Looking beyond basic cloud economics: Part One

A lot of the ‘low hanging fruit’ for cloud migration has now been consumed. The maturity of cloud in the marketplace means that, for most organizations, the bulk of those self-contained or obvious applications will now be happily sitting in a company’s cloud platform of choice. Even larger and more complex enterprise-grade solutions that were seen as daunting to migrate, like Enterprise Resource Planning (ERP), are by now partially migrated or have cloud migration projects in planning.

But the application layer itself is just one part of the cloud opportunity. Supporting software like ERP is a large number of highly connected underlying technology functions, feeds and processes, as well as a complex and often scantly understood commercial and license real estate. Initially many businesses left this supporting infrastructure alone, outside of their cloud migration strategy. Or, perhaps worse, focused on a ‘lift and shift’ mentality where gains are limited to the economics of hardware and hosting.

As Gartner notes in their Market Guide for Oracle Cloud Infrastructure Professional and Managed Services 2022 report, getting good value out of moving infrastructure to the cloud isn't straightforward. The uncertainty, complexity and pace of change associated with the shift to cloud is significant and the associated opportunities, risks and threats need careful consideration. The guide (in which Inoapps is featured as a representative vendor) reports a one third jump year over year relating to the volume of inquiries Gartner receives around Oracle Cloud Infrastructure (OCI) consulting, migration and managed services. But they point out, as we know, that it takes expertise and experience to know where and how to optimize your investment.  

All this leads us to the subject of this blog series, where I’ll be exploring the facets of cloud infrastructure to consider to realize the greatest savings and efficiencies.

Here at Inoapps, a key tenet of cloud migration is to look beyond cost and pure headline fiscal values around compute components like the cost per CPU hour, or GB of storage, to focus on the ability to streamline operations. Focusing on the outcomes of a solution and moving away from backend inputs elevates the discussion from being a simple economic decision focused on the cost of ‘hosting’. Looking beyond basic hardware economics presents other compelling benefits alongside savings. This is not to say that cloud, especially Oracle Cloud, may not provide compelling economics for these factors, but considering these alone ignores the greater value to be realized.

We’ve seen that cloud deployments come into their own when customers consume Platform as a Service (PaaS) solutions as opposed to just Infrastructure as a Service (IaaS) models. IaaS in many ways differs little from co-location solutions, even where a third party is abstracting the support component away. As such, while it may be possible to reduce infrastructure costs associated with compute, storage and network resources, these tend to be limited in their overall impact when contrasted with the cost of the software that runs within the infrastructure. Indeed, organizations have already become adept at using technologies like virtualization and Hyper Converged Infrastructure (HCI) to drive out unnecessary compute costs.

In this series I’m going to discuss our experiences gained from working with a wide spectrum of customers of different sizes across a range of industries. I’ll explore the benefits and savings they’ve unlocked when migrating on-premises solutions to cloud PaaS in a true ‘move and improve’ sense, as opposed to the aforementioned ‘lift and shift’ approach.

A true PaaS solution offers customers a range of benefits. These include but, as always, are not limited to:

1. Elastic capacity. PaaS services should offer the ability to scale up and down in response to demand. While much of the conversational focus here is on using elasticity to cope seamlessly with peaks in demand, these also offer cost reduction opportunities—these are explored and illustrated in the next part of this blog series.
   
   
2. Operational efficiencies. When the vendor takes on elements of management inclusive in the cost, they do this at an economy of scale that is unlikely for a third party to be able to match. This allows customers to focus on the outcomes and business value of the products and solutions they rely on, and to move away from being primarily concerned with ’keeping the lights on’. Focusing the operational budget of the IT department around deliverables, as opposed to maintenance, affords companies a significant value-add. While this may initially seem like an opportunity that’s hard to quantify, very few organizations are free of technical debt or project backlog, and freeing up resource time to focus on these provides clear value.
   
   
3. Standardization. With PaaS, the cloud vendor manages the underlying deployment. This means the customer has a ‘safety in numbers’ benefit of ensuring that their deployment conforms to the standards the vendor sets out. As such they are highly unlikely to ever find themselves as a niche or edge case from a support perspective, or on a hardware/software platform that finds itself either as second tier or, worse still, de-supported. It is this standardization that also allows the cloud vendor to provide an ‘as a Service’ approach that includes management of the underlying stack at an economy of scale that helps organizations drive the cost out of their own business-as-usual activities with cloud computing’s inherent elasticity.

So the real value of cloud adoption is about a lot more than headline cost numbers. This means there’s a lot to consider in building a better cloud ROI case, getting a better ROI perspective on moving infrastructure to the cloud, or avoiding overspend in the cloud. In the next part of this series, I’ll explore how elasticity can significantly reduce cost. You can read more about it here.