When cloud adoption makes sense – and when it doesn’t

There has been a rise of “rehoming” or cloud repatriation, says BBD.

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The cloud has firmly established itself as ubiquitous – many businesses make use of it at least in some shape or form and it’s no longer seen as new or unknown. It’s often touted as the proverbial silver bullet for business challenges, promising an all-in-one solution that offers scalability, efficiency and innovation. Yet, as more businesses dive into this digital frontier, and as some of those who have already made the leap have discovered, the cloud (or their approach) isn’t always the one-size-fits-all answer they thought it might be.

While many organisations have seen impressive results from the cloud – achieving new levels of operational efficiency and flexibility – it hasn’t been a universal success. Werner de Jager, head of BBD’s Cloud Services team, highlights a crucial issue: “Forty percent of cloud initiatives fail to deliver the expected value, leading to a significant amount of buyer’s remorse in the market.”

At BBD, we’ve invested heavily in exploring the transformative potential of cloud solutions and have compiled extensive findings and lessons learned (which you can read here). Despite our enthusiasm for the cloud’s benefits, we’re also observing a significant trend: the rise of “rehoming” or cloud repatriation, whereby companies are moving workloads out of the cloud, either to other providers or back on-premises. De Jager explains: “The migrations out of cloud are done for various reasons, but largely around cost or moving certain workloads to providers that offer more value.”

Many organisations that have moved to the cloud and are now under pressure to reduce costs are finding themselves in a state of buyer’s remorse, so much so that “adoption of the cloud is actually becoming less of a race and more of a value discussion”, explains De Jager.

Some of the key factors contributing to this include:

• Misaligned expectations: Organisations often move to the cloud with the expectation of immediate cost savings. However, the reality can be different. Without proper planning and management, cloud costs can exceed initial projections, leading to dissatisfaction.
• Lack of preparation: The initial set-up of a cloud environment, including creating a 'landing zone' and upskilling staff, requires significant upfront investment. Without clear, immediate benefits, this can lead to frustration and a perception that the cloud is not delivering value.
• Inadequate monitoring: Cloud wastage is a common issue, often arising from poor oversight and lack of familiarity with cloud services. This can result in inefficient resource usage and higher costs.
• Data migration challenges: Data migration is complex and can pose significant hurdles. The process often encounters issues related to data sovereignty, residency and integration, which can impact the success of cloud initiatives.
• Security concerns: Security remains a major concern, with some organisations repatriating services due to perceived or real vulnerabilities. The shift from traditional IT security models to cloud-specific strategies can be challenging.

A recent survey by UST reveals that among the 82% of organisations adopting cloud-native approaches, 95% face significant challenges that prevent them from realising the full benefits. 

The top challenges include:

• Adapting legacy processes: 46% struggle with integrating existing processes into cloud environments.
• Training development teams: 46% report difficulties in upskilling their teams for cloud-native development.
• Automating processes: 44% face hurdles in automating testing, deployment and monitoring.

These challenges lead to issues such as:

• Security concerns: Increased complexity and tool sprawl (where organisations accumulate multiple IT management and monitoring tools for the same or similar purposes, leading to redundant processes) exacerbate security risks.
• Collaboration issues: Poor collaboration between developers, security teams and operations hinders effectiveness.
• Cost creep: Increased costs from having various instances of services, which could be centralised (we write about how this can be mitigated using FinOps here).

When is the cloud simply not right for you?

• Cost vs value: If cloud adoption does not align with your business needs or if the costs outweigh the perceived value, it may not be the right solution. Evaluate whether cloud investments will genuinely enhance operational efficiency and support your strategic goals.
• Complex integration needs: For businesses with complex integrations or unique data requirements not well supported by cloud providers, on-premises or hybrid solutions might be more appropriate.
• Skill and resource constraints: If your organisation lacks the necessary skills and resources to manage cloud operations effectively, the transition may be more costly and problematic than anticipated.

“We’ve found that buyer’s remorse is linked to a few key aspects,” explains De Jager. “Many organisations don’t understand cloud costs and the impact of variables, are not able to manage their cloud environment once it has been deployed and are simply doing too much too fast and taking a lift and shift approach where they don’t need to.”

To combat these common missteps, we recommend the following:

• Understand cloud impact: Analyse how cloud changes your business, including cost and billing impacts. Secure executive buy-in and follow a Cloud Center of Excellence (CCOE) approach to ensure strategic alignment.
• Assemble a skilled team: Ensure your team is trained before migration. Partner with experts who can support your team during the initial phase and upskill your staff over time.
• Measure twice, cut once: Be selective with workloads and focus on migrations that offer measurable value. Spend adequate time planning to avoid costly mistakes.
• Understand your metrics: Define your cost versus value metrics upfront such as cost per user, cost per transaction and so on.
• Calculate your costs: Take all your current costs into account and be realistic about which of these are replaced by cloud services versus which you would retain. A cloud migration specialist partner can help with this (find out more about BBD’s migration services here).

Investing wisely in the cloud is crucial as it significantly impacts operational efficiency, cost management and strategic success. A well-considered cloud investment maximises benefits like scalability, flexibility and innovation while minimising risks and costs. Navigating the complexities of cloud solutions requires expertise and foresight. This is where a cloud managed services provider becomes invaluable. An experienced technology partner can guide your cloud strategy, aligning investments with long-term business goals and helping you avoid pitfalls.

Whether you’re migrating, modernising or need to rescue a current cloud solution, BBD offers expertise to guide you through every step of the process. Our team helps optimise cloud strategies, minimise costs and ensure that your cloud investments align with your business goals. From strategic planning to hands-on support, BBD is your partner in navigating the complexities of cloud adoption and achieving sustainable success.