Cloud Cost Factors: 7 Considerations

May 19, 2020
Manufacturers looking to move data to the cloud face unique challenges due to the nature of industrial business and existing capital investments. Here’s advice on how to assess those challenges from a cost vantage point.

Though is still too early to tell for certain, it’s reasonable to expect that the COVID-19 pandemic will accelerate, rather than blunt, industry’s push toward digital transformation. A few key factors behind this reasoning include increased work-from-home for non-production personnel, greater reliance on remote troubleshooting and maintenance to reduce travel costs and minimize close contact between humans whenever possible, and increased supply chain connectivity not just for ease of transactions, but also insight and analysis.

With this realization in mind, industrial businesses should expect to increase their use of cloud computing resources in the near-term. 

Paul Gomez, vice president of enterprise delivery at Columbus Global (a technology service and consulting business helping companies modernize their operations digitally), advises manufacturers to be aware of seven consequential cost factors when looking to move on-premise systems to the cloud. Those factors are detailed below. 

Extent of Migration. Gomez stresses that it’s important for manufacturers to realize they don’t have to move their entire enterprise to the cloud at once. “You can move workloads in phases according to your budget and needs,” he says. “You can even maintain a fixed hybrid infrastructure of both on-premise and cloud-deployed functions. The fewer functions you migrate, the less you’ll pay, and vice versa.”

Based on his work with industrial companies, Gomez says that manufacturers often want to migrate a non-critical application first, before committing to a total cloud migration. “This helps mitigate risk. However, it should be an application that’s important enough to base the decision to migrate other, more important, applications on. This can be considered part of the testing phase.” 

Once companies move past the initial stages of migration to the cloud, Gomez advises that there be “a meeting of the minds with the stakeholders in the company to determine the best chronological order of migration. For example, a company might start with one business function such as finance or warehousing or manufacturing operations. One of our manufacturing customers who recently moved to Microsoft Dynamics 365 Finance and Operations started with a major blueprinting project to map their journey. When it was time to start migrating, they started with smaller projects such as moving legal entities over to the cloud and managing inventory of maintenance and repair items in Dynamics 365. After those smaller migrations, they took the “big bang” approach to migration, which combines migration and upgrades in a single go-live.”

Deployment Challenges. Because most manufacturers work with a mix of older and newer applications, the older ones often require updates to function in the cloud. Some will even need to be replaced, that’s why Gomez recommends identifying these kinds of challenges before setting your budget, considering the time and resources they will require.

“Manufactures need to assess the lifespan of their current applications, as there’s no one-size-fits-all answer,” Gomez says. The order of priority in moving applications to the cloud should focus on those applications that are “becoming costly or lack efficiency or applications that don’t ‘play well’ with others.”  

He notes that, with software like Microsoft Dynamics 365, users will get regular upgrades automatically. “Microsoft launches incremental updates bi-annually, so once you’re a Dynamics 365 user, you’ll really never have to think about upgrading an app again,” he says. “Another advantage is that, once you’re on the Dynamics 365 platform, you can collaborate with third-party applications, including your own legacy applications. So if there’s an application that’s working great for a manufacturing company as-is, if you can isolate that application, you can make it work with Dynamics 365 Finance and keep it the way it is until it’s no longer practical in terms of cost and functionality.”

Third-Party Support. Because migrating systems to the cloud isn’t a simple process, most companies hire a third-party consultant to ensure a secure data transfer, a smooth transition, minimal interruption to their operations, and optimal cloud performance after they launch. “These services add cost,” Gomez says, “but they can be essential to success. 

When searching for the right third-party advisor to help with the migration, Gomez advises looking at companies that are similar to yours to see which third-party technology companies they are working with. “This is especially true the more niche a company is,” he says. “For example, a life sciences company should look for a third-party company with experience in life science ERP implementations and a food processor should look to a third-party company that specializes in what they need for process manufacturing specifically.”

Gomez also notes that, in this process of assessing third-party providers, to not overlook the capabilities of the team already in place at your company. Consider whether or not it’s possible for them to handle migrations, upgrades, and/or support. Beyond the capabilities of your staff, also consider if handling those tasks are worth their time?

Cloud Services. There are many options for cloud services, some you’ll need, some you won’t, and others you may want to just try for a period of time. Gomez suggests using a tool like Microsoft Azure’s pricing calculator to piece together products and services to determine your potential monthly rate. 

Moving, Integrating, and Testing.  Moving any systems to the cloud involves several important steps that demand focused security measures and expert management, according to Gomez. “Data must be moved safely and without vulnerability, apps may need modifications during integration, and the infrastructure requires thorough testing before it can go live,” he says.

Pay attention to the distinctions between implement and operate. “You may have a third party like Columbus come in during the change process of your IT technology, but once it’s been introduced, your team can do most of the management,” Gomez says. “Or maybe you already have a product like Dynamics 365 and now you need someone to tune it to your business specifically—a company like Columbus would help make applications that support your process. And it should never be the other way around, that is, where a company makes process changes to fit the technology.”

Ongoing Actions. Of course, the cost of your migration won’t stop once you’ve launched to the cloud. Several continuing factors should be considered under your cost umbrella, like training staff on the cloud products, performing additional tests, adding more workloads, scaling services, and maintaining a secure environment as you do so.

Time Spent. All of these determining factors involve an element of time. Incorporate the cost of labor into your budget or you’ll risk underestimating by a significant margin, Gomez says.

Having taken all seven of these points into consideration and calculated your potential budget, Gomez says it will be easier to “weigh the costs versus benefits of moving your enterprise to a cloud-based environment. For example, you can consider whether or not you could reduce costs and accomplish more with a scalable cloud infrastructure. You can also consider what you stand to gain from automatic software upgrades, improved collaboration, and greater visibility on your products and operations. For most manufacturers, the benefits are well worth the cost of investing in cloud services.”

Editor's Note: Listen to the "Automation World Gets Your Questions Answered" podcast with Matt Boese of Columbus Global on "How to Get a Quick ROI from Analytics Software."

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