When it comes to cloud migration, modernization has to come first. Systems and process that are old have to be updated before they can be migrated to the cloud because they won’t function as is on modern infrastructure. Determining what to modernize should be approached as a traditional budgeting issue. Many companies approach migration as a technology or product issue, but when you’re migrating to the cloud and expecting to reap savings, it very clearly plays a role in your company’s budget.

Systems that are already modern should be migrated to the cloud. These systems usually require minimal effort and there can be considerable cost savings. Older systems will require modernization for cloud migration, so you need to evaluate whether the investment will be worth it. For instance, if you need to refactor 40% of something to get it into the cloud and it costs $50,000 but the savings over the next three years is $300,000, then you know it’s worth it. But if you need to refactor 80% of something and it’s going to cost you $1,000,000 but only saves you a few hundred thousand, then it’s clearly not worth it. 

However, evaluation is not always that cut and dry. You also have to consider the intangibles. Sometimes you can’t anticipate how much savings there is without factoring in other hidden costs. A system that costs a million dollars to refactor and yields a small amount of cash savings may seem like a losing proposition. But if it breaks every 30 days, is affecting customers, and is forcing someone to get up every other night to keep it on line in between, then there are costs in lost revenue, reputation, and turnover or potential HR issues.

Removing those costs adds to your savings, but quantifying them can be difficult. HR isn’t going to go down the rabbit hole of trying to put a number on that, so you have to assign some level of value to it to determine if those intangibles are worth the extra cost.

There is a scale factor with this as well. All companies want to be financially efficient and fiscally sound, but at the end of the day you have to keep your company running. So you have to ask if you can afford it. Let’s say you’re a massive corporation which spends a couple billion dollars on technology every year. It costs a million dollars to modernize, and you have a team of five people you want to keep in your company for 10 years. You don’t want these people to have to get up every night only to burn out and quit, so it’s probably worth the million. But if you’re a smaller scale company and can’t afford to spend that kind of money because the savings isn’t enough, then it might not be worth it.

Essentially, you want to move as much as you can into the cloud. You want to utilize as many services as you can to maximize the benefits your cloud provider offers. But you also want your company to remain financially stable and running, otherwise it’s all for naught. Be sure to do cost/benefit analysis using hard numbers, but don’t forget about the intangibles like keeping good employees from burning out.