Analysts project an increase in the rate at which cloud computing is adopted but it is important to balance the benefits and costs of migrating to the cloud.

The benefits of migrating to the cloud are well chronicled. Zero hardware costs, lower management costs and the availability of platforms that adapt rapidly to competitive threats and opportunities are three of the primary motives, while many see cloud computing as a way of eliminating over-capacity and freeing up IT budget for innovation.

Such has been the rate at which businesses in the manufacturing, banking, and professional services industries have migrated to the cloud that Oracle co-CEO Mark Hurd predicts 80% of corporate data centers will disappear by 2025. Similarly, analysts from Morgan Stanley have forecast revenues for cloud service providers will increase by more than 30% per annum.

However, although cloud services have allowed many companies to scale quickly without the capital expense of building on-premise data centers, some analysts have warned the decision to shift from buying to renting compute capacity should not be taken without consideration of the costs of migrating to the cloud – both the direct costs and the, often overlooked, indirect costs.

All-or-Nothing Shifts are Not Ideal

All-or-nothing shifts to the cloud are not ideal according to Lydia Leong, a vice president at Gartner, because “Most companies starting on this journey don’t know what they don’t know”. Her advice is echoed by Edward Wustenhoff, the chief technology officer at Burstorm, who suggests it is better to move a fraction of applications to the cloud and learn the capabilities of the cloud at a modest pace.

This approach gives companies the opportunity to re-migrate applications back to the corporate infrastructure if the initial deployment fails to fit the business model. It also give companies the opportunity to evaluate whether its cloud deployment plan should be fine-tuned. “CFOs [should] periodically take the pulse of what’s happening in the market”, Wustenhoff advises.

Performance, Security and the Social Factor

Other potential concerns are performance, security and the “social factor” according to Timothy Chou, a lecturer in cloud computing at Stanford University. Chou points to a human error outage at Amazon that took several large websites – including Netflix, Reddit, Adobe, and the Associated Press – offline for eleven hours in February.

Chou also suggests companies should define their security requirements and find out if the service provider meets them. He notes that many cloud service providers have tools addressing these requirements, but companies will have to spend time familiarizing themselves with how the available tools can be built into their existing apps.

Chou also speculates that some organizations resist migrating to the cloud due to a social factor he describes as having nobody´s throat to choke when something goes wrong. He believes that a gradual migration to the cloud will help resolve these concerns over time as the C-suite sees far better pricing than the company would experience if it tried to do everything on its own.