Top 3 Reasons Customers Overspend on Their Cloud Migrations

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Peter Newton

SVP, Cloud Consulting

As businesses increasingly embrace the cloud to drive agility, scalability, and innovation, one unfortunate reality often accompanies these transitions: overspending. Despite the cloud’s promise of cost efficiency, many organizations find themselves paying more than anticipated after migrating their workloads. This isn’t a flaw in cloud technology but rather the result of common missteps in the migration process. If enterprises simply lift and shift from their data centers to the cloud, they may end up spending significantly more. On the other hand, thoughtful strategies such as containerizing applications can lead to substantial savings in both operational and management costs. Let’s explore the top three reasons customers overspend on their cloud migrations and how to avoid these pitfalls.

1. The Lift-and-Shift Trap

1. The Lift-and-Shift Trap

The most common approach to cloud migration—and often the most problematic—is the lift-and-shift strategy. In this method, organizations move their on-premise workloads to the cloud with minimal modifications. While this may seem like a quick and cost-effective approach, it often results in inflated cloud bills for several reasons:

  • Inefficient Resource Utilization: Applications designed for on-premise infrastructure are often over-provisioned to account for peak usage. When these applications are moved to the cloud without optimization, organizations continue to pay for unused capacity. For example, AWS offers tools like CloudWatch to monitor and optimize resource utilization, helping to identify and eliminate unused capacity.
  • Lack of Right-Sizing: Cloud platforms offer a wide range of instance types and pricing models. Without thorough analysis, businesses may end up choosing the wrong instance sizes or tiers, leading to unnecessary costs. Azure’s Cost Management and Billing tool can help businesses analyze their usage and choose the right instance sizes.
  • Missed Opportunities for Modernization: Lift-and-shift skips the critical step of rearchitecting applications to take advantage of cloud-native services such as serverless computing or managed databases. These services can significantly reduce costs by shifting operational burdens to the cloud provider. AWS Lambda and Azure Functions are examples of serverless computing services that can help reduce costs.

To avoid the lift-and-shift trap, businesses must assess their workloads before migration. Identify which applications can be modernized or rearchitected to leverage cloud-native capabilities. Though this requires upfront investment, the long-term cost savings and performance improvements are well worth it.

2. Underestimating Management Complexity

2. Underestimating Management Complexity

Another major driver of overspending is the underestimation of the complexities involved in managing cloud environments. Many organizations assume that moving to the cloud eliminates the need for robust management practices, but this misconception can lead to spiraling costs:

  • Lack of Governance: Without proper governance, teams may spin up cloud resources without adhering to cost controls or best practices. This often results in shadow IT and resource sprawl, where unused or underutilized resources accumulate. AWS provides tools like AWS Organizations to help manage and govern multiple AWS accounts centrally.
  • Overlooked Maintenance: Applications and workloads require ongoing monitoring and optimization to ensure cost efficiency. Failure to implement automated scaling, shut down idle resources, or right-size instances can quickly inflate costs. Azure’s Auto-Scaling feature can help manage and optimize resource usage by automatically adjusting the number of instances based on demand.
  • Skill Gaps: Managing cloud infrastructure requires specialized expertise. Organizations that lack these skills often end up relying on external consultants or overprovisioning resources to avoid performance issues, both of which increase expenses.

Implementing robust cloud governance frameworks and investing in cloud management tools can mitigate these challenges. Automation, in particular, plays a critical role in managing costs. For instance, tools that automate scaling, resource tagging, and usage monitoring can help organizations identify and eliminate waste.

3. Failure to Embrace Containers

3. Failure to Embrace Containers

Containerization is one of the most effective strategies for reducing cloud costs, yet many organizations fail to adopt it during their migration. Containers allow businesses to package applications with their dependencies, enabling consistent performance across environments while optimizing resource usage. Here’s how containers contribute to cost savings:

  • Efficient Resource Allocation: Containers use shared operating system resources, enabling higher density compared to virtual machines. This means organizations can run more workloads on fewer resources, reducing cloud costs. AWS offers Amazon ECS and EKS for container orchestration, which can help optimize resource allocation.
  • Portability: Containers make it easier to move applications between cloud providers or hybrid environments, enabling businesses to take advantage of competitive pricing and avoid vendor lock-in. Azure Kubernetes Service (AKS) provides a managed Kubernetes service that simplifies container orchestration and enhances portability.
  • Simplified DevOps: By standardizing the deployment process, containers streamline development and operations, reducing the time and effort required to manage applications.

For organizations new to containers, managed services like Kubernetes and Docker on platforms such as AWS, Azure, or Google Cloud provide an accessible entry point. By containerizing applications before or during the migration process, businesses can unlock significant cost savings and operational efficiencies.

Conclusion

Cloud migration holds immense potential for transforming IT operations and driving business growth, but it requires more than simply relocating workloads from data centers to the cloud. Overspending often occurs due to unoptimized lift-and-shift strategies, underestimating management complexities, and failing to embrace cost-saving technologies like containers. By addressing these issues head-on, businesses can achieve the full benefits of the cloud without breaking the bank.

Organizations should approach cloud migration as an opportunity to modernize their IT infrastructure. Conducting a thorough assessment of workloads, investing in cloud governance, and leveraging containers are all steps that lead to a more cost-effective and efficient cloud journey. In doing so, businesses can turn the cloud from a cost center into a competitive advantage.

About the Author

Picture of Peter Newton

Peter Newton

SVP, Cloud Consulting, NexusTek

Peter is a seasoned IT executive with a +25 year proven track record of leveraging cloud and AI technologies to drive operational excellence, enhance productivity, and deliver innovative solutions for high-profile clients. His expertise spans hybrid cloud IT services, platform engineering, and transformative technology implementations, with achievements including securing platform engineering contracts, guiding large-scale data modernizations, and increasing client satisfaction through effective cloud strategies.

Need an expert partner to optimize your cloud migration? Contact NexusTek today!

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