Businesses move to the cloud for several reasons. For some, moving to the cloud means gaining access to the best enterprise-level technology without the associated costs of handling, maintaining, and managing the underlying infrastructure. For others (like startups), the ability to scale quickly and respond faster to market demands are top of the list.
Whatever the reasons, every business that decides to make the move needs a cloud implementation strategy to operate successfully and profitably in this environment.
In this article, we’ll cover the steps and key considerations when building a cloud strategy.
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A cloud strategy is your action plan for achieving long-term success in the cloud. Gartner defines it as “a concise point of view on the role of cloud within the organization.” Ideally, your cloud strategy should be properly documented like you would a business strategy.
Your strategy will differ depending on the stage of your business and your reasons for moving to the cloud. If you’re a new business, for example, your goal might be to move fast and grow your customer base as quickly as possible. A more established business might have different expectations.
A cloud strategy helps you to:
Now that we’ve covered the definition and benefits of a cloud strategy, let’s look at the paths for a new company adopting the cloud versus a traditional business that already has a considerable technological footprint on-premise.
If you’re a startup, you’re focused on building your product and improving the value you deliver to your customers. The faster you do that, the faster you’ll find success in the market.
Therefore, your strategy should be to move fast, avoid undifferentiated heavy lifting — work that brings no value to your business — and adopt as many managed cloud services as possible. This will save you a lot of costs.
For instance, instead of maintaining servers, use serverless services; instead of creating and managing custom/bespoke systems, think about containers and Kubernetes; instead of managing your own database, use managed database systems like RDS Aurora from AWS or a Snowflake data warehouse product that can increase your customer growth. These are generally better, easier, and faster alternatives.
If you’re part of a more traditional/on-premise company that has not yet migrated to the cloud, first consider if your product is profitable, functioning, doesn’t require a lot of changes, and is already delivering a profit back to your business.
In this case, your strategy might be to leave everything the way it is and only consider the cloud for new initiatives. However, if you already feel the burden of operating your own systems because you have to continuously innovate and iterate on your solutions or you're under a lot of competitive pressure, then it probably makes a lot of sense to migrate to the cloud.
Note, you should not expect that things will initially be cheaper or less expensive in the cloud. In fact, you should expect things to be a little bit more expensive before they improve.
For a traditional business moving to the cloud, the three-step process below applies.
Most traditional businesses start their journey to the cloud by taking what they have in their data center and lifting and rehosting it in the cloud. Lift and shift is the most expensive way of migrating your data to the cloud, but it’s also one of the fastest.
One note of caution: Avoid trying to maintain a product by having one leg in your data center and the other leg in the cloud. Operating in two worlds could cause a lot of stress, instability, and challenges. Therefore, choose a cloud service provider and commit to the cloud for the long run.
Once you have moved your applications to the cloud, focus on iteration. Look at the costs associated with operating your system and identify which features, products, or unit costs are most expensive for the operation of your system.
Why? Because what was cheap in the data center might not be cheap in the cloud, although there may be cheaper alternatives. There may be managed services from your cloud provider that you can use. However, you should base your iteration and your development work on what it costs to deliver your products and features to the market.
Adopt tools that will give you full insight into your cloud costs in a context that is relevant to your business. For example, CloudZero’s cloud cost intelligence platform allows you to map costs to product features, teams, and customer segments. This helps you to quickly calculate your margins and understand your most profitable products/features.
As you become cloud-native, your team will automatically start to think of managed services and cloud services they can leverage/use to go faster than they could ever go when the company was on-premise.
The next step is to adopt a philosophy of elasticity and flexibility for rapid change. At this stage, your systems and the costs associated with those systems should scale dynamically up and down based on customer load.
The closer you get to a curve where your customer activity is aligned with your system activity, which is aligned with your costs, the better you can see a real indication of how efficiently your systems are running.
Say you have a legacy application that processes digital photos that you would like to move to the cloud. Once you've made the commitment to move, your strategy should be as follows:
It's important to set aside time to consider using those new services because if you don't, your competitors certainly will. In particular, you should consider how to:
For example, if you can process a photo for 20 cents a photo, that’s your unit cost. If your competitors can process a photo for 5 cents, they have a real advantage over you.
Your strategy should be about bridging that gap and increasing profitability.
For companies that haven't yet moved to the cloud, first consider if you need to make the move. Do not adopt cloud services because they are trendy.
You may not need to move to the cloud if you’re not in an industry or business where your products or services need to rapidly change, or if your system scales well and doesn't need to operate in the cloud, or if your customer growth deals with delivering a service that doesn't change.
Unfortunately, these use cases are fast disappearing.
Make cost management a key part of your strategy. Avoid thinking about your cloud computing bill from a total-dollar point of view. Instead, think of cost in terms of per feature or cost per product, or what it costs to deliver the value to your customers.
Ultimately, consider that in terms of your gross margins to the business, if you’re successful, your costs will go up over time. However, if you're tracking your cost per feature or product, you will see that those costs match your customer growth. Then you should align that with key metrics for your business. This is called unit cost tracking.
Adopting this philosophy of tracking unit costs early on as part of your strategy versus focusing on your overall cloud bill will enable you to better focus on delivering profitable innovation to your market.
CloudZero is built to deliver just the right insight you need. With CloudZero’s cloud cost intelligence platform, you can operate confidently while keeping track of your costs.
To learn more about how CloudZero can help you measure, monitor, and optimize your cloud spend — as well as identify your unit costs — request a demo here.