What Is the ROI of a Cloud Transformation?
As more organizations consider adopting cloud into their stacks, this article takes a critical look at how they should evaluate future ROI.
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As more and more organizations make the move to the cloud, it can be tricky to really pin down the value of that transformation. Moving to the cloud can be a daunting, costly, and time-consuming task, especially considering that any interruption in business-as-usual won't be acceptable for customers or end-users. While there are many ways to go about a cloud transformation (lift and shift, containerization, low code, etc.), re-platforming is a tactic that can have a powerful end result. But, the prospect of going this route generates a lot of concern in many organizations.
Some of the questions that I am typically asked about re-platforming are:
- "What is the return on investment (ROI) for re-platforming in the cloud?"
- "How do you justify the cost?"
- "What is the timeframe for ROI on a total rebuild?"
My answer to those questions starts with a number of lenses and approaches to looking at ROI in the first place:
- In the world of digital transformation, ROI isn't solely about how much money a particular product makes, but the value of the whole customer experience. If one piece of the system is not performing, then a replatform can make a real difference in the overall experience and should be considered.
- Mergers and acquisitions are becoming more commonplace in the technology industry. In satisfying the due diligence required in such situations, a re-platformed product is worth more and will perform better than an old, outdated, unscalable product. We have recently seen much more stringent technical due diligence, both in strategic acquisitions and in private equity. The ROI of re-platforming? Looking good when your product is under review for acquisition.
- Partial re-platforming with microservices provides a less risky approach and can easily lead to a complete re-platform over time, without a huge upfront budget. Replatforming doesn't need to happen overnight or all at once, but taking steps toward it today will put you ahead in the future. A partial re-platform allows you to reap the benefits of re-platforming, without taking on all the risk that comes with completely rebuilding a product.
- Cost savings also have to be factored in. If a re-platform is focused on the appropriate use of cloud technology then ROI needs to include those cost savings as well. When calculating the R in ROI, ensure that you include cost savings from shutting down data centers, third-party hosting, and co-location facilities that you currently use.
The Bottom Line
It's becoming more critical for organizations of all sizes and industries to make the move to the cloud because the customer experience will soon depend on it. While there might be challenges and roadblocks, undergoing a cloud transformation is inevitable. Certainly, there is a significant ROI in re-platforming, but take the time to consider all options, as every organization has different needs, "speeds," and desired outcomes.
Published at DZone with permission of Jonathan Fries, DZone MVB. See the original article here.
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