What is driving the pace of cloud migration and cloud modernization?

Cloud technologies can transform business organizations and elevate them to the top echelons of their industries. However, cloud adoption often means migrating traditional architectures to the cloud, modernizing existing cloud-based architectures, or a combination of both.

Recent statistics highlight the irreversible growth trajectory that cloud technologies, and those who adopt them, are witnessing. The estimated value of the global cloud computing market will see a figure of $1,240.9 billion by 2027, and as we enter 2023, specific trends are shaping cloud migration and cloud modernization strategies. So, it is wise for businesses to stay educated about practices and critical trends.

Traditional, on-premise server and VM deployed application portfolios deteriorate over time and gradually lose business fitness, innovation support, and agility while becoming increasingly expensive, complex, and risky to maintain. Software engineering leaders and enterprise application leaders can use various approaches to continuously improve the fitness and value of their applications, so that they can better support changing business demands, with application migration and modernization being a popular vehicle to kick start the cultural and process changes necessary to take advantage of these modern approaches.

According to the 2023 Gartner CIO and Technology Executive Survey,^[1] 46% of organizations will increase their spending on application modernization, and 50% will increase their spending on cloud platforms in 2023. Also, 47% will decrease investments in legacy infrastructure and data center technologies, illustrating the transition to modern technology platforms.

There is no one-size-fits-all approach for a migration and modernization project. However, using a methodology such as Gartner’s 6R’s (Rehost, replatform, refactor, rearchitect, rebuild, and replace), can help to categorize applications in terms of the effort, value, cost, risk, and business impact involved. Business organizations must be part of the process of selecting the migration and modernization approach for their applications, because when business leaders choose the path of least effort, they may save time and upfront cost, but fail to reduce the underlying technical debt within their application portfolio or achieve the strategic goals of their migration. Consequences of choosing the wrong migration path often include high operating costs, low realization of business benefits, poor availability, business process disruptions, unmaintainable code, and early termination of the modernization initiative.

Why should business organizations migrate in the first place?

The principle of the exponential growth of technology dictates that the cutting-edge technology of today might be the legacy systems of tomorrow. Legacy systems might have been effectively deployed in companies for decades. However, as migration projects become more commonplace, every business organization must understand what trends are driving migration activity and the main reasons why other business organizations are launching, or at least considering going through a migration process. According to Gartner’s 2022 strategic trends research,^[2] by 2025, cloud-native platforms will be the foundation for more than 95% of new digital initiatives – up from less than 40% in 2021. The primary motive for cloud adoption and digital transformation includes reducing costs and risk while enhancing innovation and productivity. However, there are others:

• Scalability and flexibility: Cloud services can be quickly scaled in or out based on demand, providing businesses greater flexibility and agility. This can be especially beneficial for organizations with fluctuating workloads or seasonal peaks.
• Improved efficiency and productivity: Cloud services can help businesses streamline their IT operations, reduce manual processes, and automate routine tasks. This enables IT staff to focus on strategic initiatives that drive business value.
• Innovation and competitive advantage: Cloud services can enable organizations to rapidly prototype and launch new applications, services, and products, with minimal CapEx investment, the cost of failure is vastly reduced, allowing more opportunities to experiment and innovate to gain a competitive edge.
• Digital transformation: Many organizations are undergoing digital transformation initiatives to modernize their IT infrastructure, improve customer experiences, and stay ahead of evolving business trends. Cloud services are often a critical component of these efforts.

Overall, cloud migration services are driven by the need for businesses to remain competitive, agile, and efficient in ’today’s fast-paced business environment. However, migrating can be challenging; even with clear advantages and straightforward technological advances, the needs and priorities of particular enterprise constituencies are often different and sometimes contradictory. So, what is driving the pace of migration and modernization?

• Cloud benefits: Cloud transformation enables greater agility, scalability, and resilience, as well as the ability to utilize DevOps practices for Infrastructure as well as software development. More and more businesses are becoming convinced of the transformative benefits of cloud modernization. The primary cloud benefits that companies identify include the lightweight flexibility needed to scale big almost instantly, the relatively low cost of protecting from and recovering against potentially catastrophic business disasters, and the increased transparency for FinOps.
• Strategy-driven: More businesses acknowledge that only with a carefully mapped plan will they be able to undergo an entire cloud migration and modernization project successfully. This strategy can involve everything from framing high-level business roadmaps and objectives to establishing whether and when a business will migrate to or modernize its cloud infrastructure.
• Cloud-only strategies: Businesses are increasingly capable of designing and using a cloud-only architecture. While companies have successfully used hybrid models, most enterprises want to phase out hybrid models and move to an exclusively cloud-based architecture. Besides the obvious business benefits, cloud-only strategies contribute more to sustainability initiatives, by companies no longer needing to purchase excess physical assets that may only be used during a peak sales period or during a disaster event, but which nonetheless require physical space, energy and cooling to keep them on standby.
• Rapidly Maturing Technology: Cloud technology is quickly maturing, which can be seen by the increasing number of today’s cloud-focused enterprises. Once there was a shortage of cloud experts; today, this trend has reversed. The number of experts on legacy technologies is dwindling, whereas experts in cloud computing are on the rise. Cloud services vendors are now generating high revenues and gaining the trust of large enterprises. This suggests it is the right time to migrate to a cloud-based service to reap the benefits many huge enterprises are gravitating towards.
• Increasing Market Demands: Customers today expect companies to be updated regularly, with almost no downtime. Such expectation is highly encouraged through disruptive business models such as Uber, Amazon, and Netflix. Furthermore, market demands also increase due to competitors upgrading to newer and more agile technologies; however, these might not be built from scratch but by stitching together cloud-native services with small amounts of code deployed in containers or functions.
• Uniting legacy on-premises data and cloud customer data: Part of the motivation to migrate to the cloud is that part of the data already lives there. Indeed, much of a company’s most valuable customer data is increasingly on the cloud, which sparks cloud migration projects. These migration projects bring a strategic opportunity to develop a richer and more holistic view of their customer data by applying migration strategies capable of transforming the data and making it easier to use and analyze. However, even with its business wonders and benefits, there isn’t a unique formula when selecting the “right” vendor with the “right” cloud services for a complex cloud transformation project. Migration projects do not happen in a vacuum for most business organizations, mainly because they bring a priceless opportunity to reevaluate and modernize entire applications, systems, and business processes.

