It’s official. The Cloud is now mainstream and the ROI of moving a small business to the Cloud is only increasing. The number of companies adopting it as their core IT strategy is only going up, and that includes the number of small businesses alongside mid-market and enterprise. In fact, global public cloud services market forecast (across all sizes of business) to reach $832.1 billion in 2025.
There’s little doubt you have heard about the benefits, which include improved scalability, greater collaboration efficiency, flexibility of work practices, and—above all else—reduced IT costs. But not everyone is convinced that the reduction of costs in hardware ownership and maintenance outweighs the total cost of a cloud migration.
We believe that’s because most of the discussions around migrating to the Cloud revolves around why organizations should do it, or they focus on the implementation side of things. In this article, we’re taking a more pragmatic look at the various impacts to your ROI when moving a small business to the cloud. The goal is to help you understand if a migration might be a good choice for your organization.
Factors that Impact Cloud ROI
The problem with measuring cloud ROI is that many different factors must be taken into consideration, some of which may not be immediately obvious. Let’s start with the cost side of things because it’s easier to tackle. Here are the main costs associated with migrating applications and data from an on-premises infrastructure to the cloud:
Dragging ROI Down
For a cloud migration to be successful, it must have a well-thought-out plan that accurately identifies which applications and data should be moved to the cloud, and it needs to include both priority and process. Depending on how well a cloud migration is executed, it will cause downtime (in more dire cases, extensive downtime). Even though in most cases downtime is given, it can be dramatically mitigated by a well-thought-out plan.
Generally, cloud infrastructure costs are calculated based on the utilization of computing, networking, and storage resources, as well as the type and frequency of access to cloud-based applications. Providers of cloud services use a variety of pricing models, including pay-as-you-go, fixed subscriptions, reserved instances, and spot instances (each offer specific advantages and disadvantages). Picking the right pricing plan for your company will help yours gain control over costs.
Just because the cloud can remove the need to maintain an on-premises infrastructure doesn’t mean the cost of management post-migration is zero. Organizations must still protect themselves against cybersecurity threats, train employees to use new cloud resources as efficiently as possible, and solve day-to-day IT issues associated with their use.
Boosting ROI Up
Now, let’s take a look at some of the main benefits of moving to the cloud that have either direct or indirect impact on the overall ROI:
Reduced total cost of ownership
Because cloud services providers have optimized and streamlined practices, they typically deliver compute, networking, and storage resources cheaper than for on-premises implementations. And because cloud services are a predictable operational expense, organizations can better budget their IT expenses and avoid unwelcome surprises.
Improved business agility
Once an on-premises IT infrastructure has been set up, it’s usually tough to go back or scale down. The cloud doesn’t work like this, so organizations can dynamically adjust their use and related costs based on their current needs.
Increased employee productivity
By its very nature of being on-premises, that set up unavoidably creates a technology lock-in that may limit the ability to use the latest and greatest digital tools. The cloud gives employees access to optimized infrastructure and up-to-date applications, helping them be more productive.
Greater energy efficiency
It’s easy to overlook just how power-hungry servers can be. Running and cooling even a single server can heat up a small business’s electricity bill. Companies with virtual servers don’t have the heavy dependency so they can operate more efficiently. Many times, they can rely on renewable energy sources. All of this reduces overhead which can keep their fees competitive.
Better data security
Cybercriminals are becoming more sophisticated, and even small businesses now have to go to great lengths to defend themselves. Even though the cloud doesn’t eliminate the need to spend money on defenses, the cloud has more advanced tools and best practices that cover cybersecurity. Often companies only need to purchase a few supplemental tools instead of the full security list that comes with an on-premises set up.
Final Answer: Cloud Can Deliver Impressive ROI
When Nucleus Research (a global provider of ROI-focused technology research and advisory services) performed an analysis of 101 ROI case studies that took place from January 2018 to November 2020, they found that cloud technology deployments deliver 4.01 times the ROI as on-premises deployments.
“Further, cloud deployments allowed the customer organizations to recover the cost of their initial investments 2.5 times faster than for on-premises deployments,” stated analyst Daniel Elman.
Even hybrid cloud migrations can deliver great ROI, which is what a commissioned study conducted by Forrester Consulting found. According to the study, hybrid cloud migration projects can see a 145% return on investment within three years.
These and other figures are so impressive because organizations that successfully migrate to the cloud unlock a source of exponential value, with a lower total cost of ownership being just one of many benefits. And yes, that goes for companies of all sizes, even micro businesses.
We Can Help You See that ROI
While a cloud migration can deliver impressive ROI, it can only do it if the project is executed well. Simply taking data and applications from existing on-premises servers and throwing them onto a virtual environment with a plan, documentation, goals, and a clear process isn’t going to get good results no matter how much you pay for it.
To get the most out of your ROI, you must understand the current state of your business and know where you want to take it. Every company is different and for some, this might mean a small and slow migration to the cloud with a roadmap than eventually migrates everything.
A reliable IT partner with plenty of cloud migration experience like Help Desk Cavalry can help you create and implement a custom cloud migration plan that’s the best fit for your company’s current and future needs. Contact us, and we can talk you through what it might look like for you.