Developing an Effective Business Case for Exiting the Data Centre

Data centres have been the backbone of IT infrastructure for decades. However, in recent times, physical data centres have been dropping in popularity. According to Gartner, over 85% of businesses will take a cloud-first approach to their data and infrastructure needs by 2025. 

More and more we are seeing businesses that want to simplify and reduce ongoing IT hosting costs and service complexity, whilst accelerating the ability to innovate quickly across business units. These businesses are looking to cloud-based infrastructure to meet these needs. It’s not surprising then that there is a significant increase in the interest and adoption of managed services, managed hosting, colocation services, hyper-converged systems, and hybrid cloud management platforms.

However, exiting the data centre and moving to the cloud is a complex challenge. Businesses need to develop an effective plan to transition from on-premise environments to public or private cloud. This can be a radical transformation for some organisations—a change that is essential but requires significant business reconfiguration to be successful.

Why are businesses leaving the data centre?

Businesses exit data centres for a variety of reasons – the rise of digital business models, aging IT infrastructure, heightened cybersecurity risks, or a combination of reasons can all push the exit forward. Here are some of the key reasons for existing the data centre.

• Legacy IT infrastructure: Ageing IT infrastructure drives increased operational costs, as well as creating compliance and outage risks, making it much harder to preserve a competitive advantage. Businesses are thus moving away from disruptive legacy infrastructure to keep up with the relentless demands of current times.
• Competitive pressure: AI-driven automation and shifts towards digital models have sped up the competitive business environment at an alarming rate. Organisations are pivoting towards cloud architecture because it gives them the speed and elasticity needed to compete in today’s bustling landscape.
• Scalability: The seamless scalability and agility of cloud environments allows businesses to engage in new markets around the globe, streamlining processes and driving growth.
• Acquisition complexities: Purchased businesses often must adopt the operational procedures and practices of the new parent company – this could include exiting the data centre for cloud-based infrastructure.
• Compliance and cybersecurity: Cyber security is becoming an increasingly important for business, with threat actors becoming more skilled at breaching IT security. Cloud offers robust cybersecurity options to protect data; it also ensures better compliance and provides stronger disaster recovery options over traditional data centres.
• Sustainability initiatives: Businesses are under mounting pressure to prioritise environmental sustainability within IT operations. In addition to driving digital transformation, cloud adoption provides organisations with opportunities to simplify their technology operations and strengthen their commitment to green IT.

What constitutes the perfect business case for exiting the business centre?

By migrating some or all their digital assets to the cloud, businesses can achieve transformational results; they can move and innovate faster, modernise aging infrastructure, scale globally, get better insights from their data, and restructure organisational models to create better customer experiences.

While there are clear directives for exiting the data centre, it still requires significant consideration from business leaders given the impact it can have on operations, processes, and people. With extensive experience helping organisations successfully migrate to the cloud, SXiQ has observed five key components that ensure a successful business case for migration.

1. Key stakeholder buy-in

Businesses require the buy-in of key stakeholders to effectively exit the data centre and make the transition to cloud successful. A well-planned, carefully articulated, and smartly directed business value case is essential to get important stakeholders on board with the plan.

Dominant logic may suggest that the Chief Information Officer (CIO) would be the first person whose interests need to be met. While this remains true for driving technology change, increasingly we are seeing the Chief Financial Officer (CFO) as a key stakeholder whose buy-in is required for an organisation to move to cloud-based infrastructure. Therefore, important metrics illustrated in a migration business case should weigh the interests of both the CIO and CFO respectively.

This is because the lines of responsibility for IT management are becoming blurred. CFOs have just as much (perhaps even more) decision-making power as CIOs do nowadays. CFOs are responsible for organisational budgets and also for ensuring that all decisions and value additions align with and augment overall business plans.

2. Transition Roadmap

Businesses need to visualise a clear roadmap to transition out of data centres. To do so means carefully analysing current business requirements and picking out key areas that would drive migration to cloud-first models.

The most important element of this roadmap is flexibility to make changes as needed. Organisations must regularly refresh their roadmaps based on trials, errors, successes, and new insights. They also need to update them in alignment with other moving parts of the organisation to ensure that the transition out of the data centre doesn’t negatively influence other quadrants of the company.

3. Assessment of cloud migration implications

A perfect business case for exiting the data centre needs to include a thorough assessment and articulation of how the existing data centre operates and how it will continue to operate post-migration in a cloud-based environment.

This assessment should include an inventory of current servers, databases (and data portability), components, applications, and configurations. It should also include information on systems, dependencies, and operational costs. This information is vital because a business case must predict and calculate how these elements will migrate to a cloud-based infrastructure.

