Move to cloud cuts costs 25%
Forklift manufacturer KION Group was seeking more efficient and scalable systems to expand its warehouse automation, supply chain and logistics solutions to customers in more than 100 countries. To accomplish these goals, the company needed to integrate and modernise its IT infrastructure. The best path was through the public cloud, managed by trusted partner DXC Technology. DXC’s full-stack managed platform included consumption-based pricing, enabling the company to match its computing demands for warehousing systems based on customers’ 12-hour shifts. This resulted in a 25 percent reduction in IT infrastructure costs — savings that were passed on to customers. Thanks to the agility and automation of DXC’s platform as a service, fleet management systems that once took 8 weeks to deploy can now be delivered in a single day. — Read the story
Too often, enterprises implement cloud solutions and soon find they are paying more for their combined cloud and on-premises infrastructure. In many cases, organisations are learning the pitfalls of unconstrained cloud consumption.
Historically, it was relatively easy for infrastructure planners to understand and predict data centre costs because of the constraints placed on adding servers and resources in house. Public cloud, on the other hand, enables essentially unlimited and immediate consumption. This typically means organisations are continually reacting to larger-than-anticipated bills from cloud providers and scrambling to find ways to reduce cloud consumption or offset those costs through savings in the data centre. Over time, this results in a sawtooth-style trajectory of cost peaks and valleys — with no real savings.
Tracking cloud and on-premises costs together
A leading telecommunications firm faced numerous challenges in tracking migration program costs against budget. There was no single source of truth or centralised IT cost data for a portfolio of 7,000+ applications across cloud and data centres. DXC worked with the company to create a data extraction layer and a centralised tool for tracking costs. DXC audited costs, mapped applications to multiple areas of the business to improve visibility and cost analysis, and established a 7-year forecast for the IT estate. DXC also advised the telecom on creating the ideal cloud service mix.
The Cloud Right approach
Doing Cloud Right™ means the organisation can create a predictable downward cost slope more closely aligned with business outcomes and profitability. A recent DXC study showed that customers who modernised applications in migrating from on-premises infrastructure to cloud or hybrid IT on average improved their total cost of ownership (TCO) from 12 percent to 34 percent.
34%
average TCO improvement with a Cloud Right approach to migration
How can this be achieved? Consider these measures:
- Identify best-fit applications for cloud and on premises. Consider which applications should logically move to the cloud today and which ones can be moved in the future. Establish a clear set of criteria for picking one platform over another. For example, customer-facing applications requiring continuous development could benefit from the agility of public cloud. In contrast, applications that seldom change and don’t need to be wrapped with new services are a better fit for on-premises infrastructure. In most cases, those on-premises resources have already been purchased and can provide years of ROI.
- Ensure greater accountability for costs. The traditional CapEx cost structure puts greater emphasis on upfront costs for new applications and business services, and ongoing operational costs are built in and assumed to grow with the business — or, even worse, costs stay the same even when business demand declines. Cloud offers an OpEx approach that turns that traditional cost model on its head — no upfront capital costs but operational costs that are constantly changing with demand. Cloud, however, offers much greater visibility into the actual IT costs associated with selling a product or service. By apportioning these costs to individual business units and application development teams, organisations can ensure greater accountability for costs that can be constantly measured against business objectives, creating a greater incentive to drive down costs.
- Explore ways to simplify the IT estate and operations. One of the most common mistakes related to the traditional lift-and-shift approach to cloud migration is that fundamental cost-savings measures are ignored, or continually moved to the back burner. For example, organisations can save huge sums of money by rationalising and eliminating duplicate or underused applications, and continuously optimising virtual server environments to reduce the overall footprint of the IT estate. Modernising legacy applications to cloud native can create a more unified operational approach based on DevSecOps principles, easing the eventual move to cloud. Savings from these and other initiatives can be reinvested into mainframe modernisation, creating even more efficiencies and potential cost savings.