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5 key ways to avoid overspending on enterprise cloud adoption

Companies that take a careful approach to enterprise cloud adoption aligned with business objectives can help optimize spending and get the most from cloud investments.

Enterprises across the board today understand and appreciate the power of cloud computing. Not surprisingly, Gartner expects worldwide revenue from public cloud services to reach $354.6 billion by 2022. Yet, organizations often struggle when it comes to implementing cloud in the most optimal and cost-effective manner, a challenge that is amplified by the current global health crisis situation when organizations are under severe pressure to curtail costs while looking for stability and efficiency. 

Cloud adoption plans are often formulated as part of an organization's IT strategy, rather than business strategy. To be effective and efficient, cloud implementation must be part of the organizational vision. It is important to answer questions such as how do they envisage their future, what are the new business models they want to adopt or experiment with or how should they adapt to the new market changes to be able to arrive at the right cloud strategy.

1. Defining the scope

A multitude of enterprise cloud applications are available today to address a wide variety of business function requirements. Understanding the priority areas to identify the business processes that need cloud coverage is important in order to define the scope of your cloud investment rather than aim for a mere replication of your existing on-premises ecosystem onto a cloud platform. 

For instance, if an organization's customer service and supply chain functions take precedence over others in defining its future business, it needs to begin its cloud journey with these functions. If it goes for a big bang approach with all functions, then it not only increases the cost but also brings complexity of implementation without immediate gains of new business models. The scope of cloud adoption should always be dictated by future business strategy rather than just the current IT infrastructure.

2. Identifying a roadmap

One of the biggest drivers for cloud adoption, in addition to the inherent advantages of cost savings and efficiency, is the ability to drive intelligent, strategic decision-making. Therefore, prioritizing the processes or functions that will drive maximum impact along with identifying the technology that can enable those decisions is an important step to understanding the kind of cloud apps that will work well for the organization.

For example, for an e-commerce player, poor forecasting accuracy may be a big pain point and it may be looking at AI for an answer. For another retailer, the biggest priority may be to trace products across the supply chain, in which case, blockchain may play a key role. Ensuring that the cloud strategy is defined by these business decisions delivers significant "above the cloud" benefits.  

3. Choosing the right cloud type

There are several paths available for cloud adoption. An organization might choose to migrate its applications to the cloud while also modernizing existing on-premises infrastructure to enable digital technologies such as IoT and AI. It might choose to transform completely to the cloud through a single-tenant cloud version of the enterprise apps. Alternately, it might choose to adopt a multi-tenant cloud platform. Each of these paths have their own nuances and offer certain advantages and disadvantages.

The decision to adopt one path over the other needs to be governed by parameters such as business goals, security concerns, standardization needs, organizational preparedness and cost. As the organization evolves and business goals change, the cloud strategy needs to evolve in line with new requirements. For instance, a multi-tenant public cloud may work for a startup today but may no longer be the best option as the organization grows into diverse services and customer base. Adoption of a multi-tenant solution could be piloted with a smaller regional or divisional business since success depends on adoption of standard business processes.

Once successfully transformed, the solution and business model could be rolled out to larger regions or divisions. Organizations can also start with multi-tenant solutions for their new diversified business as it does not involve transformation of existing processes. M&A activity could also be a good starting point for such cloud initiative with an opportunity of implementing the new solution and undergoing the change in one step instead of integrating it with existing solutions and then transforming the landscape.

4. Choosing the right hyperscaler

There are multiple vendors offering hyperscale products in the market today including both public as well as specialized private cloud solution providers. Cloud platforms are also available from smaller boutique cloud providers and ERP product vendors. While most of these offer a common set of fundamental elements, each of them has its own unique focus areas, specialties and features. Interestingly, ERP product vendors are defining an agenda that ties up with few specific hyperscalers. Having a clear sense of the business expectations can help businesses choose the right option and optimize spending.

Factors that play a significant role in the decision-making include business architectures, in built AI and machine learning solutions, compatibility with multi-cloud environments, ability of pay for performance and the availability of industry solutions. Few industry solutions are available with cloud ERP products for small  and mid-sized organizations to adopt.

5. The right implementation

Enterprise application implementations are often driven by a large set of customizations. Too many customizations can become a hindrance, such as not being able to integrate with other apps on the cloud, inability to utilize external data or unable to realize the future roadmap of the organization. It is a good practice to ensure that the architecture is scalable and flexible enough to integrate with open source applications.

Most cloud app implementations are standardized, and clients have largely started adopting these standard functionalities. Once implemented, the usage of cloud applications needs to be monitored and controlled to ensure that there is no indiscriminate usage of cloud. This also impacts ROI since costs are directly proportional to the number of users for most cloud platforms.

Overall implementation strategy should be to make it business-centric and supportive of making intelligent decision-making. As more organizations realize the benefits of cloud, adoption is set to go up drastically. However, taking a careful approach to cloud adoption that is closely aligned with business objectives can help optimize spending and get the most from cloud investments.

About the author

Dinesh Rao is executive vice president and global head of enterprise application services at Infosys.

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