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Navigating Cloud

Unveiling Three Common Mistakes and Charting a Course to Success

Organizations across industries are embarking on a thrilling race to harness the incredible benefits offered by cloud technology. From unparalleled scalability and cost savings to empowering agility and fostering innovation, the cloud promises a brighter future. However, a failure to pay proper attention to planning the strategy for your cloud journey can lead to turbulent skies and unforeseen challenges. In this article, we delve into three common mistakes made by organizations as they move into cloud and reveal how to navigate through the storm while enjoying the journey.

The Cloud has become a hotbed of innovation, igniting creativity, and driving growth. Its vast ecosystem of tools and resources empower organizations to develop and deploy new applications, services, and products at lightning speed. Thanks to cloud technologies, businesses can experiment, iterate, and bring ideas to market faster than ever before. But what happens when they fail to plan for these changes, or when organizations underestimate the cloud’s potential for impact?

Poorly executed cloud transformations have taught some organizations valuable lessons about the contradictions of this transformative technology. The cloud's user-friendly and easy-going nature does not eliminate the need for careful planning, strategic decision-making, and continuous learning. Embracing these lessons will enable organizations to harness the true potential of cloud technology and achieve their desired outcomes, while avoiding the pitfalls that have plagued many failed transformations.

1. Head-first without a cloud strategy

 

Would you embark on a year-long, cross-country journey without a plan? Surprisingly, many organizations do just that when it comes to their cloud journey. Attempting to adopt cloud technologies without a clear understanding of business needs and anticipated outcomes can quickly turn into a complex puzzle. Without knowing the starting point and end goal, creating a roadmap becomes a daunting task, leaving teams vulnerable to unexpected issues and pitfalls. 

A well-crafted cloud strategy serves as the cornerstone for an organization's approach to the cloud. It raises essential questions that help shape their vision and guide decision-making. Will the organization go all-in on the cloud or retain certain workloads on-premises? Will they rely on a single cloud provider or leverage the unique strengths of multiple providers? These fundamental questions form the basis for an organization to define its vision and determine how it will deliver on that vision.

The cloud strategy should align with these principles and decisions ensuring that potential issues can be mitigated and that actions align with the overall direction of the organization. It is essential to make key decisions early on, such as determining how the cloud will be utilized and whether it will integrate with existing, on-premises, technologies. Addressing these considerations from the beginning will help organizations avoid complications and ensure a smooth transition to the cloud.  For instance:

  • Multi-Cloud – Will the organization leverage the services of more than one cloud provider?  This approach can leverage the specialized services of different cloud providers and serve as a business continuity solution as it spreads risk across multiple providers.  However, this approach can lead to increased costs due to egress charges, differences in cloud service providers’ commercial models, increased operational workload to manage cloud deployments, and increased training across multiple vendors platforms.
  • Hybrid-Cloud – Will the organization operate on-premise and cloud together? This can reduce cloud storage costs, address some data residency issues, and alleviate some security concerns. However, this can also result in difficulty scaling the deployed solutions due to lack of technical coordination and poor interoperability between on-premises and cloud environments (e.g., performance issues caused by underlying network not being modernized)
  • Migration approach – Will the organization modify applications to take advantage of cloud, or move them as-is? Applications designed for use on-premises may need some redesign to take full advantage of cloud or to reduce the potential for bloated costs. But there may be circumstances where that’s not possible and it’s urgent to move applications without doing any re-engineering or refactoring. Knowing those risks and cost factors is important to making a sound decision.

With so many choices to be decided on before any workloads are moved, it’s clear a well-defined application migration strategy is an essential component to a solid cloud-strategy.  Without considering how cloud will be used and how the workloads will get there, organizations will lack:

  • A clear strategic direction for what is driving the cloud transformation, aligned with overall business and technology strategies and desired outcomes
  • An understanding of the necessary cloud services, operations, and frameworks to meet goals
  • Proper cost-containment measures and governance structure 

In cloud, there are few up-front costs to establish a presence, but organizations cannot “sweat” their assets like they can on-premises which means ongoing, and usually increasing investments. Without careful and early decision-making, cloud costs can be significant and difficult to retroactively fix. Early alignment of business objectives to investments towards business goals can help be a deciding factor in how the cloud is deployed and managed. Thoughtful decisions towards cloud architecture and governance, and how workloads are deployed, can help to contain potentially run-away costs, and ensure that investments align with business objectives.

