As technology continues to advance, companies must constantly evaluate their IT infrastructure and determine whether it is more cost-effective to maintain on-premises or move to the cloud. In this post, Braden Pitts, VP of Technology for MJ Insurance (one of the largest privately held insurance agencies in the US), provides key insights into the benefits and considerations of cloud migration and suggestions for effective cost management.
First and foremost, it is essential to “go explore” and find trusted advisors who are knowledgeable about cloud computing and can help steer your organization in the right direction. This may include cloud providers such as AWS or Microsoft Azure and consultants who specialize in cloud migration. By seeking out these experts, you can better understand the costs and benefits involved in cloud migration and make informed decisions about how to proceed.
One common misconception about cloud computing is that it is inherently expensive. However, Pitts emphasizes that this is not necessarily the case. While it is true that moving to the cloud can involve upfront costs, such as those associated with migration and training, it is essential to consider the long-term cost savings that cloud computing can offer. For example, cloud services like AWS can provide enterprise-grade services at a fraction of the cost of on-premises solutions.
It is also important to consider the potential costs of not exploring the cloud as an option. Maintaining on-premises infrastructure may be more expensive, particularly in terms of lost opportunities for innovation and security. By not taking advantage of the benefits that cloud computing can offer, companies may be left behind as their competitors move ahead with more agile and cost-effective solutions.
In order to determine whether a system should be maintained on-premises or moved to the cloud, the first consideration is whether it is a core system that will be a long-term part of the ecosystem. On-premises costs to consider include licensing, as well as the costs of redundancy, such as failover capability and high availability strategy. Taking a business usage perspective is important to determine whether the application is a gold tier and requires mission-critical support.
When conducting cost analysis, it is essential to take into account all of the factors involved in both on-premises and cloud infrastructures. This may include recovery point objective, recovery time objective, generator and battery backup, carrier redundancy, and other hidden expenses like licensing. By breaking
down the cost overheads per hour pricing, companies can get a like-for-like comparison between the private stack and cloud options and make informed decisions about which solution is best for them.
One of the key benefits of cloud computing is the shared accountability model that cloud providers like AWS offer. In this model, the provider manages some of the infrastructure and security aspects, freeing companies to focus on other areas of their IT infrastructure. This can ultimately lead to cost savings and increased agility, allowing companies to innovate more quickly and respond to changing market demands.
To effectively manage cloud costs, there are several tools and strategies that companies can use. For example, built-in tools such as cost explorer, billing and service utilization alerts, and set budgets for utilization can help companies monitor and manage their cloud services. Additionally, industry partners such as InterVision can provide valuable insights into the utilization of SaaS platforms (Software-as-a-Service and licensing for large enterprises.
Other cost-saving mechanisms include using cost-saving plans or reserved instances for resources that will be kept long-term for a significant discount. Companies can also talk to representatives at cloud providers like AWS or Azure to understand commitment thresholds for discounts but should be proactive about asking as providers may not always offer this information unprompted.
In addition to providing valuable insights into cloud migration and cost management, Pitts also underscores the importance of a multi-dimensional approach to ROI. This includes not only financial ROI but also mission and human ROI. Sometimes a project may have a negative financial ROI but a positive mission and human ROI, which can be important for growth and innovation.
Ultimately, the decision to move to the cloud is one that requires careful consideration and evaluation of all the costs and benefits involved. However, as technology continues to advance and competition increases, it is becoming increasingly clear that the cost of not exploring the cloud may ultimately be greater than the cost of migration. By seeking out expert advice and taking a multi-dimensional approach to ROI, companies can effectively manage their cloud costs and stay ahead of the curve in a rapidly changing digital landscape.
