Avoid Cloud Migration Budget Overruns

The relentless pressure to expedite their digitalization has instigated a widespread shift toward cloud computing, recognizing its integral role in modern business. However, numerous companies have encountered operational inefficiencies and, consequently, financial strain due to inadequately planned cloud migration initiatives. To circumvent these potential challenges and optimize their cloud migration, organizations should first evaluate their unique business requirements, forecast the assimilation of emerging technologies and formulate a comprehensive strategy, according to Rimini Street.

In 2021, consulting firm McKinsey expected just Fortune 500 companies to incur losses upwards of US$100 billion through 2024 because of inefficient cloud migration strategies. Similarly, Gartner Research anticipated 60% of infrastructure and operations leaders to encounter public cloud costs overruns to negatively impact their on-premises budgets through 2024. These financial setbacks underscore the necessity for organizations to view cloud migration as not just a technical endeavor but a strategic initiative that demands meticulous planning and execution. However, "to overcome the barriers of innovation in the region, it is essential to align the executive vision with that of the rest of the staff," says Ricardo Delfín, Leader of Clients and Market for Mexico and Central America, KPMG.

In light of these consequential costs, a cloud readiness assessment should be considered a fundamental planning task before companies begin a cloud migration, according to Gartner. Such assessments meticulously analyze applications, workloads and helps determine the best approach in consideration of a company’s operational needs and business model. Failing to undertake this essential planning process can leave developers with vague specifications, potentially leading to implementation delays, misconfigurations and reduced performance, according to CIO. 

One pertinent example of an accelerated, yet potentially risky cloud migration strategy is rehosting, which involves transferring applications to the cloud without altering their fundamental architecture. However, while this strategy promises swift migration, it frequently leads to complications such as redundant or corrupt data retention and diminished performance due to inadequate configuration, according to Rimini Street. These complications in cloud migrations often result in additional, avoidable costs for companies that could have been prevented through proper due diligence.

According to Deloitte, 88% of surveyed companies consider cloud technology as fundamental to their digital transformation endeavors, stating that it could significantly enhance both revenue generation and operational efficiency. However, challenges such as regulatory compliance, potential operational disruptions during migration and compatibility with existing systems may hinder cloud migration efforts. To address these challenges, it is crucial to recognize that employees might resist the change given their preference to on-premise systems. Therefore, conducting proper training can effectively mitigate their reluctance to change and facilitate a smoother transition, says CIO.

While proper planning is an essential factor of an effective cloud migration, understanding the existing infrastructure and choosing the right combination of technology tools can significantly improve the efficiency of cloud migration efforts. For instance, businesses working with a distributed infrastructure can leverage edge computing technology to help process data closer to the source, reducing latency and optimizing the use of cloud resources. On the other hand, AI and ML technologies can analyze existing systems, identify dependencies and predict potential issues before and during migration.

Altogether, these outlined considerations could help the 50% of Mexican companies currently grappling with the execution of cloud migration strategies due to budgetary constraints, as reported by KPMG. This encompasses the 41% of companies facing skill shortages and the 33% that experience challenges in departmental alignment.