Stax on Stax
14 Jan 2021
Making A Business Case for Cloud That Actually Stacks Up
In 2021, I don’t need to explain the importance of cloud in achieving your business outcomes. Unless you’ve been living on Mars, you’ve seen how COVID-19 has sped up cloud adoption.
Once seen as something that could be put off, a successful cloud transformation is now a matter of survival, as businesses and their customers become more reliant on technology due to the pandemic. With the unemployment rate in Australia up at 7%, businesses are looking to avoid extinction, so the motivation for a cloud transformation is no longer in question. In a survey last year, more than half of enterprises in Australia said their cloud usage for 2020 would be higher than predicted, and spending on public cloud services is forecast to grow 18.4% in 2021.
But too often, businesses undergoing a cloud transformation fail to realize their expected outcomes.
While C-Suite leaders know the advantages of the cloud, they don’t always have a clear idea how to carry out a structured transformation. As a result, cloud solutions are implemented in an ad hoc manner, resulting in increased costs, higher business risk, slower delivery, and poor ROI.
For example, a company may be seeking to reduce costs, but because they lack experienced cloud engineers, or fail to optimize resources, or track costs properly, the total cost to the business is significantly higher. You don’t have to look too hard for such examples of such bill shock: one of the reasons we created Stax was to avoid situations like these for our customers.
This post will help you avoid this fate, by helping you lay a framework for change that leads to a structured business transformation, one that avoids the poor outcomes many businesses experience.
Understanding the Triggers for Change
When adopted properly, cloud technology has huge potential for value creation and innovation. A solid business case encompassing all factors—from IT and business benefits to migration strategy—will create a framework in which to decide which cloud solutions are relevant to and make financial sense for your business. It all starts with what’s driving your decision.
Moving IT infrastructure and services to the cloud is a decision influenced by many internal and external drivers, and understanding those drivers is the first step in preparing a structured case for cloud.
So, why are organizations making a move to the cloud? In our experience, businesses are being driven by a need to:
- Increase security and data protection
- Reduce costs and increase long-term savings
- Increase product and services speed to market
- Deliver higher availability and scalability
- Identify risks and recover from failures quickly
- Replace legacy IT systems
- Provide greater accountability
- Maintain competitive advantage
Additionally, external factors such as expiring IT hardware contracts, mergers & acquisitions or business decoupling may also influence a move to the cloud.
Out with the Old, In with the New
For many businesses, cloud presents an opportunity to move away from lock-in contracts with expensive, unresponsive consultancies and shift to an efficient, cost-effective cloud solution offering more tangible business and IT benefits.
A switch from the traditional model to a cloud solution can mean:
- Enhanced customer experience: Offering improved services through online and mobile channels, greater product selection, and faster delivery.
- Ability to innovate: Leveraging mobility, social media, the cloud, big data, IoT, AI and other disruptive technologies to increase competitive advantage.
- Reduced operational costs: Lower costs of business operations and improved financial performance through operational excellence.
Creating A Business Case
The real value of cloud becomes evident when a holistic and transformational approach is taken, with the business case forming the foundation of your migration strategy. And while each organization’s strategy will look different due to specific goals and reasoning, there are still common points that should be addressed when presenting your business case for cloud.
Step 1: Determine both the business and IT drivers
Identify what needs to change, and why, considering all stakeholders and their needs. Typically, organizations are driven by a need to:
- Increase data security
- Lower running costs
- Reduce risks
- Increase speed to market
- Drive innovation
Step 2: Map the current environment
A solid understanding of the current IT ecosystem is key to a successful cloud transformation. The business plan should highlight existing business and IT interactions, noting complexities, interdependencies, business-critical issues and priorities for improvement.
Step 3: Quantify costs, investments, and strategic opportunities.
While cloud brings about many direct IT benefits, the business benefits may not be immediately apparent and should be emphasized in the business case. For example, cloud adoption can resolve pain points in current processes through automation, increase product speed to market, provide transparency of costs across departments, and increase productivity.
The costs of the program however, will be apparent at the outset. Cloud requires an investment in the technology and the team to maintain it. It’s unlikely your existing team will have the skills to do this, so you will be entering a competitive market for DevOps and CloudOps specialists.
By emphasizing the wider benefits, you can avoid having cloud considered as purely a cost center, not the strategic investment it should be. Flybuys CTO Brad Blyth made this point in a recent webinar.
Step 4: Identify and evaluate cloud alternatives and benefits.
Choosing a cloud solution or provider — for example, AWS, Microsoft Azure or Google Cloud Platform — is one of the key steps in planning a cloud transformation, and shouldn’t be a decision made solely by the CIO. The final call will come down to which solution offers the best fit for ongoing business needs while delivering new capabilities for innovation through technology.
Step 5: Calculate ongoing cloud ROI
ROI calculation can be used as a key indicator for validating your business case. This involves analyzing the benefits of reduced IT costs, identifying the investments required for a new solution, and projecting the costs and potential savings over a fixed period. The assessment of the costs you made in Step 3 will be essential here, as will an ability to track and assign cloud costs to the relevant business unit.
The Stax Solution
Following this process will allow you to present a useful business case for your organization. Once approved, your attention can now shift to delivering on the promises you made, and a different set of challenges emerge — how do you quantify, allocate and reduce costs, manage risk, and maintain your cloud ecosystem?
Previously, organizations had no option but to build their cloud foundations from scratch for every cloud migration, a complex process that could incur significant cost and add months to a migration’s timeline. They then had to maintain them, manage their risk posture, allocate and track costs, and ensure compliance with relevant industry regulations. But with Stax, you can purchase secure, evergreen cloud foundations out-of-the-box, and significantly accelerate delivery.
Stax allows you confidence in cloud, so your team can focus on building value for your business, not foundations.
For more info on Stax, get in touch and request a demo.Request a demo