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February 09, 2017
CIOs: Exemplify cloud value with C-suite business case
By: Jason Kemper

When AWS launched 10 years ago, few people perceived the transformative impact the cloud computing platform would have on business strategies and enterprise IT support. Fast forward to today and AWS cloud is mainstream with clear benefits: Companies can experiment with new business models at little risk; save money on computing infrastructure to support these models; and take advantage of flexible, on-demand architecture for digital innovation to better serve employees and customers.

So why are some businesses still hesitating? And what can CIOs do to kick start an AWS cloud migration? In truth, most CIOs don’t need to be convinced; they understand the agility, scalability and stability that AWS cloud can bring to their organizations. But articulating the value proposition for migrating legacy hardware, applications and infrastructure can be difficult, especially when the transition might be costly and complex.

To move ahead, CIOs need a solid business case that convinces C-suite peers about the significant return on investment (ROI) that the company can realize with cloud migration and adoption.

Demonstrate full value of cloud

Based on Accenture’s experience across the spectrum of cloud migration capabilities, a tried-and-true approach to developing this business case is to:

  1. Think through and justify the cloud’s value proposition, particularly for large investments in legacy technology infrastructure, including data centers.

  2. Determine which applications to move to the cloud and then rationalize the potential savings.

  3. Look at possible cloud migration risks and develop a strategy to mitigate.

Here’s a closer look at how to complete each step along with some tips and results.

Segment, target and position—Infrastructure portfolios can contain hundreds of applications, so knowing where to start may be daunting. Most likely, it will be too time consuming to evaluate the total cost of ownership for every application and analyze the potential cost savings for moving each one to the cloud.

Instead, take a representative sample of applications from an application family, build up the underlying costs and then extrapolate to the broader family. This framework makes it easier to estimate savings at an aggregate level and identify cloud migration candidates. It also leads to better decisions about which type of cloud (public, private, hybrid) to migrate each application family toward, as well as the relevant service model (platform as a service, infrastructure as a service, software as a service).

In our experience, CIOs need to account for several factors related to the applications’ technology stack, including the retirement schedule, network sensitivity, end-user geographic footprint, and compliance and security needs.

Using this approach, Accenture has helped clients quickly identify and target applications for the cloud, and then focus their migration and refactoring efforts. In fact, a Global Fortune 500 developed a cloud strategy for 75 percent of its application portfolio in only six weeks.

Develop cloud savings potential 

After defining the application families and cloud migration targets, calculate the value of moving to the cloud. Bear in mind the actual costs of operating the applications in the cloud, current costs of running the applications on-premise and any migration or refactoring costs.

Savings should result across several categories, including the ability to build to “average use” rather than “peak capacity.” Labor savings are possible by redesigning roles or reassigning resources. Additional savings may come from automation of processes. For facilities, especially if the company owns its data center, savings may result from a reduction in cooling or electrical, as well as new uses for the vacated space.

One CIO calculated that by migrating 70 percent of the application portfolio, her company would be able to save $28 million in after-tax net benefits. Not surprisingly, C-suite management was convinced to make the journey to cloud.

Risk Mitigation Strategy

Planning for potential risk should be part of any cloud migration. Common risks include:

  • Vendor lock-in on cloud platforms. Design a strategy that allows the same applications to be run on different platforms using IT workflow automation and orchestration.

  • Data privacy issues. Consider all data privacy implications in advance to ensure company policy will not prohibit targeted applications from moving to the public cloud.

  • Inability to support the cloud migration. Assess ability to support the cloud migration, as timing and delays can affect potential savings.

Following these steps will not only prepare CIOs with a business case to exemplify the value of cloud migration, but, more importantly, position the company for future success with optimized assets and the ability to innovate through cloud technologies.

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