Cloud Migration begets Cloud Modernization

When a business organization considers starting a migration project, application modernization often needs to catch up. The minute they begin to think about cloud migration, it’s worth considering if it’s time to make other significant changes to their storage, management, and entire infrastructure. They may also consider hiring a partner specializing in cloud services related to complex cloud migration and modernization projects.

Modernizing and transforming an application means going beyond a simple migration, commonly known as a ‘lift and shift.’ This older model moves the application from on-premise to the cloud without substantial changes. ‘Lift and shift’ migrations are less expensive and straightforward to perform and still garner some advantages of cloud over on-premise. However, modernizing an application means reworking an application to take advantage of brand-new models, such as adopting scalable microservices and exposing functionalities through re-usable API’s.

Microservices and exposing functionalities refer to a type of software architecture. A monolithic application architecture has processes that are tightly coupled together, and which are deployed as a single independent unit. A microservices application comprises separable, autonomous functions. Breaking a monolithic application down into a set of microservices is known as refactoring, and it comes with many benefits, such as decoupling services to allow them to be individually updated or replaced, as well as allowing services to be scaled-out independently of one another. This leads to higher efficiency and a much more agile application Sometimes the functionality offered by a microservice can be useful in more than one application, so exposing it in a defined way can help developers of other applications to take advantage of it, the defined way of exposing it is called an Application Programming Interface or API.

Whereas before, the choice was mostly on to rehost or not, now there is a wide array of architecture and infrastructure models to choose from, with the potential to deploy microservices to orchestrated containers or migrating elements such as databases to managed cloud services being just two possibilities. So, before providing a final answer, business leaders must clearly understand how their cloud migration and modernization will impact their business organization and select the adequate approach for their migration and transformation project. From a business perspective, it is easy to identify five main drivers for a migration and modernization project:

• Cost: The total cost of operating, maintaining, and changing the application needs to be lowered concerning its business value.
• Business fit: What must be changed or improved if the application no longer meets current business requirements?
• Innovation: The application constrains the business from leveraging new business opportunities or addressing disruptions.
• Agility: The application and its supporting ecosystems are not able to keep up with the pace of change, or those changes may come with an unacceptable level of cost and risk.
• Risk: The legacy application poses security, compliance, supportability, reliability, or scalability risks. With application platforms and languages, the risk of a skills shortage can often be a significant concern.

And when it comes to approaches, we can identify three significant possibilities that differ in their ability to change the technological, architectural, or functional aspects:

• Rehost and replatform: These allow changes to the technology platform on which the application is running. These approaches can solve problems caused by technology.
• Rearchitect: Allows changes to both the technology platform and the code structure of the application. These approaches can solve problems in the technology and architecture domains.
• Rebuild and replace: Allows functions and features to be changed or added. These approaches can solve problems in the functional domain and provide the opportunity to transform technology and architecture.

Due to their complexities, possibilities, and approaches, migration and modernization projects tend to take considerable time, effort, and resources to execute. And they  require a clear strategy and even professional guidance from an experienced partner or consultant to guide business organizations through their specific requirements, current practices, and market trends.

Picking the right partner

Business organizations may be hesitant to connect with a partner for their cloud migration and cloud modernization project as they may feel they can handle it in-house or directly with a vendor. However, there are inevitable mistakes that many businesses make that can cost them even more money than they plan on saving when switching to the cloud.

Gartner’s 2022 ‘cloud shift’ predicts business organizations spending on public cloud computing will exceed 51% by 2025 and that almost two-thirds (65.9%) of spending on application software will be directed toward cloud technologies in 2025, up from 57.7% in 2022.  The research includes enterprise IT categories that can transition to the cloud within the application software, infrastructure software, business process services, and system infrastructure markets.

In 2020, a Gartner survey predicted that 80% of organizations worldwide would overspend their cloud infrastructure budgets because of a lack of strategy around optimizing their cloud usage. Flexera’s 2022 State of the Cloud Report surveyed business professionals worldwide, including Asia-Pacific, and stated that respondents self-estimated a cloud spend waste of 32%, up from 30% last year.

Working with an experienced partner like SoftwareOne enables organizations to leverage better relationships with cloud vendors and provide lower costs through mutual negotiation and by advising organizations about cloud cost optimization. An experienced partner like SoftwareOne will leverage the project’s complexities, costs, and their relationship with the selected vendor, to save money and migrate efficiently.

SoftwareOne advises businesses about migration best practices while providing consistent support and architectural planning. This enables IT staff to focus on the core business, increase productivity and reduce the stress of managing and maintaining their cloud applications. As a global software and cloud expert, SoftwareOne leverages its expertise in software asset management and cloud consulting services to ensure that its client’s IT estate is optimized to buy only the software they need and use. Optimization with SoftwareOne improves compliance, reduces audit exposure, and lowers software spend.

The challenges of cloud migration and cloud modernization can be daunting. Yet, despite all of the associated difficulties, it presents an exciting opportunity for growth and promises a new era of modern systems, that can meet the ever-changing requirements of today. SoftwareOne provides experienced guidance on navigating complex cloud migration and modernization projects while minimizing risks.