Re-engineering your business
Optimizing your business model isn’t just about migrating workloads from the data center or adopting new services in cloud. It involves re-engineering the business at a strategic level, from the capabilities you build, through to the way you engage with customers.
Core transformation areas
Your profitability model will also be very different
By moving workloads to cloud, your immediate margins are likely to shrink. This is because the cost and revenue model of cloud services is very different.
Many hosters don’t migrate their existing customers because they seem at first to be more profitable as part of a SPLA model, don’t want to disrupt existing contracts, or feel that tracking business will be too complex. But the reality is often quite different. With correct comparison, you can find favourable margins for VMs and actual customer consumption and profitability in Azure.
It is important to have discussions with your senior Finance team, executive sponsors and a Microsoft Finance specialist early on to make sure you fully understand the cost implications and balances of moving to a cloud service model.
If the costs don’t balance, the timing may not be right for you. You should openly discuss the viability of cloud early on
Key questions that must be asked will include:
- Can you afford to move to Azure, what does it do to your costs/revenue?
- If costs go up, how do you look at this over time?
- What are the typical Microsoft investments available?
- How do costs compare over the next 5 years?
Cloud and data center transformation is a big undertaking and you may not currently have the resources to do it successfully. The benefits can be huge, but ultimately, you will need to decide whether this is the right time.