Additionally, a thorough analysis of how a corresponding cloud-based solution will accommodate these existing elements, improve their functionality, and mitigate current roadblocks and bottlenecks with new technologies is essential.

4. Framing downtime as a bridge, not a barrier

Migration from a data centre to a cloud-based infrastructure will result in downtime. There’s not much that can be done to avoid this. However, organisations can plan smartly and be proactive to ensure that downtime is minimised and utilised for other purposes.

High volumes of data and components that need to be migrated, especially if they are complex, will mean more downtime for a business. Moving data to profoundly different systems requires training, technical provisions, broadband capabilities, and management plans. Challenges during migration may include a lack of interoperability that could cease operations.

These migration challenges that result in downtime may appear to be daunting. However, a solid business case will identify, acknowledge, and plan to mitigate as many of these problems as possible to ensure that dreaded downtime is a bridge rather than a barrier.

5. Return on Investment (ROI)

One of the key reasons to exit data centres and explore cloud-based options is that it makes good business sense to do so. In other words, the exit should result in enhanced ROI. The business case will fall flat if there is poor planning and articulation of the path to a higher ROI. And the case for a higher ROI will write itself if the above points are dealt with.

Additional considerations would include ensuring there are sufficient budget allocations for the rest of the company during a large-scale cloud migration. Organisations should also logically first move their highest-yielding segments to the cloud.

Segments of a business that bring lower profits can either be migrated at a later stage or even eliminated completely if they don’t align with the larger objectives of an organisation and the overall reasons for exiting the data centre and migrating to cloud.

The key benefits of exiting the data centre

The most persuasive argument for exiting the data centre comes from showcasing how cloud can transform operations and processes, while relieving the pressure of competing business needs. Cloud brings extraordinary benefits for businesses, and these should be showcased in the business case for migration.

Here are some of the benefits we see when organisations migration to cloud environments:

• Future-proofing: Customer demands and market trends are fluctuating and evolving at a pace previously unseen. Businesses can be prepared for what the future holds with cloud technologies enabling them to innovate more quickly in order to keep pace with competitors.
• Scalability: Businesses can meet the growing demands of the modern era by scaling at high speeds and lower costs.
• Speed: The agility of cloud-based environments allows businesses to develop and release new services or add new components to existing services at breakneck speeds.
• Innovation: Cloud technologies offer businesses streamlined systems with great elasticity to design, develop, experiment, and innovate new offerings for their customers.
• Sustainability: The obvious and immediate environmental advantages of exiting data centres have already been mentioned. However, by avoiding resource-intensive IT supply chains and moving to the cloud, more profound sustainability ripples can be initiated, yielding meaningful environmental benefits for the global community.

The reasons for exiting data centres are evident. The key benefits can potentially transform businesses and take them to greater heights in a short time. However, as mapped out above, migration from the data centre to cloud technologies is complex, and there’s a tremendous amount at stake for businesses. It can be disastrous if done incorrectly or inefficiently.

A specialist in cloud applications, cloud platforms, and cloud cybersecurity transformation can help an organisation migrate seamlessly—with all the benefits and none of the hassle. A world-class cloud integrator like SXiQ can help take a business to the next level by mediating a data-centre-to-cloud migration that leaves no stone unturned.

Why choose SXiQ to deliver migration?

SXiQ has a proven track record in transforming organisations’ legacy data centres into enterprise cloud architectures. SXiQ’s deep understanding of complex technology environments and industry proven capability has helped some of Australia’s largest brands migrate and modernise their cloud infrastructure, middleware, and application stack.

In just 15 months, SXiQ migrated Orica, a multinational manufacturer of explosives and blasting systems to AWS. SXiQ also worked with the century-old Australian dairy and food company Bega Cheese Limited on technology migration related to their A$560m acquisition of Lion Dairy & Drinks. The migration was completed in 12 months, during which both entities operated without disruption.

When organisations partner with SXiQ, they get a partner with enterprise-capability and start-up agility – gaining all the benefits of its larger competitors, but with the added bonus of customisation and intricate collaboration. Few cloud integrators offer the same level of flexibility.

By choosing SXiQ, a company dedicated to sustainability, clients can also contribute to making a significant impact on reducing e-waste, recapturing decommissioned hardware, and raising funds to help feed underprivileged Australians.

SXiQ can transform businesses. Those businesses, in turn, can transform the world. Email us at Enquiries@sxiq.com.au to assess your cloud readiness and begin your transformation journey.