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Moving to the cloud proving too costly for businesses

By Shannon Williams
Fri 28 Feb 2020
FYI, this story is more than a year old

While moving to the cloud remains a top priority for most organisations, the process of moving is proving to be more costly for businesses than originally expected, according to new research out of the UK. 

Capita’s Technology Solutions' ‘From Cloud Migration to Digital Innovation’ report revealed more than half of businesses (58%) found moving to the cloud has been more costly than they envisaged.

However, the research says that cloud migration (72%) remains the top transformational priority for most organisations, ahead of process automation (45%), big data analytics (40%), and artificial intelligence/machine learning (31%). 

Capita says this is a further indication that organisations see cloud as a core component to effectively enabling next-generation technologies.

The report surveyed 200 IT decision makers, and found reduced cost (61%), improved speed of delivery (57%), and increased IT security (52%) as the main reasons organisations are looking to move to the cloud. However, 90% of respondents admitted that cloud migration had been delayed in their organisation due to one or more unforeseen factors. Issues such as cost (39%), workload and application re-architecting (38%), security concerns (37%), and skills shortages (35%) all point to a process that is more complicated than expected.

“Cloud adoption is a critical foundational step towards opening up real transformative opportunities offered by cloud-native technologies and emerging digital platforms and services. While some forward-thinking organisations are able to keep their eye on the goal, the complexity of the migration and application modernisation process tends to introduce delays and cost-implications that slow down progress,” says Wasif Afghan, head of Cloud and Platform at Capita’s Technology Solutions division.

According to the report, on average, those businesses asked had migrated 45% of their workloads and applications to the cloud. However, this did correlate to organisation size as organisations with more than 5,000 employees have further to go, with less than a third (31%) of workloads and applications migrated. This could be the result of having larger, more complicated systems, the report suggests.

Nearly half (43%) of respondents found security to be one of the greatest challenges they had faced during their migration. A lack of internal skills (34%), gaining budget approval (32%), and progressing legacy migration solutions (32%) were other significant challenges organisations had faced.

The report shows half of respondents found their organisation had to ‘rearchitect’ more workloads and optimise them for the cloud than they had expected. Further, only just over a quarter (27%) found that labour/logistical costs have decreased – a key driver for moving to the cloud in the first place, Afghan says.

“Every migration journey is unique in both its destination and starting point. While some organisations are either ‘born in the cloud’ or can gather the resources to transform in a relatively short space of time, the majority will have a much slower, more complex path," he says. 

"Many larger organisations that have been established for a long time will have heritage IT systems and traditional processes that can’t simply be lifted and shifted to the cloud straight away due to commercial or technical reasons, meaning a hybrid IT approach is often required," Afghan says. 

"Many organisations haven’t yet fully explored how they can make hybrid work for them, combining the benefits of newer cloud services whilst operating and optimising their heritage IT estate."
 
Despite some of the challenges outlined in the report, the majority (86%) of respondents agree that the benefits of cloud are compelling enough to outweigh its downsides. For more than three-quarters (76%) of organisations, moving to the cloud has driven an improvement in IT service levels, while two-thirds (67%) report that cloud has proven more secure than on-premise.

Overall, three-quarters of organisations claimed to be satisfied with their cloud migrations, the report shows. However, only 16% were ‘extremely satisfied’ – which Afghan says indicates most organisations have not yet seen the full benefits or transformative potential of their cloud investments. 

In addition, 42% of respondents currently believe that cloud had ‘overpromised and underdelivered’.

“It’s no longer enough to think of cloud as simply a way to benefit from initial cost savings or just another place to store applications and data," says Afghan. 

"Today, the move to cloud is driving a spirit of innovation right across the enterprise, paving the way for advanced digital services to be rolled out in a highly accessible, faster and more cost-effective way – whether that’s AI, RPA, complex data analytics or machine learning," he says. 

"Only through the alignment of IT and lines of business leadership – in terms of goals, vision, direction and mindset – can organisations fully unleash the potential of cloud to address their key business objectives, whether that is improving business agility, delivering an enhanced customer experience or enhancing business efficiencies.” 

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