises have made significant investments in implementing highly functional, stable Enterprise Resource Planning (ERP) systems. Many of these deployments include configurations and customizations that meet specific business needs. When running well, a tailor-fit ERP can serve as a reliable, robust operational platform that allows the enterprise to continue to see ROI for many years to come.
According to Gartner’s 2019 CIO Agenda survey, 3% or fewer of the enterprises surveyed see ERP as a game changer. That priority shift could mean that fewer ERP investments are being included in the CIO’s business-driven roadmap. Yet, continued reliance on ERP vendor policies and support models force CIOs to spend limited budget, resources and time on “keep the lights on” ERP projects that may not drive growth and competitive advantage.
Moving the core functionality found in ERP to a completely new Software-as-a-Service (SaaS) platform (the cloud) is not a smart move for most enterprises. Since most ERP deployments are highly complex, moving ERP to SaaS can be very expensive and disruptive. SaaS ERP likely won’t make most enterprises better able to respond to business demands for growth and innovation. Additionally, SaaS ERP is an evolving solution with functionality and operational issues that are yet to be solved. The opportunity cost of a full-scale deployment to a less mature, less functional cloud solution is delaying or missing out on cloud investments that would yield a high impact to the business.
The best practice is to focus on budget and staff on initiatives that matter to the business. Although ERP in the cloud makes sense in a few scenarios (small to midsize organizations or those with minimal complexity), most enterprises are choosing to preserve their investments in ERP systems while they innovate with cloud technologies around the edges.