2. Lack of Cloud Governance and Transparency

 

An assessment on the impact for the organization, its capabilities and processes should be done to decide on an operating model or Cloud Center of Excellence (CCoE) to support governance. Organizations need to consider how the implementation of cloud services will impact the day-to-day work of their employees to take full advantage of task automation. The governance model will lay out how, in collaboration with decision makers in both IT and the lines of business, KPIs (key performance indicators) will be defined and measured, and resources are to be allocated systematically rather than haphazardly. Governance provides business rules to be adhere to and provides a mechanism for ensuring the cloud environment is controlled without restricting the freedoms inherent in cloud.

Within this governance, Cloud FinOps and DevSecOps practices can help to make sure everyone takes ownership for their cloud usage, there is appropriate decentralized decision making, and periodic reviews. These practices ensure that any software developed and delivered is secure and reliable and is meeting sound architectural practices specifically for cloud. These best practices help to ensure that the strategy evolves in tandem with the organization's changing needs.

Easy-to-use cloud provisioning tools and service models from hyperscalers can lead to high cloud service adoption but pose a potential lack of control for companies. Individuals may be able to spin up cloud instances without central coordination or oversight, contributing to a lack of control and governance, and increased risk in the form of unforeseen costs. This can be compounded by cloud services being purchased independently by different departments or individuals using the "credit card principle". Without governance in place to pre-empt the risk, it can be challenging to get control over spending and gain visibility into the total allocation of IT spend, especially in a multi cloud environment. Additionally, without proper governance and transparency, it is difficult to maintain effective cloud management and harness the benefits, especially if the cloud solution in place resembles more of a patchwork where uncontrolled pieces are continuously added, rather than a coherent organized solution. 

Establishing standards for automation, self-service, DevSecOps and Cloud FinOps capabilities can help. However, to avoid issues, organizations need to establish proper governance measures and practices for specifically managing their cloud resources and find the right balance between centralized control and decentralized ownership. Lastly, organizations need to understand that all applications might not be meant for the cloud and perform a thorough application dispositioning exercise to determine this. 

As a part of establishing governance and transparency, organizations should consider implementing a structured, central cloud governance framework, aligned with the IT target operating model, and create a CCoE which further helps ensure proper support in cloud migrations by working as a broker for the business, and coordinating the organization's cloud efforts. The framework and structural enablement of a CCoE should include policies outlining resource usage guidelines, access controls, and compliance measures. Beyond a CCoE, real-time monitoring tools should be deployed to track resource utilization and avoid shadow consumption. Regular audits should be conducted to ensure policy adherence. Lastly, a designated guardian to oversee governance can help improve accountability, facilitate better communication and collaboration amongst departments, and ensure that resources are used effectively, thereby reducing costs and mitigating risks associated with adoption.

3. Misunderstanding complex pricing models and their implications

 

Cloud vendors and sourcing alternatives offer a variety of pricing models, each with its unique cost structure and tantalizing promises of cost savings, scalability, and flexibility - like a pot of gold at the end of the rainbow. However, without proper experience, navigating the intricacies of cloud pricing models and TCO-calculation tools can be daunting, difficult to use or understand.  Especially when adding the complexity of a multi-cloud environment and reconciling costs across multiple vendors. 

All major cloud service providers offer cost estimation tools that can be used to create initial fiscal targets and built upon to estimate future costs.  It’s important to note that these tools will provide quality estimates based on the information provided, but do not factor for rate increases, increasing numbers of transitions, or tech spread.  Best practices are to use vendor cost estimates to create a baseline, then establish a longer-term budget that factors in ongoing growth and price increases.  This can be done using standardized tech growth and price estimates based on a standard annual percentage increase.  While this will only ever be an estimate based on what is known today, regular monitoring and pricing reviews as part of governance should help to avoid sharp, unpredictable increases.

