Running IT-as-a-Service Part 50: Hybrid Cloud migration – Where is the money saving?
Conclusion: External Cloud services can realise cost reduction up to 50 % p. a. and promise no set-up or exit fees. While the ongoing cost reduction is realistic, there are significant other costs related to third-party services that should be considered to calculate the overall cost saving of Cloud migration. They are:
- Transition-in cost due to the use of external consulting services to set up the new environment (up to $2.5 million for 7,000 users), as well as procurement cost to prepare tenders, select vendors and negotiate contracts (up to $300,000)
- Transition-out fees to migrate the current service to another service provider (similar to transition-in cost)
- Hardware depreciation related to private Cloud exit
- Governance fees to ensure Cloud consumption remains within budget and the desired service levels are tracked and met (up to 7 % of the annual cost)
- Risk mitigation strategies to ensure the Cloud service remains secure.
The purpose of this research note is to provide a step-by-step approach to determine the ongoing cost-saving opportunities needed for Cloud migration business case1 preparation.
About The Advisor
Dr. Wissam Raffoul was an IBRS advisor between 2013 - 2021 who specialised in transforming IT groups into service organisations, with particular expertise in IT Service Management (ITSM), process optimisation, outsourcing and Cloud strategies, enterprise systems management solutions and business-centric IT strategies. Prior to joining IBRS in August 2013, he was General Manager strategic consulting in Dimension Data advising clients on applying technology to improve business performance. Prior to joining Dimension Data, he was a Vice President in Gartner/META Group and issued various research publications covering service delivery processes, centre-of-excellence models, managing outsourcing vendors, benchmarks, maturity models, IT procurement evolution and supply/demand models. In previous positions, he headed HP ITSM consulting Practice in Australia. He also acted as an infrastructure manager, reporting to the CIO at a number of large organisations in government and in the financial and petrochemical industries.