Cloud computing

Building an Investment Case for Cloud

In 15 months, 80% of all IT budgets will be committed to cloud apps and solutions. The reality is that Cloud First is now a fairly standard IT strategy so SaaS and cloud hosted applications are normal, with Hybrid Cloud becoming a popular option. One of the most important aspects of transforming to Hybrid Cloud is being able to articulate a clear business case for change.

This is a critical challenge for clients – cloud initiatives get shelved in many cases because the team can’t come up with a compelling business case for change. There is a lack of understanding of the benefits realisation approach needed and they don’t always appreciate the investment commitments required to get to the cloud.  Clients don’t always articulate their challenges as “move to cloud” either – in many cases we work with clients who want to reduce the cost of IT, transform their data centres or increase the effectiveness of IT delivery.

In this blog post I will highlight the 5 key areas DXC Technology considers with clients as part of building a Hybrid Cloud Business Case.

  1. Undertake Discovery & Assessment

In order to assess the scope and scale of the task, clients need to undertake a discovery and application assessment exercise to understand the current state of their IT landscape. Readers may be surprised, but we do come across clients in all sectors who don’t know what they have, or the state of their IT assets (including those that have CMDBs).

Discovery and assessment exercises (conducted correctly) will help to set out the basic building blocks of the business case by:

  • Identifying those apps that are suitable to move to the cloud
  • Proposing the most appropriate “landing zone” for each application
  • Assessing the level of remediation/effort required to support the move to cloud
  • Identifying the level of technical debt across the IT estate

The assessment should also highlight areas for rationalisation or efficiency in the current IT estate; such as improved environment management and licence optimisation (a challenge to ask yourself is how efficient is the current utilisation of IT assets and capacity) – this will also help to clarify the investment case.

  1. Think of Hybrid Cloud in Terms of Business Models, not Technology.

When we talk about Hybrid Cloud landing zones (Public Cloud, Leveraged Private, Managed Private, SaaS, colocation, traditional hosting) everyone’s immediately focused on the technology. However, each component of hybrid has a specific business model that is driven by Capex versus Opex weighting, variable costs (Consumption/Managed Service Model costs), transformation/migration costs and considerations of Infrastructure as a Service (IaaS), Platform as a Service (PaaS) or Software as a Service (SaaS).

Once you have the outputs from the assessment, you can start to think about optimising your approach, based on the recommended landing zone and remediation required for each application, set against the benefits for each application. Some applications will require replacement or re-platforming which will require long term investment commitments.

You also get some idea of the additional costs in areas such as security and networking as you plan your Hybrid platform.

  1. Undertake a Pilot Exercise

Undertaking a pilot exercise with an application can be done very quickly – from a few weeks to a few months.

A properly conducted pilot will help you see the issues, risks and challenges with moving to cloud. If you work with a partner it will also help you assess the partner for future work and help you understand the skills required to undertake the transformation from your side. With key enterprise applications such as SAP we recommend this approach to demonstrate the benefits and potential of cloud.

The key learning outcomes will give you an understanding of the timescales and the investment needed to shift applications to the cloud – these are essential for a compelling investment case.

  1. Consider the Wider Business Benefit Inside and Outside of IT.

I said in my previous blog post that the real benefits of cloud come from doing things differently – and reconfiguring the IT operating model to support cloud delivery. This is where the investment case starts to look at the wide benefits to the business and IT.

Focusing on IT operational and delivery disciplines, improved governance and automation of IT services leads to improvements in IT through improved speed and quality of IT delivery (DevOps) and a reduction in the cost of IT (and a reduction in the costs and risk of shadow IT).

For the business, this means that IT have the ability to deliver more value to meeting their needs. An optimised IT and applications infrastructure gives the business the opportunity to focus investment opportunities that are delivered faster and with higher quality, than ever before.

  1. Develop a High Level Transformation Plan

Even at a high level, a transformation plan will help you set out the length of the programme, the key investments needed and will highlight when benefits will start to be realised. Answering the investment and benefits realisation questions are key and, as I said above, is often what stops the programme moving forward.

By following the steps outlined above, you reduce uncertainty and risk, and the investment case has objective data to back it up rather than more assumptions. This really reduces the risk of the validity of your investment case being challenged. After all, not everyone will be a supporter.

DXC Technology have wide experience in helping clients to create the investment case for cloud, from initial discovery to the transformation plan. If you are interested in talking about your challenges I would be glad to help, please contact me.

Paul Brown

Author: Paul Brown

Paul Brown is a highly experienced Business & Technology Transformation Leader who has worked with a range of clients across financial services, legal, telecoms, travel & public sector. He currently is a strategic cloud and digital advisor at DXC Technology where he supports a range of global and UK clients.

He has experience of driving strategic change including technology investment strategy, IT programme delivery, digital transformation, CRM and Big Data solutions in Europe, US, Canada and the Middle East. He holds a PhD from University of Plymouth, focused on business transformation in financial services.