By ensuring a holistic understanding of pricing implications, the organization will also be able to optimize its cloud spending, forecast future costs, and make data-driven decisions that are aligned with its business objectives. By fostering a culture of financial literacy and proactive communication, organizations can also demystify cloud pricing and make informed decisions aligned with budgetary constraints.

Summary

 

In the ever-evolving landscape of technology, organizations face the daunting challenge of navigating through turbulence and avoiding costly mistakes. To conquer this digital realm, they must be equipped with a well-defined cloud strategy, proper governance, and a holistic understanding of cloud pricing models. 

Without a clear understanding of their business needs and objectives, even the most mature organizations can find themselves on a treacherous and expensive path that is difficult to recover from. To regain control of their cloud investments, organizations must assess and understand their business objectives, crafting a comprehensive cloud strategy that places their organizational goals at the forefront. This strategy must be accompanied by clearly defined Key Performance Indicators (KPIs) and regular cost assessments to ensure alignment with financial objectives. 

While the allure of easy-to-use cloud provisioning tools and service models from hyperscalers can lead to a rapid adoption of cloud services, it can also give rise to spiraling costs if not effectively managed. To avoid these pitfalls, establishing proper cloud governance and practices becomes imperative in fostering a healthy and productive cloud practice. By embracing these pillars of success, organizations can confidently navigate the cloud landscape, harnessing its full potential while avoiding the pitfalls that lurk in the shadows.

What is Deloitte’s cloud smart approach?

 

Deloitte is passionate about helping organizations to unlock the full potential of their cloud investments and achieve their business objectives.  Our team of experts collaborate closely with clients, leveraging our global industry knowledge to create tailored cloud strategies that drive innovation, scalability, and cost-effectiveness. By harnessing the power of the cloud, we help organizations accelerate their digital transformation journey, enabling them to stay ahead of the competition and thrive in today's dynamic business landscape.

  • We understand the importance of defining a comprehensive strategy and plan for the cloud journey, tailored to the unique needs and objectives of each organization. Our team works closely with clients to assess the impact of cloud adoption and make informed decisions on the choice of delivery model, whether it's hybrid, multi-cloud, or single cloud.
  • We assist in designing the operating model, including the establishment of a Cloud Center of Excellence to provide the necessary support and structure throughout the journey. We leverage our global experience to help establish a solid foundation for cloud transformation, enabling clients to drive innovation, enhance scalability, and achieve their business goals.
  • We believe in creating an environment of continuous control and follow-up to prevent "shadow consumption" and ensure transparency and control over cloud usage and associated costs. Our team helps define an appropriate governance model, leveraging advanced mechanisms and cutting-edge tooling. This professional approach enables organizations to maintain visibility into their cloud consumption, identify potential areas of overspending, and optimize resource allocation.
  • Successful cloud transformations require more than just technical expertise. We recognize the importance of solid management principles, such as Cloud Financial Operations (FinOps), and the need for informed and supported operational controls. These often-overlooked elements are the key to propelling organizations from good to great in their cloud journey. By leveraging our deep understanding of Cloud FinOps and operational controls, we help accelerate cloud transitions, optimize costs, and drive efficiency. Our team brings a unique blend of expertise and experience, ensuring that organizations not only achieve their cloud goals but also establish a strong foundation for sustained success.
  • To drive successful change within an organization, buy-in from top leadership is essential to create a sustainable and comprehensive business case that covers all aspects of the transformation. We understand the importance of engaging with key stakeholders and aligning their vision with the proposed change. Our team excels in crafting compelling business cases that highlight the potential benefits, risks, and return on investment associated with cloud transformation.

Ready to learn more?

 

Deloitte has successfully assisted numerous organizations in navigating the complexities of cloud computing. Our comprehensive range of services spans from strategy formulation to seamless transformation, enabling organizations to optimize their cloud investments and achieve their aspirations for business and operational improvements. Our dedicated team of practitioners is ready to guide you through every step of the cloud journey, providing valuable insights and innovative solutions tailored to your unique needs. 

If you are ready to learn more about how Deloitte can help your organization thrive in the cloud, please refer to the contact details below. We look forward to connecting with you and embarking on a transformative partnership.

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