Hidden cost of cloud puts brakes on migration projects

Migrating to the cloud is regarded as top priority for IT heads, alongside digital transformation, a study from Capita has reported. But unforeseen expenditure is having a negative impact on migration initiatives.

The Capita From cloud migration to digital innovation report, based on a survey of 200 IT professionals, found that, on average, 45% of the organisations surveyed said they have migrated their workloads and applications to the cloud.

According to Capita, this suggests they have reached around halfway in their migration journey. The study reported a strong correlation between migration progress and organisation size, with the largest organisations (5,000+ employees) having further to go.

More than half (58%) of the IT decision-makers surveyed believe the cloud over-promised and under-delivered, while 43% admit that the cloud is more costly than they thought. Only 27% of IT decision-makers surveyed claim they have been able to reduce labour and logistical costs by moving to the cloud.

Mark Cook, divisional executive officer at Capita, said: “Every migration journey is unique in both its destination and starting point. While some organisations are either ‘born’ digital or can gather the resources to transform in a relatively short space of time, the majority will have a much slower, more complex path.

“Many larger organisations will have heritage technology and processes that can’t simply be lifted and converted, but will need some degree of ‘hybrid by design’,” he added.

When asked what unforeseen factors had delayed cloud migration projects, 39% had cost as the main factor, followed by workload and application rearchitecting issues (38%) and security concerns (37%).

More than a third said they did not anticipated the extra skills they would need to complete a cloud migration project, according to Capita.

“Organisations are finding they know less about cloud migration than they had thought, coming up against a skills shortage and/or lack of expert guidance,” the report stated.

“This lack of knowledge and expertise is likely causing many of the struggles encountered, and is only compounding the challenges of rising cost and rearchitecting issues.”

Capita warned that the lack of skills and inadequate guidance both contribute to delayed transformation journeys and are likely to slow down the benefits.

“Our research discovered that as many as 90% of migrations had been delayed due to one or more unforeseen factors. Successful transformation journeys involve considerable investment of time and resources to build up the right skillsets, expand teams and deliver ongoing training and upskilling across the board,” Capita said.

Despite the challenges outlined in the report, the majority (86%) of IT decision-makers agree that the benefits of cloud are compelling enough to outweigh its downsides. For more than three-quarters (76%) of organisations, moving to the cloud has driven an improvement in IT service levels, while two-thirds (67%) report that cloud has proven more secure than on-premise.

Overall, three-quarters of organisations claimed to be satisfied with their cloud migrations. However, only 16% were “extremely satisfied”, indicating that most organisations have not yet seen the full benefits or transformative potential of their cloud investments. In addition, 42% of respondents currently believe that cloud had “overpromised and underdelivered”.

“Cloud adoption is a critical foundational step towards opening up real transformative opportunities offered by cloud-native technologies and emerging digital platforms and services,” said Wasif Afghan, head of cloud and platform at Capita’s Technology Solutions division.

“While some forward-thinking organisations are able to keep their eye on the goal, the complexity of the migration and application modernisation process tends to introduce delays and cost-implications that slow down progress,” added Afghan.