Companies are still waiting for their cloud ROI

Everyone jumped to cloud computing to save money but got the opposite. Cloud ROI will require optimization, finops, and refactoring before it lives up to past promises.

Most businesses have many reasons for shifting to the cloud. The most common is to save money. Sadly, it happens pretty rarely, at least in the short term. Instead, as The Wall Street Journal recently reported, company executives say their costs are rising as they shift to cloud computing. 

Now that we better understand the benefits and liabilities of cloud-based platforms, the resulting truth is painful. We’ve learned that most enterprises do not use cloud in business-optimized ways and thus end up missing the promised ROI. 

As I wrote in my cloud computing book in 2008:

Cloud computing is not the savior of IT. It is nothing but a way to deploy your enterprise architecture in a way that has the potential to be more productive and cost-effective. In essence, it is a tool, not a way of life. It is not magic, it is not even new, but if approached correctly, it could be a path toward efficiency.

I was skeptical then, and I’m skeptical now. You can leverage technology with the potential to save money, promote agility, and scale. The scary part is that people making decisions often don’t understand how to get to an optimized solution. In simplified terms, you need to build cloud-based configurations of technology that are better than the “as is” state. Instead, many enterprises just push scads of applications and databases onto cloud platforms and then wonder why their cloud bill is so high. 

It’s easy for everyone to get in a circle and blame bad technology decisions on the deficiencies of cloud computing ROI. The harder but more productive conversation is how to put cloud systems on a more cost- and business-efficient path.

The trouble with the current state of cloud computing is that many enterprises migrated the easy way and they need to migrate again the right way. Most businesses just replatformed their workloads and data on public clouds, making a few changes when they couldn’t be avoided. Now that the applications and data are on cloud platforms, executives are coming to the unpleasant realization that the problems and limitations of the legacy systems didn’t magically disappear in the cloud. Another unpleasant realization? The only way for business data and applications to find value in the cloud is to rebuild and reconfigure for cloud-based efficiency. 

It’s understandable that the conversion can was kicked down the road with a lift-and-shift approach to migration. Proper conversion involves a huge amount of work, including:

  • Redoing data storage systems that are chock full of redundancy without a single source of truth
  • Finding missed opportunities for better business processing such as having analytical systems that plug back into business processes
  • Tapping into the cloud platforms themselves by implementing finops for cost monitoring and optimization
  • Refactoring the applications that should have been refactored before moving them to cloud-based platforms

There’s more, but those are the main task categories.

What went wrong? Not enough people pointed out the consequences of moving to the cloud in less-than-purposeful ways. Indeed, most enterprises were advised to leap to the cloud as soon as possible and figure things out when they got there. That turned out to be bad advice, but I doubt you’ll get an apology for the lack of ROI. More likely you’ll hear excuses like, “We just got to the cloud, so now we just have to work out the kinks.” Or, “We migrated x% of the workloads. The hard part is over.” The bad news? Any variations of those statements are probably untrue. 

I wish I could tell you to implement this tool set or those processes to recover a solid ROI. There is no magic that will fix this problem. You must make an honest assessment of where you are today, find the issues that prevent the anticipated ROI, and eliminate them one by one. The result should be a much-improved system that provides value to the business, often a great deal of value. That won’t come without a lot of work, commitment, and the political fortitude to call this what it is—a misstep. 

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