Part 1: Setting the Organizational and Financial Foundations

Migrating to any Public Infrastructure as a Service (IaaS) Cloud requires detailed planning in order to maximize the chances of success. This blog post poses a series of observations and questions that must be reconciled prior to the migration to have any degree of objective success. Please note that this is Part 1. This is only a starting point, and 2. This blog will focus exclusively on IaaS Clouds.

What is Cloud?

A cloud service is defined by three characteristics:
1. Provisioning of compute, storage and network over the Internet.
2. The ability to self-execute the provisioning and de-provisioning compute, storage and network resources via an API.
3. A “pay-as-you-go” billing model.

Failure to meet any of these criteria doesn’t preclude a service offering from being compelling. They may even still be in the Cloud, but it would not be considered a “Public Cloud” nor an “Infrastructure as a Service” (and, as such, falls outside the scope of this discussion).

Finance:

Capital Expenditure (CapEx) versus Operational Expenditure (OpEx)
For an Enterprise team, leveraging the Public Cloud involves several obstacles and adjustments. Firstly, the financial team must be brought onboard, and the CapEx versus OpEx discussion must be had. Public Cloud will represent a change for them because it is an OpEx expenditure.

CapEx in a nutshell:
Costs are fully accounted for in the year they were purchased. They are depreciated over a period of years.

OpEx in a nutshell:
Costs are deducted from Gross Profit.
Gross Profit = NetSales – Cost of Goods Sold

It’s actually more complicated than it sounds because the model may be fixed, depending on the level support you require from commercial software vendors. The solution that makes the most sense may be a mix of CapEx and OpEx. For example, proprietary Operating System licenses and proprietary Database licenses may determine your deployment strategies and impact availability, depending upon the terms of those licenses.

As part of the financial discussion, you must consider what software licensing you’ll need and the extent of your “Bring Your Own License” (BYOL) approach. When it comes to Microsoft Windows in AWS, this can be complicated because of the particular way they handle license fees. Dedicated Hosts, a particular mode of deployment, can also be impactful to service availability if the number of applications and their requirements is not accounted for.

Clarity on Migration Costs

Forklift migrations take time. Usually, they have to be organized based on various factors (ease of the lift, project dependencies, etc.). Below is an example of the costs of running workloads in two different locations.

Please note that the charts below are based on experience and are designed to be illustrative and not specific; each situation would have its own unique constraints. The vertical axis is an arbitrary currency figure (for illustration purposes only). The horizontal axis displays arbitrary units of time. The reason for this is simple: absolute time and dollars are not the point; they can vary by size and scope and workload of implementation. The point of the diagram is to illustrate general trends.

The first chart illustrates that during the first part of the migration, IT costs will increase, sometimes appreciably. The first two charts assume an active follow-on program of refactoring.

The second chart uses the same data, shown in total amounts. If applications are refactored to be cloud-native, you may look forward to overall decreased costs.

The final chart illustrates what occurs when applications are not refactored. Cloud costs never decrease, but actually begin to escalate due to the addition of new workloads.

If you don’t implement refactoring and achieve Cloud-native architectures, you will not realize long-term cost savings.

Expect Changes

Is your management team prepared for the long-haul reorganization required for a Cloud implementation?

Deploying in the Cloud will require a different approach to budget expenditures. Failure to adjust will mean the Cloud migration will fail—and some migrations do fail.

Are they prepared to do a triage of their existing workloads, outsource those workloads to a SaaS (where tenable), and drive forward with the workloads that actually define your organization? Finally, are they prepared to analyze the cost/benefit of refactoring applications to be Cloud-native to bring the whole process home?

If Leadership balks at refactoring the workloads to be Cloud-native, it will increase overall costs, not reduce them.

Are they prepared to do the training and shift the cultures of Security, Network Operations, and IT Operations to DevOps? Are they prepared to retrain existing staff or replace them with new staff to assist in the project? If replacement or augmentation is out of the question, will leadership commit to retrain current staff to leverage Cloud—for both the forklifting of existing and the initiation of greenfield Cloud-native projects, and finally the refactoring of the workloads to be Cloud-native?

Are they prepared to make the necessary investments in Cloud security? It is a Public Cloud, after all. Security in the Cloud is a shared model.

Migration to the Cloud will make plain whether the organization’s management team is competent or not. There will no hiding from this.

Middle management will also be held accountable, as every project cost will be precisely accounted for. Are all your projects profitable for the organization?

Finally, Cloud migration can be a complicated process. Start small if you can, with a single workload. Keep in mind the investment you are making in people, process, and your application workload. Use those lessons to inform follow-on workloads (or not! Not every team or workload is right for the cloud.)

Perhaps the best measure of corporate management is how well the careful allocation of resources achieves a productive end while minimizing debt. Well-run organizations stand to benefit greatly from the opportunities presented by the Public Cloud. Poorly run organizations experience escalating costs.

When done well, migration to the Cloud is a transformational event for an organization. Performed correctly, it drives new approaches to application-deployment and workload-processing while dramatically reducing costs and allowing an organization to capitalize on its value creation.

Please click here to continue reading Part two of this series: Setting Technical Challenges.

Lastly, if your organization is currently crafting its Public Cloud migration strategy and hopes to avoid a migration nightmare, please don’t hesitate to reach out to us to learn more about what’s involved and how Anexinet’s expert consultants can help.