Six cloud migration strategies for consumer products and retail

The need for a cloud migration strategy

Although cloud migration has been on the agenda of retail and consumer products companies for years, many companies have lagged behind other sectors when it comes to porting their core legacy business applications to the cloud. Despite positive experiences with a variety of customer-facing applications and the benefits of cloud in IT (information technology) cost savings and enhanced agility, few companies have taken this step.

The reasons for the lag are primarily logistical. In the past, companies have commonly patched numerous applications together to meet evolving requirements, devoting the lion’s share of their limited IT budgets to apps that promise competitive differentiation.

But focusing on new apps usually adds more complexity to the landscape, the technical debt continues to accumulate, and overall system performance declines while operational risks rise. All the while, opportunities and competitor challenges go unmet.

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Cloud migration strategy’s crucial role

Clearly, this approach can’t go on much longer. And three upcoming challenges are likely to exacerbate the situation:

• The next recession: Many economic observers predict an inevitable recession in the coming year—but the cloud can play a crucial role in streamlining operations and reining in costs, shifting more IT costs from Capex to Opex. IT teams can also avoid purchasing and maintaining assets just to support the peak sales period. Growing the share of variable cost in the IT budget reduces the cyclical risks of mistimed digital investments.
• The next recovery: The inherent scalability of cloud systems means that it’s more difficult for the company to overshoot on its investments during a growth period. At the same time, better analytics improves the company’s ability to forecast not only the next downturn, but also the next upturn, giving executives a clearer idea of how to time their capital investments.
• The next business model: A cloud-based core makes it easier for the company to respond to spikes in demand and also make transformational changes to the business. Once core processes are in the cloud, the IT function moves beyond being a support organization and can finally become a true business partner—while dispensing with seasonal code freeze constraints. With the right IT in place, companies can carry out their work at a holiday level of preparedness every day of the year.

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Three steps toward determining your cloud migration strategy

Before a company can move its core processes to the cloud, it needs to take three preliminary steps:

• Classify applications: Differentiating, customer-facing applications that drive business value are prime candidates for investment to modernize. Non-differentiating, back-end applications should be maintained as is or migrated to the cloud using a low-cost approach. Nonstrategic, legacy applications are often candidates for retirement.
• Identify simplification opportunities: For applications that are being retained, the company should determine which applications have overlapping functionality and can be combined.
• Prioritize applications: Based on the above analyses, the company should set its modernization priorities. These priorities should consider the ease of working with the application architecture and the strategic business value of the application.

With this foundation in place, companies can approach legacy-to-cloud migration in one step (directly from legacy to the cloud) or two steps (moving from legacy to a more modern on-premises platform, and then migrating to the cloud)—six options in all.

Optimizing the human network

Digital assets aren’t the only resource strategists should consider before choosing the right path forward. The people who will use, operate, and in some cases, redesign these systems must also be fully committed to the cloud journey. In the end, convincing them of the importance of making the journey may be nearly as critical as choosing the right path.

Next, you need to consider who to bring in to help advise you on the appropriate approach, execute the migration, and guide you on the change journey. There are many software vendors and system integrators on the market that can handle pieces of a digital transformation. But relatively few have the capacity to look strategically at a company’s digital challenge, devise a plan for meeting that challenge, and execute the plan.

You need a company that can offer:

• Knowledge and expertise of your industry, with deep insights and a proven track record regarding how digitalization can enhance your competitiveness.
• Recognized experience performing change management and leading employee education campaigns integrated into the larger offering.
• End-to-end technological support for rolling out the solution, which includes assessments of current conditions, plans for app modernization and migration, and the ability to build highly scalable cloud-native applications.

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