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Commercial Insight: How to choose a cloud service provider when migrating to the cloud

If you are planning to migrate to the cloud this case study illustrates our recommended approach to choosing a cloud service provider.

This cloud migration project delivered OPEX reduction, the agility to flex with demand and a competitive contract with the chosen cloud service provider

If you are planning to migrate to the cloud this case study illustrates our recommended approach to choosing a cloud service provider, from identifying your requirements through to evaluating and negotiating with potential suppliers to ensure you achieve the optimal deal.

The drivers for cloud migration

Omnia* is a UK based high street and e-commerce retailer with 2,000 employees and an annual turnover of £500m.  Increasing e-commerce market pressure meant meeting customer demand for new functionality in a timely fashion was high priority. In addition hardware was reaching end of life so Omnia had a technical and commercial requirement to optimize their infrastructure.

The trend towards the cloud is well underway, with many organizations migrating their entire existing on-prem estate.  Omnia took the decision to migrate the majority of its infrastructure to cloud to meet both technical and commercial objectives.

The strategy’s key objectives were to:

  • Identify the core hardware that couldn’t migrate
  • Review the market for cloud service providers (CSP)
  • Reduce the technical complexity of the estate
  • Increase the agility of the development teams
  • Deliver commercial benefit

Our role as IT procurement experts was to collaborate with the technical teams to establish the hardware to remain, define the future cloud requirements to include in the market evaluation, negotiate the new contract with the cloud service provider and facilitate the migration from the incumbent on premise supplier to the new CSP. This would all be achieved through collaboration with the technical teams.

Our recommended approach when migrating to the cloud

Step 1: Preparation for market

The Cloud market has evolved rapidly over the last few years.  Depending on whether you are looking at public or private cloud will determine the providers to consider.  Suppliers such as AWS and Azure provide hosted solutions that can be flexed up and down rapidly to provide maximum agility to your delivery teams without the organizational overhead of managing a data center.

The other option is a private cloud which can mean you are responsible for standing up and maintaining the infrastructure, which increases overhead and run costs and makes flexibility for development less agile because of the time taken to expand capacity.  Managed service offerings are available, although a premium is paid versus public cloud there may be organizational requirements that determine the need for private.

Key considerations when evaluating the market for cloud service providers are:

  • Security – what are your organizations minimum requirement?
  • Experience of migrations from on prem
  • Existing technical specifications are compatible
  • Commercial models
  • Maintenance downtime

We worked with Omnia’s technical teams to identify the future requirements considering the current estate and development planned for delivery of the project roadmap.  It was agreed that a public cloud model was adequate and proposals were sought for a managed service.  We reviewed cloud migration supplier capabilities across the market and produced an appraisal report to identify capable suppliers.

We developed a comprehensive request for proposal (RFP) in collaboration with the technical team and issued it to the five most suitable cloud solution providers. The well-defined requirements meant the suppliers were able to produce accurate responses including commercial terms and price modelling.

A further consideration moving forward was the migration from and the management of the incumbent supplier.

Step 2: Evaluation & negotiation

We worked with the technical, legal and financial teams to develop an evaluation matrix for the response.  The sections were split by the relevant subject matter experts who scored each question from the responses, these scores were weighted to give an overall total.  It was clear that the market leader was leading, but we took the second supplier through to negotiations to explore the range of services available and create leverage in the negotiation.

Roles were allocated to the members of the negotiation team which included subject matter experts from Technical, Commercial, Legal and Finance.  We developed a plan that aligned with the key objectives and each member covered a different section depending on their expertise.

The plan also mapped the deliverables with the most and least desirable outcomes, as well as a settlement state, to reach the end goal. The plan delivered the following:

  • A competitive agreement with the chosen cloud service provider which also met the technical and migratory challenges
  • No need for a further implementation supplier or charge for migration
  • Ability to increase the agility of the development teams
  • Reduction in the complexity of the existing estate due to migration
  • 15% OPEX cost saving for cloud services vs. on-prem service

Step 3: Contract implementation

Migrating the existing on-prem estate to the cloud service provider was a complex project due to the configuration of the existing infrastructure and lack of knowledge of its content, a ball of spaghetti.  The CSP was well versed in this type of scenario, as seen in many organizations where an architecture has evolved without consistent planning and forethought.

Key risks to be mitigated were:

  • Lack of service for a system during migration with no roll back option
  • Support service to be as good as, if not better than the current
  • Ensure the development teams:
    • understood the contract and usage rights to avoid any breach
    • were trained in cloud usage
  • Co-ordinate the suppliers to deliver a successful outcome

We coordinated the project teams for Omnia, the incumbent supplier and the cloud service provider using a RACI that everyone could follow during the migration.  It was imperative the incumbent delivered what was required to ensure the success of the migration and the cloud solution provider deliverables; a number of tools and techniques were recommended by us to enable this.

Step 4: In-life contract management

Once the migration was complete, we introduced defined supplier and contract management governance that would enable Omnia to efficiently manage the CSP and the service they delivered.  The governance revolves around scheduled meetings monthly, quarterly and bi-annually between different teams within Omnia and the cloud solution provider.  The scope of the meetings become increasingly strategic and have senior attendees the fewer the frequency, this ensures alignment of strategies and direction, especially where technology is concerned and a forum for escalations.

The benefits of migrating to the cloud

The main objective for Omnia was to deliver agility to meet demand on their development teams and reduce the OPEX cost for the infrastructure.  Both were met, in addition the unpicking of the spaghetti highlighted several redundant systems that were mothballed resulting in a reduction in cloud capacity requirement and further savings.

Overall, 90% of the IT estate was migrated to the cloud resulting in a cleansed system estate that was easier to develop and maintain.

The contract negotiated with the selected cloud service provider:

  • Included client-favored clauses not achieved previously in the market, paving the way for a sustainable and client-focused relationship
  • Enabled increased flexibility and agility of development teams that increased project throughput and end customer engagement driving sales
  • Agreed tiered pricing vs. usage and secured discounts on future cloud capacity

The agreement with the chosen cloud service provider was ultimately far simpler and easier to manage than the previous on-premise model which again delivered efficiencies to the Omnia team so they could focus on developing and not handholding the CSP.

As IT procurement experts we help our clients get optimal value from their wider supplier agreements and expenditure. Our services range from end to end procurement projects through to day to day contract management. If you could benefit from additional IT procurement resources please feel free to contact us to see how we can help.

*Protecting our clients’ confidence is of utmost importance at ITAA. While our case studies are based on true projects, we have used fictitious names and removed or changed other identifiable details.

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