Business Effects of Cloud Migrations

• The Change of Business Dynamics and Procedure
• Effects on Your Employees
• Financial Impact
• Contractual Business Obligations
• Business Risks
• Resources

The Change of Business Dynamics and Procedure

When migrating services to the cloud which is fundamentally a change of business strategy affecting the range of internal departments. The affects this can have on the business can be huge.

New Sales Approach

• Cloud migration enables organizations to adapt to market changes more easily.
• Sales teams gain a broader range of offerings due to increased scalability and flexibility.
• Cloud allows a focus on innovation and development, freeing resources from service management.
• Sales teams can approach new customers, previously out of reach, diversifying the customer portfolio.

Advanced Business Analytics

• Cloud offers specific services for business analytics at a large scale and low cost.
• Enables agile and dynamic decision-making based on extensive data analysis.
• Explores large-scale data sets for insights into sales patterns, product feedback, and infrastructure performance.

Shift in Responsibility

• Cloud services transfer infrastructure management responsibility to third-party providers.
• Reduces the need for on-premise tasks such as sourcing, installing, and maintaining services.
• Establishes a new relationship with cloud vendors, potentially requiring a dedicated account manager.
• Internal data center teams may experience reduced visibility, necessitating increased collaboration.

Process and Procedures Overhaul

• Cloud migration initiates administrative changes across various departments.
• Identifies affected areas, requiring changes in processes for service delivery, finance, - support, development, etc.
• Documentation of new processes crucial for avoiding retroactive efforts in updating business systems.
• Ensures a clear understanding of workload changes post-migration.

Deployment and Operations Transformation

• Cloud deployment tools offer on-demand resources, reducing wait times for new environments.
• Utilizes automation, serverless computing, and self-healing architecture for a refined - software-defined data center.
• Testing environments in the cloud replicate production, reducing bugs and enhancing customer experience.
• Cloud-specific architecture requires a deep-coupled approach, impacting how applications are compiled.

Access to Latest Software

• Cloud providers offer the latest operating systems and software, requiring adjustments for - compatibility.
• Enables selection of software versions during deployment, ensuring access to the latest technology.
• Supports innovation by allowing development teams to leverage new features and functions.

Business Awareness and Employee Engagement

• Introducing cloud technology may face resistance due to a lack of understanding and fear - about job retention.
• Requires a mindset shift and effective communication to address concerns and maintain morale.
• Employee engagement crucial for success, involving education, reassurance, and transparent communication.
• Employees need avenues to ask questions, provide feedback, and contribute ideas to feel part of the change.

Resource Recycling and Allocation

• Cloud migration results in redundant on-premise hardware, creating an opportunity for - infrastructure refresh.
• Collaboration with asset and life cycle teams to upgrade on-premise hardware alongside new infrastructure.
• Additional resiliency for on-premise services through duplication and load balancing.
• A strategic one-time trade-off to enhance existing infrastructure and avoid future hardware investments.

Effects on Your Employees

Following a strategy whereby a new technology will be implemented whereby it may create new roles, make existing roles redundant and open up opportunities for employees to follow a new career direction, then you can expect that there will be a number of effects on your employees when it comes to adopting the cloud.

Roles and Opportunities

• New Roles: Cloud adoption creates opportunities for new roles in architecture, implementation, and support.
• Resistance: Some existing employees may resist cloud computing as a part of their career.
• Team Division: Operational support teams might be split between on-premise and cloud operations.
• Redundancy: Cloud replication of on-premise services can lead to existing roles becoming redundant.

Retraining and Skill Transition

• Training Trade-off: Cloud services can make existing roles redundant due to increased automation.
• Data Center Team Impact: Reduced personnel required as hosts move to the cloud, impacting data center teams.
• Change in Job Roles: Existing skill sets might not directly translate; retraining is essential.
• Certification Encouragement: Encourage certifications, such as AWS or Azure, to validate team knowledge.

Reassurance and Communication

• Safety of Roles: Reassure technical teams about the safety of their roles and offer clear communication.
• Development Path: Provide a development path for additional training to retain key personnel.

Resource Recycling and Allocation

• Infrastructure Refresh: Redundant on-premise hardware provides an opportunity for infrastructure refresh.
• Enhanced Resiliency: Consider duplicating on-premise services for additional resiliency.

Training for All Levels

• Basic Cloud Principles: Offer basic cloud principles training to non-technical staff to foster understanding.
• Technical Training: Technical teams need vendor-agnostic and vendor-specific training for effective migration.
• Online vs. Classroom Training: Consider the benefits of online training for flexibility and self-paced learning.

Mobility

• Remote Access: Cloud adoption allows remote access, facilitating home working and talent sourcing globally.
• Flexibility: Employees and customers can access data globally with an internet connection.

IT Team Contribution

• Focus on Business Goals: Cloud services enable IT departments to focus more on business-oriented goals.
• Time Reinvestment: Management, automation, and monitoring features in the cloud free up time for innovation.
• Enhanced Services: Engineers and developers can invest time in enhancing existing and developing new services

Financial Impact

It’s no secret as to how the costings against on-premise and the outer resources within the cloud compare, with cloud resources being significantly cheaper. This is largely due the large economy of scale that the public cloud providers can implement. However, there are still some less-obvious financial impacts of migrating services to the cloud.

Capex to Opex

• Capex in On-Premise: In on-premise solutions, additional resources involve capital expenditures (Capex) for hardware, upgrades, software, licenses, maintenance, racking, and cabling.
• Cloud as Opex: Cloud computing shifts these expenses to operational expenditures (Opex), where costs are incurred as short-term resources are used, providing flexibility in resource management.

