19 Jun 2020
5 mins read
The most important question that every CxO is trying to answer is “How do I realize TCO savings within the first year of migrating applications to Cloud?” This question was always important, however in the post COVID world, the importance of this question will go up exponentially as budgets become very tight. The second important question is “Can I minimize or eliminate risks in cloud migration projects?” This blog provides insights into both these questions, to help CxOs and their teams in easier decision-making.
First, let us consider the four important factors that have a major impact on TCO. They are:
The following image gives a detailed breakdown of the costs for an application with active release plan along with an indicative percentage contribution to the overall TCO.
Different cloud migration options can impact the TCO to varying degrees and the following sections highlight these:
There are four options to migrate an existing application to Cloud, popularly termed as the 4Rs. They are:
The benefits or business impact of cloud migration can be measured by the following five parameters which are:
The following table maps the four cloud migration options to the five benefits for making an informed business decision on choosing the right option.
As you can see from the above displayed diagram, cloud replatform appears to be the one that is most promising with cloud refactor coming in as the next best option. Cloud replatform option can give the maximum TCO benefits due to the potential for eliminating various license costs and also the ability to increase application performance and development productivity.
If the implementation cost of cloud replatform can be reduced by bringing in automation, these options would be even more attractive. This is exactly what Hexaware does with their AMAZE™ for Applications product which brings automation in cloud replatform projects. With the use of AMAZE™, the cloud replatform row would look like:
Now choosing the right cloud migration option becomes a no-brainer and cloud replatform with automation (AMAZE™) becomes a clear winner.
Cloud replatform activity involves a series of steps that will have to be done for each application and which consumes significant amount of time and cost. These steps are outlined as follows:
AMAZE™ for Applications from Hexaware can automate most of the above mentioned tasks and can drastically reduce efforts and time. For more details on how AMAZE™ accomplishes these tasks, you can request a demo by writing to amaze@hexaware.com.
For this article, the focus is on realizing ROI within 12 months.
A typical cloud replatform project with AMAZE™ involves the following steps:
In most cases automation led replatforming using AMAZE™, Design, Development and Unit Testing can be completed in 4 – 6 weeks to get the application to a SIT ready state. Compared to the manual approach which can take 6+ months this is a significant saving in terms of time and cost.
In cloud replatform projects, ROI starts at the point, where the initial investment or cost to replatform the application to cloud is recovered by reduction in monthly operating cost. This can also be called as the break-even point from a financial standpoint. In simple terms if $500k was spent on cloud replatforming and post replatforming if there is a $100k reduction in monthly TCO, then it would take 5 months to hit break-even or the point where this project would turn financially profitable.
The graph below highlights various tasks in cloud replatforming along with TCO plotting where cost is represented on the Y axis and timeline in months on the X axis for an application that was replatformed by Hexaware using AMAZE™ for Applications.
As illustrated in the graphical representation, the following are the key milestones:
Due to accelerated replatforming and reduction in time, an even ROI can be achieved. Also, investments start giving positive returns from the first month itself, which is very attractive.
Having eliminated the ROI question, the next important question that comes in every CIO or Technology decision maker’s mind is, “What is the risk involved and will this approach work?” This is a very valid question with any new technology like AMAZE™ for Applications.
The simple answer to this question is to engage with companies like Hexaware in an output-based engagement model, where Hexaware gets paid only after the application passes SIT. In this model, the risk of the project gets eliminated completely and customers have nothing to lose in trying out this new technology to migrate applications to cloud. To get started write to amaze@hexaware.com for a detailed, free assessment and implementation plan.
In summary, the three important factors to achieve ROI within the first year are the following:
To add to the above dimension, an output-based model will further reduce or eliminate the risks associated with cloud replatform projects.
To get detailed insights into the potential TCO savings write to amaze@hexaware.com and get started with a free assessment.
About the Author
Vinodh Arjun is responsible for Service Offering creation, Demand Generation and Demand Capture functions. He is also the product owner for AMAZE™ for Applications (Hexaware's automated cloud replatforming product suite) and is focused on developing and adopting a platform-based approach for application cloud transformation. He is passionate about leveraging advanced technologies for increasing the efficiency and quality of application development and transformation.
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