The Cost of Not Moving to Cloud

If you're feeling confused about migrating to Atlassian Cloud, you're not alone. One of the biggest unknowns when deciding whether to make the move to cloud is right for your business is what the investment looks like, or better yet, how much will not moving to cloud cost your organization in the long-term.

The standard question to start with when investing is, "What is the ROI?" When determining the cost of moving to the cloud, the benefits are easy to calculate. Cost savings, increased efficiency, improved security,  better environmental footprint, employee safety can all be calculated by the ROI.

Henry Mintzberg once said “Strategic planning is not strategic thinking. Indeed, strategic planning often spoils strategic thinking, causing managers to confuse real vision with the manipulation of numbers.” By all means, determine your ROI. However, keep in mind that calculating the ROI doesn't answer the question, "What is the cost of not investing?"

In this article, we'll take a look at how to calculate your ROI, determine TCO, and examine the costs of not moving to cloud that organizations often overlook. 

Calculate Your ROI

The standard formula for ROI (Return on Investment) is:

(profit from investment - investment) / investment = ROI

When moving from a data center to cloud, the cost would be calculated as:

(Savings from moving to the cloud - cloud migration costs) / cloud migration costs

Savings from moving to cloud are calculated by determining your Total Cost of Ownership (TCO).

Determine Your TCO

TCO is calculated by identifying all the costs associated with your current server infrastructure. Keep in mind that operational and fixed costs both need to be calculated. Some of these costs include: 

• Servers - The average lifespan of a server is 3-4 years.  

• Physical location - A location to house the servers
• Maintenance and support  for the servers - This includes supporting hardware, cooling systems, and all the parts needed to purchase, maintain and replace the servers
• Staff -
  • Asset Management - IT staff time monitoring system
  • Maintenance - Maintenance staff fixing and maintaining system
• Software licensing - Systems used to run your server infrastructure
• Energy bills - Impact that running servers has on energy bills
• Downtime for upgrades

Here is a great example of how one of our clients – Castlight Health – drastically reduced their TCO when moving to cloud. 

Consider Cloud Migration Costs

• Cloud services - Subscription fees from your cloud computing provider
• Internal resources - IT team (and any other staff members) working on the migration
• Software licensing - Any new software licenses acquired as well as forfeiture of licenses you already purchased but won’t be necessary anymore in cloud
• External resources - A team with cloud migration expertise to help make the transition as smooth as possible

Examine Not-Investing Costs

• How far behind your competitors will you be? Apps are being developed and strategic partners are investing in cloud-first solutions.
• How much is downtime costing you? Consumers want 24/7 immediate results.  
1. Lost sales revenue
2. Lost employee productivity
3. Damaged reputation with customers and key stakeholders
4. Data loss 
5. Potential compliance/regulatory penalties

• How will the supply chain affect my data center operations? Are you relying on others to have the products needed in stock? The recent semiconductor shortage due to Covid is a prime example. 
• What opportunity costs am I missing?  According to Investopedia, Opportunity Cost is listed as the “potential benefits one misses out on when choosing one alternative over another”.  Could your IT costs be transformed from a cost center to a consumption based revenue source?
• What is the cost of scalability?

The Price You'll Pay

CEOs must look at a changed and continuously evolved business landscape. Seizing near term revenue opportunities without the upfront CapEx or long-term support costs or quickly winding down without worry about unused infrastructure helps you navigate today's digital economy. The price you'll pay is more than just ROI. It is the potential cost of opportunity lost, stagnation, and falling behind in the rapidly changing world. Strategic thinking means looking at ROI and opportunity and considering your long term vision. 

Cloud migrations - especially their costs - are top of mind in the Atlassian community, especially with the end of support for Atlassian Server products in February of 2024. If you are overwhelmed or confused about how much an Atlassian Cloud migration will cost you, your best bet is to bring in an Atlassian Cloud Specialized Partner to help guide you through every step of the process. Praecipio proudly holds a 100% migration success rate thanks to our highly customized approach that involves a diligent planning process and rigorous testing. Reach out to our team of cloud migration experts, and we'll help you determine costs, next steps, and what it will take to migrate your organization to Atlassian Cloud.