Cloud Billing

• Cost Allocation: Cloud environments allow billing to be split and shared among divisions, departments, and customers, improving cost tracking.
• Consumption-Based Charges: Charges are based on consumption, preventing overpayment for unused resources. Internal Reporting: Internal reports aid departmental budgeting, and finance teams can directly manage cloud finance accounts.

IT Budget Changes

• Hardware Budget Reduction: Cloud adoption reduces spending on hardware and associated Capex costs.
• Increased Software Budget: Software costs rise with the need for cloud services.
• Shift in Staffing Costs: Staffing costs for managing on-premise infrastructure decrease, while costs for specialized cloud talent may increase.

HR Costs

• Personnel Changes: Changes in roles and responsibilities may lead to severance, redundancy pay, and recruitment costs.
• Transition to Cloud Talent: Recruitment of specialized cloud talent may be necessary until in-house expertise is developed.

Improved Efficiencies

• Enhanced Processes: New processes must be more efficient, fostering improved communication and collaboration between departments.
• Increased Productivity: Efficiency improvements lead to increased employee productivity and morale.

Rapid Go-to-Market

• Advantage in Product Development: Cloud resources enable faster product, application, or service launches compared to on-premise solutions.
• Revenue Growth: Rapid deployment allows quicker releases, contributing to revenue growth.
• The transition to cloud computing influences financial models, budgeting strategies, and operational efficiency, offering benefits in flexibility, cost management, and speed to market.

Contractual Business Obligations

Moving your services out of your own data center environment and into a third-party vendor’s data center can cause issues and concerns when it comes to contractual obligations.

Impact on Service Level Agreements (SLAs)

• Concerns and Unknowns: Moving to a public cloud may raise concerns about meeting SLAs with customers due to less visibility and potential lack of control over issue resolution.
• Resiliency of Vendor Services: Evaluate the resiliency of specific services offered by the chosen vendor across their environment.
• Service-Specific SLAs: Analyze SLAs for each service intended to be used. Different services have different criteria, e.g., Monthly Uptime Percentage, Region Unavailability, Unavailability of EC2 and EBS, or Error Rate for AWS services.

Negotiation and Changes in SLAs

• Potential Negotiation: Depending on the service plan, negotiate specific terms related to SLAs that impact customer agreements.
• Dynamic SLA Changes: Cloud providers have the right to change SLA terms to adapt to evolving services. Regularly review SLAs for compliance with contractual agreements.

Architectural Considerations for Higher Availability

• Fault Tolerance: Architect systems to be fault-tolerant across different geographic regions to handle major incidents and maintain service reliability.
• Cost Consideration: Building higher availability may incur additional costs. Evaluate if the workload requires such continuity.

Compliance Controls

• Auditing in On-Premise Environment: In on-premise environments, external auditors likely audited IT infrastructure for compliance against standards like PCI DSS, ISO, SOC, HIPAA, etc.
• Responsibility Shift to Cloud Provider: Some compliance controls related to physical security of the host can be delegated to the cloud provider.
• Worldwide Compliance Programs: Large cloud providers operate globally and must comply with regulations from various countries, offering a higher level of compliance compared to individual infrastructures.
• Remaining Responsibility: While the cloud provider covers certain compliance controls, specific responsibilities still lie with the user.
• Services for Compliance: Cloud services like AWS Config can aid in maintaining compliance by monitoring configuration, checking audit compliance controls (e.g., PCI DSS, HIPAA), and generating reports for auditors.

Business Risks

Understanding and mitigating business risks is essential for successful cloud adoption and management.

Legislation and Regulation

• Data Protection Laws: Adhere to specific regulations like EU data protection laws, ensuring compliance with security controls, retention requirements, and regional data transfer restrictions.
• Architectural Considerations: Architect the environment to meet security requirements and mitigate risks related to data storage locations.

Technical Ability

• Skill Set Transition: Employees managing current infrastructure may resist learning new technology specializations required for cloud migration.
• Risk to Business: Inadequate workforce skills pose risks to productivity, security, and achieving migration objectives.

Reliance on a Third Party

• Loss of Control: Cloud services shift control to vendors, making businesses dependent on vendor performance.
• High Availability Solutions: Architecting high availability solutions across different regions mitigates risks associated with cloud vendor failures.
• Multi-Cloud Adoption: Some enterprises adopt services from multi-cloud vendors to reduce dependency on a single cloud provider.

Inflexibility of Contracts

• Customer Agreements: When using public cloud services, adhere to customer agreements and terms of use, including SLAs.
• Negotiation Challenges: Negotiating specific terms, especially affecting SLAs, may be challenging, depending on support levels and resource usage.

Wrong Strategy Choice

• Reassessing Strategy: Businesses may realize, post-migration, that the cloud strategy isn’t yielding expected benefits or cost savings.
• Adaptation Options: Consider options like reverting to on-premise solutions, changing cloud deployment models, or adopting a hybrid cloud approach.

Technology Advances

• Continuous Technological Changes: Cloud providers continually advance technologies, requiring adjustments to applications and services to align with new features.

Shared Infrastructure

• Security Concerns: Shared infrastructure, while cost-effective, poses potential security risks for high-sensitivity workloads.
• Dedicated Tenancy: High-sensitivity workloads may require dedicated hosts and tenancy to prevent data sharing on the same physical host.
• Security Measures: Shared host security operates at multiple layers, but breaches, though rare, could theoretically allow access to other customers’ data.

General Business Risks

• Risk Identification: Numerous business risks may exist; identifying and mitigating these risks is crucial.
• Learning Period: Anticipate a learning period for deploying cloud services and be prepared to adapt and make changes based on experience.

Resources

• Getting Started with Migrating to AWS