Post by Michael Sebastian Nanfeldt

All the things we discuss with our customers when they’re considering moving to the cloud

2018 September 19th

What is the cloud really? What can the cloud do for you and your business? What does it demand of your business? What are the risks of the cloud? And are you going in the cloud at all?

The questions are plentiful. At least the answers are just as many. We make sure to give you Delegate’s version and input to the cloud, based on the discussions we have with our customers.

Let’s start with the short answer to what the cloud is: In its pure form, it is the outsourcing of your IT—from backup and database to settlement of solutions.

Your server space is rented and your applications are stored in large central data centers. In short, this is the cloud. It can probably best be described as what we also call Software as a Service (SaaS), simply built in a way that is easy to start up, easy to expand and minimize, and with a simple usage-based pricing model: You pay for what you use.

A brief explanation. Just as promised.

What can the cloud do for your business?

With that brief explanation in mind, it’s obvious to start with all the great business prospects at the cloud. (Yes, we’re not exactly neutral, but give us a chance to substantiate our claim).

There are three overall business perspectives to consider:

  • Finance
  • Security
  • Efficiency

Consider them umbrella terms that cover various benefits and business aspects.

Let’s go over them one by one.

Finance

We often talk to our customers about 4 financial benefits of going into the cloud.

Benefit 1: You pay for what you actually spend. The cloud is, if anything, a scalable and flexible solution built to handle varying amounts of data. In the cloud, your data shares server space with a number of other organizations, with all the economies of scale it provides. So you only pay for what you use, and can turn up and down your expenses depending on your needs.

Benefit 2: Minimizing energy costs. With the cloud, you avoid having servers that are not fully utilized (because they certainly do not), and which therefore put their significant imprint on the electricity bill.

Benefit 3: No large investment costs. In the cloud, you let others know about the large hardware investment, and completely avoid up-front having to invest in servers, with uncertainty about how much space you actually need both now and in the long run. You should also not invest in backup servers, in case the primary ones go down, and then you completely avoid worrying about whether your investment is obsolete before you have set it up.

Benefit 4: Savings on employee optimization. When we look at the customers’ expenses for IT, salaries for heavy IT employees (which we know can be difficult to find) are a fairly significant item. There is a lot to be gained here by releasing some of these resources for non-server tasks and by optimizing workflows and processes, which are a natural part of the transition to the cloud.

We are not talking about cutting staff but about freeing up time for tasks that can be felt on the bottom line.

It should be quite clear that the financial incentive is great when we’re talking about “must vs. must not.”

But this does not operate in a vacuum.

Safety

Security is also one of the themes we always turn to when we talk about the cloud with our customers.

The fact is that data is always exposed. Always and no matter where it is. Companies today are so dependent on data and systems that a technology crash can paralyze an otherwise well-functioning business completely. We have seen it several times over time.

If we are to protect ourselves as best we can against hackers, viruses and ransomware, a solution in the cloud will always be more secure than an on-premise solution. The mere fact that the major providers of cloud services have the cloud as their major focus area, means that they put all their efforts into creating a secure solution for their customers. The opposite would ruin their business… and mammoths like Microsoft, IBM, Google, and Amazon cannot live with that.

Therefore, the security of, for example, Microsoft Azure or Office 365, is completely second to none, and we dare to guarantee that their budget for security far exceeds what Danish companies will be able to do for their on-premises solution.

In that light, the security benefits of the cloud are pretty obvious. The cloud provides security—both for you and your customers. And even though you probably already have control of the GDPR, we should probably mention that the cloud is and will be the best tool for securing and managing data on your customers!

And thus we arrive at the third and final umbrella.

Efficiency

Efficiency is the third business perspective we talk to our customers about.

A classic IT organization spends the vast majority of their resources on keeping the machine running, by maintaining and updating existing solutions. Only a fraction of their time and resources go to designing and developing something new. The time is simply not there.

In the cloud you can move on from the inappropriate pattern. Switching to the cloud is simply a huge opportunity to standardize and automate both processes and solutions. The result is faster Time to Market with new applications and tools that can lift your business and be seen on the bottom line. Focus shifts from maintenance to innovation.

