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Are you a Cloud holdout? Almost every business uses at least some Cloud services now. There are clear and measurable benefits to using the Cloud. But any transition comes with a cost. You may wonder if the price of migrating your on-premises infrastructure is worth it. How much does a Cloud migration cost? We have answers.
The Cloud is the backbone of most U.S. companies now. The statistics show a steady rise in the adoption of Cloud services, including businesses morphing their core infrastructures into as-a-service models. By 2022, 61% of U.S. businesses migrated their data and workflows to the Cloud, and 92% of companies have a multi-Cloud approach to all business functions. In 2020, public Cloud spending was around $140 billion. In 2021, the number increased by more than $50 billion. Estimates assume these numbers will continue to rise.
Microsoft and other software providers are adding to the pressure pushing companies to migrate their legacy platforms into the Cloud. The costs associated with Cloud migrations didn’t prohibit these companies from seeking the benefits of these services. But you still may have reservations about the cost of such an undertaking. A few studies are out there now that shed some light on the actual costs of a Cloud migration.
The costs of your Cloud migration depend on the volume of services you’re deploying and what Cloud services you’re adopting. There are three primary as-a-Service offerings in the Cloud:
The cost of your Cloud migration depends on which of these services you’re leveraging. For obvious reasons, the higher the complexity of the service, the greater the cost. For complex migrations falling under IaaS, there is a road mapping process for the underlying strategy of how and when data migrates. You may choose an outside consultant to help you successfully launch in the Cloud and lessen the chances of service downtime—a recommended addition that adds cost but pays for itself in a smoother migration.
Cloud service providers calculate the cost of the infrastructure and deployment services by looking at several key areas:
One of the benefits of Cloud migrations is that they take advantage of the economies of scale inherent in a shared service. There is also an element of savings related to eliminating the on-premises hardware, software and staff time associated with maintaining an in-house IT infrastructure. Not to mention the potential costs associated with a disruption to your legacy on-premises architecture. Forrester calculates this as the Total Economic ImpactÔ (TEI) of your Cloud migration.
The cost of your Cloud migration must be taken within the context of the business benefits and savings from outsourcing these services. A recent study determined the TEI of migrating Microsoft Dynamics AX (on-premises ERP) to a similar configuration using Microsoft Dynamics 365 in the Cloud. The businesses conducting this transition aimed “to reduce infrastructure and personnel costs associated with their Dynamics AX deployments while delivering the scalability and real-time data collection required to improve operations and power new opportunities.”
The TEI study found a significant reduction in the total cost of ownership (TCO) from the Cloud deployment of around 3.4%. The cost savings stemmed from:
The calculated TEI also looked at some key business benefits of migrating to a Cloud-native ERP solution. The benefits included:
These enterprise organizations reaped a 109% ROI with a real-time value of more than $8 million on average. But how does this compare with small to mid-sized organizations? The answer is that you will not only achieve ROI with a significant TEI relevant to the size of your business, but you will also avoid the risks associated with relying on a legacy on-premises infrastructure.
Some organizations elect to remain on-premises because of the perceived level of control and security. Ironically, 95% of cyber security breaches result from human error. These errors often consist of failures to upgrade legacy software platforms. The other risks and costs associated with keeping your IT architecture in-house include:
Migrating legacy on-premises applications and architectures to the Cloud can help you weather the storm of volatile markets, giving you a competitive advantage. Enavate is standing by with a Cloud evaluation to help you understand the workflows necessary to make these vital changes to your business.
Check out our Cloud Migration Checklist and start the conversation with our team.
As the Global Microsoft Solutions Evangelist, Robert is responsible for helping our clients with their end-to-end digital transformation journey within the Microsoft solutions and Cloud ecosystems. With over 20 years’ experience in the Microsoft channel – he helps our clients with Hybrid Cloud architectures, strategic and technical road-mapping, DevOps automation, Packaging, and deployment, navigating Microsoft App Source, partner relationships and more.