5 common cloud transformation cost traps - and how to avoid them!

It can be difficult to initially calculate the costs of a cloud transformation. Calculating costs in traditional operating environments is easier as data centers and in-house server halls pay for predetermined items such as rent, hardware, and licenses. In a cloud transformation, these costs cannot be translated straightforwardly, as a transformation does not just mean a move - but usually a build-up of completely new services, processes, and solutions. In addition, in the cloud, you pay for your consumption, which can often go up and down. This means that it can be difficult to predict what fees the cloud transformation will require.  

These parameters combined  create the risk that cloud transformation will bring unwelcome surprises in terms of costs. At Iver, we help many organisations with their cloud transformation journeys, and we see 5 common mistakes that cause costs to soar - and hopes of reduced IT costs to be unrealised.

5 common cost traps of cloud transformation

1. A "lift and shift" approach

A common mistake when organisations face a cloud transformation is to replicate existing conditions in the cloud. You simply move an application from the ground to the cloud without any customisation - this is known as "lift and shift". Lift and shift is rarely a recommendation when doing a cloud transformation as this approach fails to capitalise on the benefits of the cloud and makes the solution unnecessarily costly. Instead, you should modernise your solution based on the conditions of the cloud, a so-called "refactoring". A refactoring often means changing or even completely replacing an application or system and adapting the current solution so that it takes advantage of the built-in benefits that the Cloud can provide, such as dynamic scalability, elasticity, self-service capacity, measurability and more. By optimising and adapting your resources based on the new conditions that exist in the cloud, you can take advantage of the cloud's benefits linked to flexibility and efficiency - and reduce costs. 

2. Incorrect choice of architecture

Choosing the right architecture for your new cloud environment is the key to making the transformation happen. The right architecture is something that should be considered on several levels. To maximise the value of a cloud transformation, you should take advantage of available services. How these should interact and which of the services should be used requires a well thought-out architecture for the specific purpose. See it as an architecture within the architecture. 

If the wrong choice is made, you may eventually be faced with situations where the environment does not fulfill the set requirements for security and scalability, for example, and making changes in retrospect risks being costly. It is common to choose an architecture entirely based on a recommendation and without proper knowledge of your needs or the supply on the market. The problem with this is that the architecture of your cloud environment risks being unnecessarily expensive. There are often other solutions you can choose instead - without sacrificing either functionality or performance. However, this requires expertise - so get help! Critically review recommendations and try to find alternatives that do not compromise the requirements.  

3. Indiscriminate use of Enterprise versions

Many organisations fail to carefully consider their needs in relation to the resources they need in the cloud. With little knowledge of their needs, many organisations instead go for the "high ground" and randomly choose so-called "enterprise" versions of different cloud services - when a standard version of the same service might have been sufficient. It may be tempting to assume that it is always best to choose the most comprehensive version, but this can lead to unnecessarily high costs. Carefully evaluate whether standard versions can fulfill your requirements before choosing an enterprise version. 

4. Uncontrolled Capacity Planning

Predicting the capacity needs of the business is a challenge for many organisations. It is simply difficult to estimate their capacity needs and how they might change over time. Capacity needs may be constant for some organisations, linear for others, exponential for a third, and seasonal for a fourth. All these scenarios can lead to over- or under-provision of resources. Making basic estimates and putting in place accurate monitoring that detects changes in capacity needs early and thus scales up/down capacity as needed is crucial to avoid unnecessary costs. Cloud services typically have in-built capabilities to support 'business compliance'. But it takes the right knowledge to capitalise on these capabilities. 

5. Lack of the right competences

Moving to the cloud increases the complexity of IT delivery and thus requires new competences. Lacking the right skills in cloud transformation projects often leads to inefficiencies, wrong choices and increased costs. Plan for the necessary competences in the transformation and involve qualified resources early on. Use consultants or hire resources with expertise in security, architecture and cloud technologies to avoid unnecessary expenses and ensure a smooth transition. 

Want expert help to create the right conditions for your cloud transformation journey? At Accelerate at Iver, we have consultants with the right cutting-edge skills to cover all the needs organisations have to implement a cloud transformation. Through technical know-how and experience from many similar projects, we help your organisation succeed. Read more about Accelerate at Iver or get in touch via the form below.