CIOs: Don't let the cost of cloud migration hold you back

In 2024, one fact is clear: The cloud aids business success. Cloud migration isn't just an operational upgrade but a highly strategic financial strategy capable of unlocking up to $1 trillion in business value. Cloud benefits extend from reduced operating costs -- including infrastructure, labor and energy expenses -- to enhanced scalability and operational efficiency.

Most organizations have caught on to these benefits. Today, more than half of all corporate data exists in the cloud, up from 30 percent in 2015. This dramatic shift illustrates the cloud's crucial role in modern data management and sets the stage for a long-overdue discussion of the cloud's financial implications.

Cost remains one of the most prominent barriers to successful cloud adoption -- but living in the cloud doesn’t need to tank your IT budget. With a flexible cloud strategy relying on automation, hybrid and multi-cloud adoption, and innovative management tools, CIOs can maximize their investment and realize dramatic ROI from the cloud.

Cloud computing is (still) the future

For years, many industry leaders delayed cloud migration based on outdated worries, including perceived security risks, loss of control and talent gaps. But recent innovations have alleviated those concerns.

With the right partner and proactive security measures, the cloud can be just as secure as legacy infrastructure. Seamless SaaS-based cloud models enable CIOs to maintain constant access to their data, regardless of geographic location. And managed service providers (MSPs) are fully capable of bridging talent gaps, reducing costs associated with cloud data storage.

Still, many CIOs balk at the idea of cloud migration, primarily due to its steep costs. Leaders can mitigate those costs effectively -- however, before encroaching on that discussion, I should emphasize that cloud adoption is vital to business continuity. The cloud delivers:

• Improved scalability.
• Reduced infrastructure and labor costs.
• Better availability for remote stakeholders.
• Access to emerging technologies like generative AI.
• Up to 50x cost savings from reduced energy use.
• Fewer downtime-related outages.

The benefits of cloud computing and storage are undeniable -- and they’re becoming even more persuasive as commerce and business become increasingly digital.

The origins of increased cloud costs

According to McKinsey, 65 percent of IT leaders expanded their cloud budget after the pandemic. Many increased their budgets dramatically. The average healthcare and manufacturing organization doubled their expected cloud expenditures between 2020 and 2024, followed closely by a 1.8x increase for companies in the banking and public sectors.

These severe spending increases stem from the same source: An uptick in digital commerce and work during the pandemic. Today, the pandemic’s impact remains, with online spending spiking 20 percent since 2020. Our digital economy needs the cloud because it enables always-on connectivity, ensuring all stakeholders maintain access to data when they need it most -- regardless of where they are.

Data generation has reached new heights alongside digital transformation. Statista estimates that global data storage will reach 180 zettabytes by next year, a 200 percent+ increase since 2020. Storing, protecting and processing these massive stores of organizational data is a costly and resource-intensive task, especially if your cloud strategy hasn’t adapted in the past few years.

How to effectively manage your cloud budget

Leaders can improve their cloud spending by:

• Emphasizing beneficial data storage and cleansing practices: Unnecessary data comprises a significant amount of many organizations’ IT budgets. Industry research indicates that 33 percent of all corporate data is irrelevant and 52 percent is “dark” or uncategorized. Because it cannot be analyzed or used to inform strategy decisions, dark data is, in effect, useless. Worse, it’s expensive to store.
  
  Therefore, effective data management, particularly the elimination of redundant data, plays a critical role in cloud budgeting. By purging unnecessary data prior to migration and maintaining a streamlined data inventory, organizations can significantly reduce their cloud storage costs.

• Adopting a hybrid or multi-cloud strategy: During the initial rush to cloud adoption, many organizations opted for an entirely cloud-based storage solution. In time, many have discovered that a diversified approach to the cloud, incorporating both public and private clouds, can offer a more cost-efficient solution.
  
  For example, organizations may decide to store sensitive data on native legacy infrastructure and less structured or critical data on a public cloud. This strategy facilitates enhanced disaster recovery options and provides a buffer against vendor lock-in, offering more leeway for financial negotiation.

• Working with a cloud management partner and/or toolkit: Cloud management tools can offer invaluable insights into usage patterns and inefficiencies, enabling organizations to optimize their cloud expenditures through strategic resource management. Additionally, MSPs and other cloud partners can provide critical resources, including knowledgeable labor and 24/7 maintenance, keeping infrastructure costs down and uptime high.

• Considering innovative technologies: One of the cloud’s greatest promises is its provision of innovative technologies like AI, machine learning (ML) and automation. Leaders who integrate these technologies can make significant process improvements, drive efficiencies and identify unnecessary cost centers.

What tomorrow has in store for the cloud

Cloud migration isn't about immediate cost savings. It’s about unlocking long-term strategic value and a competitive advantage. How? By taking an adaptive approach to cloud computing and storage.

CIOs must consider their organization’s unique challenges before embarking on a cloud journey (or attempting to mitigate their current cloud expenditures). After all, the needs of one organization will differ dramatically from the next.

Ultimately, by embracing the cloud while actively managing its financial aspects, organizations can position themselves for sustainable growth and success in the digital era.

Photo Credit: ImageFlow/Shutterstock

As President and CEO at InterVision, Jonathan Lerner thrives on pushing the boundaries of what’s possible, transforming business through the evolutionary power of leading-edge technology. Jonathan has spent the last two decades inspiring high-performance teams to define market differentiating strategies that deliver operational excellence and drive profitable revenue growth. His executive leadership spans multiple industries including financial services, capital markets, technology services, professional and managed services, retail, logistics, distribution, public sector, and telecom.