A 2018 study by McKinsey emphasizes the efficiency perspective in the cloud, and reasons that companies will be able to save 30-40% of their IT expenses (salaries are not included in the calculations) by going from on-premises to cloud. The perspective is there without a doubt, but if you want to achieve that kind of financial gain, it has to be done properly. You need to think in terms of efficiency, and not do it half-heartedly, and simply move existing solutions built for on-premises IT.

But what about the risks?

If you take the leap as a result of the right preparation, you naturally minimize risks. But as with all new initiatives and changes, there are of course a number of things to pay extra attention to and traps to avoid falling into!

Studies show that the majority of all companies that migrate to the cloud misjudge their capacity needs. They simply base their cloud needs on their on-premises usage. The result worldwide is remarkable: on average, companies pay 36% more for cloud service than they actually need. This is primarily due to the fact that many companies’ on-premises use is not optimized and utilized properly. They therefore have a lot of unnecessary expenses on their on-premises solution, which they drag with them into the cloud.

According to Dr. Jonathan Koomey from Stanford, it stands to reason that only 20% of companies will achieve a saving by migrating to the cloud if they copy their server data directly. The remaining 80% will see a significant additional expense. The picture, on the other hand, is quite different if even the same companies migrate after they actually have a true picture of their needs. In that case, 100% of the companies surveyed will experience a saving by going into the cloud!

Fortunately, the solution isn’t big and complex, but it is hidden in the thorough preparation that we always recommend to our customers before they take the plunge!

Another risk (or threat if you will) that we always face with our customers is the maturity of the organization. It may sound like a phrase, but if the organization is not ready for the cloud and the journey is only a push from the top that requires cloud transition, the transition will never be the success it can be.

In that regard, there are a few things we always get around: Why do you want in the cloud? And what is the goal?

You should ask yourself the same thing. It is useless not only to want cloud for cloud’s sake, and not at all to start the journey without a clear goal for the organization.

We’ve said it before and we’ll say it again. PREPARATION is the key to success in the cloud. It is also the way you get around what we call risks or threats to the successful transition to the cloud.

What does moving into the cloud demand of your business?

It’s really a question that requires a little extra column space, but let’s briefly uncover the answer anyway.

Switching to the cloud is just that: a switch. This gives rise to and almost requires an examination of the IT organization. The workflows are new. The same is true of the possibilities. So it is misunderstood if you go into the cloud with a presumption that it is just something you are doing and that you can maintain the status quo. You cannot do that.

If you really want to feel the effect of the transition to the cloud and achieve success with the journey, the organization must be involved and optimized. Of course, this should not be done on the back burner, but should be considered as part of the planning, so you have the full picture.

In order to get better at the issues, which we know from experience fill a lot with our customers, we have chosen to dedicate a separate post to the topic. You can read the post “The IT organization in a cloud perspective” here.

Should you move into the cloud?

The simple answer? Yes! There are (almost) no exceptions.

Let’s board the helicopter and talk about the broad picture that covers virtually all Danish companies and organizations.

So… if we start from scratch, the cloud isn’t riskfree. You can fall into the typical traps and pay dearly for a need you do not really have. But you can afford it, and we almost dare to guarantee that you can get around that trap completely if you do your homework properly.

Leaving that risk aside, the biggest barrier is human: Uncertainty.

Few are in fact ready for change, and the shift from an on-premises solution to the cloud is shifting the status quo. It is unknown territory and the personal consequences (or the possibilities if one wears that hat) are not 100% clear.

But our recommendation is clear. You have to be in the cloud. The uncertainty and the thorough preparation that minimizes risks are fortunately affordable.

In addition to the benefits we have already covered, there are two that have not fit in, but which may be important to many organizations. So, let’s just round them up (if you’ve come this far, you might as well get the last one!).

The first is that with a cloud solution you have access to the latest technology first. You do not have to sit and wait but can access and exploit the potential of all new cloud applications to optimize your business as the first.

The second is that the cloud is the environmentally friendly choice. In a world where we have to take into account the imprint we make, it is worth taking, and it can be important for your company profile that you do what you can to minimize your impact on the environment.

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