Moving From Datacenter to Cloud: When Do the Cost Savings Start?

Moving From Datacenter to Cloud: When Do the Cost Savings Start?

[With cloud], it’s not that we’re not happy with the capabilities and the value. It’s simply that I think it would be hard for us to point out any savings, per se, because we haven’t got rid of our datacenters. We haven’t got rid of our staff. We’re running two worlds at once.

-Mid-level IT Manager

Cost savings: that is what’s most important to the bottom line. It’s often cited by organizations as a reason for leaving a datacenter and moving all workloads to cloud.

One major cost benefit from a full shift to cloud is not having to run a datacenter anymore. No power or cooling costs. No investment in facilities upgrades or improvements. No spending on infrastructure acquisition, or the people costs of deployment and maintenance.

So with those savings incentives, can a move to cloud be accomplished rapidly? Not usually.

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There is inevitably a time when an organization will be hybrid, running operations in both cloud and the datacenter, and paying for both environments.

And as this mid-level manager and Alliance member explains, during the transition when both IT ecosystems are running is not the time when an organization should expect to see cost savings.

Expenses will continue in both environments. And in some cases, maintaining a hybrid environment may be a permanent expense – if there’s sensitive data that management doesn’t want leaving the organization, or workloads that demand zero latency, for example.

Cost of Transition

Cloud usage and corresponding spending will likely start small, but cloud costs include more than what the provider bills for usage. A substantial up-front investment is often required to migrate workloads to cloud, particularly if an application needs to be refactored to take advantage of cloud capabilities. There are also costs associated with integrating the hybrid cloud, connecting cloud data with applications in the datacenter while the transition takes place.

Even with closure on the horizon, datacenter costs may be set for a time, carrying fixed costs regardless of capacity used. However, if a datacenter is slated to be decommissioned once workloads are in the cloud, careful monitoring can at least make sure that improvements and repairs are focused on short-term essentials, not long-term facilities investments.

Staffing Costs

Running two separate IT environments, each with its own ecosystem, requires another set of costs: staffing.

One scenario has the organization incurring personnel costs by hiring new folks to run the cloud environment while current staff manage the legacy workloads in the datacenter.

Another scenario uses current IT employees to maintain the datacenter environment while they acquire new skills to manage cloud. That upskilling will likely require an investment in training and, if cloud usage grows quickly, staff augmentation to keep all workloads operational.

But a long-term view of a shift to cloud can show advantages that will help the bottom line, even if the transition doesn’t necessarily offer impressive short-term savings.


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