Does transitioning to cloud actually save you any money in the long run?

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CEO in Software, 11 - 50 employees
We do a disservice when we tell the industry that, "Oh. Go to cloud because it's cheaper," because it isn't always cheaper. It still may be the right choice for many applications, even apps that aren't specifically benefited from being in a cloud, it still may be the right choice for the direction of your company and the prioritization of work habits of your employees. But cloud is not necessarily cheaper, especially not if you run a well-planned organization. When I look at cloud adoption, first I have to look at why are you considering cloud or on-premises? What are the drivers for those decisions? And a lot of those would be the technical choices, some of them might be price.

Next is, "Okay. So, you've done that analysis, you've decided that cloud is right. How have you formulated your opinion on whether it's more cost effective or not, or whether it just fits in your business model appropriately?" And then I'm looking at the things like, "How are we mitigating utilization risk versus something that we can see and touch?" For instance, if I have vSphere in my data center, I can turn off VMs all day long, they don't cost me a dime, but if I have developers spinning up VMs or containers on Amazon or Google, those things are costing me money for every minute, every hour they operate, regardless of whether they're doing anything for me. And there aren't good tools to mitigate those things or manage those risks. The tools need to get better, but taking all of those things into account and taking a realistic view of what is important to you as a company in combination with what you can do if you did it right, versus what you could accomplish in the cloud, I think it's important in almost every single application.
Director of IT in Software, 1,001 - 5,000 employees
There is this general consensus that cloud is how you get better optimization cost per dollar, and that's not the case. Especially when you look at the evolution and the maturity of companies like Workday and Salesforce. Locking into those contracts is a big deal. You could easily, in year three, start to have a significant portion of the value of your cloud spend just doing nothing for you. It's really based on what you're trying to solve for as a company. Automation Anywhere had a hyper growth phase right before I joined, and they were in the tail end of it when I came on board. There were decisions at that time that I am now unwinding around how to optimize capacity. Where I've been inserting myself into the conversation has more been around value and how we squeeze every dollar out of those decisions that we've made around investment in cloud solutions, and then looking forward from a roadmap perspective to say, "Okay. Let's look across our application landscape and see where we can do consolidation. Where can we put to work what we think our core cloud capabilities are and deprecate this other stuff?" In the absence of having better tools to manage this, you're having to spend more time thinking strategically around how you're moving your users to adopting different ways of working in order to get the value out of that. It's hard to say that there's a blueprint to this but I'm hoping that that's the direction we're going because innately I'm starting to see the same trends, especially back in my consulting days.
2 1 Reply
CTO in Software, 11 - 50 employees

No. Most definitely, cloud infrastructure, I don't think there's a blueprint or framework you can apply, it's one size does not fit all.

CIO in Education, 1,001 - 5,000 employees
Cloud migration is not cost savings; if you can get yourself out of that mindset, that's going to help. It's about what makes the most sense for you. Just buying all of that equipment, racking and stacking, and then supporting it and having people having to go and care and feed it, in some instances, still makes sense and in many it doesn't. It's a toe in the water kind of approach. There's no blueprint, but I think you have to have a strategy. As you start to retire systems then you can evaluate, "Okay. Does it make sense to have this here or does it make sense to have somewhere else?"
VP, Customer and Technical Operations in Software, 501 - 1,000 employees
We can spin up a virtual machine that is pretty close to free since we freed up quite a bit of capacity on-premise as we move more services to the cloud. Even though the majority of our production infrastructure's in the cloud, a lot of our corporate infrastructure is on premise because because the ROI is actually much better to keep them running on older hardware that is paid for. This might change when it is time to refresh the hardware, but we are setting servers lasting 5 to 6 years where in the past I would plan to replace every 3 years. We look at every workload and determine the location that makes the most sense.
Board Member, Former CIO in Software, 10,001+ employees
The infrastructure starts to get complicated. Going to the cloud is not cheaper, it's absolutely not cheaper. If it was cheaper, then what you would see is cloud companies don't make very much money, except all of them make tons of money. So, where does that money come from? And it's opaque and they're now all moving, even the SaaS providers, to consumption-based pricing, and this is really, really naughty. The silver lining out of all this is it's going to be job opportunities for CIOs in that kind of role because it's not the marketing people that are going to figure this out.
CTO in Software, 11 - 50 employees
I still think, outside of the McKinseys and analysts in the world, no one's done a true total cost of ownership ROI on cloud versus on-prem and the velocity you get from cloud versus the non-velocity you get from on-prem. It's probably very sector-dependent.
2 2 Replies
Board Member, Former CIO in Software, 10,001+ employees

I can tell you, for Facebook four years ago, anytime the fleet was over 100,000 machines it was economical to build it yourself and, for us, building it yourself was everything; from the data center all the way on up to the machines, the power distribution units, everything. But that's probably changed a little bit.

CTO in Software, 11 - 50 employees

I can tell you for Yahoo, it wasn't. Server utilization was abysmal, so it depends on the rest of the organization.

Director of Technology Strategy in Services (non-Government), 2 - 10 employees
It will transform your costs, but it won't necessarily save them.

And if you don't actually understand what your costs are before you start then it is more likely to increase them.

Especially on the services you now need to consume/uplift because you went to cloud.
5 1 Reply
Community Manager in Software, 11 - 50 employees

That makes a lot of sense . Have you navigated a cloud migration at an organization before? If so, how did you shape your cloud migration strategy?

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