Published on: November 9, 2023 | Author: Sayali Kulkarni
There are always risks involved when organizations start the widespread adoption of cloud computing. A lack of risk management can cause unexpected delays and cost overruns. Naturally, cost optimization becomes a huge part of risk management for communications service providers (CSPs) about to (or already have) started their telco cloud migration journey.
The allure of numerous benefits cloud migration brings often leads to a fervent pursuit of high-value cloud adoptions, overshadowing critical risks, taking big bite out of the cloud migration budget. This impedes the cloud transformation process.
However, substantial risks can be successfully mitigated through comprehensive due diligence and meticulous planning. In this blog, we present distinct factors that could result in overspending time and money and list steps to avoid an unexpected bill at the end of the telco cloud transformation exercise.
Cloud Management Risks that Cost Telcos
Potential risk #1 – Incompatibility with current infrastructure
Incompatibility of existing architecture reduces the execution speed of migration. The existing network elements (usually sourced from multiple OEMs) have variable response speeds, slowing down the cloud migration process.
A lack of governance policy before migrating the workloads usually leads to loss in performance and presents challenges in managing cost and security. For this reason, due diligence is required to check technical debts that arise from interdependencies between network elements and processes and even interoperability inconsistencies.
Everyone knows that data is most vulnerable during migration. Cloud data transfer introduces new external attacks, insider threats, malware, insecure APIs, and compliance risks. Data can be lost, exposed, or maliciously encrypted (ransomware).
Organizations with traditional security products and flat budgets are no longer enough to meet cloud security needs. Telcos that can’t obtain additional budget will need to move around costs and focus on their security budget to respond to cloud-specific cybersecurity threats and ensure compliance with industry regulations.
Potential risk #2 – Security
Everyone knows that data is most vulnerable during migration. Cloud data transfer introduces new external attacks, insider threats, malware, insecure APIs, and compliance risks. Data can be lost, exposed, or maliciously encrypted (ransomware).
Organizations with traditional security products and flat budgets are no longer enough to meet cloud security needs. Telcos that can’t obtain additional budget will need to move around costs and focus on their security budget to respond to cloud-specific cybersecurity threats and ensure compliance with industry regulations.
Potential risk #3 – Data loss
The cloud migration process can reveal inconsistencies that pose a risk of data loss. Such inconsistencies can occur migration, whether from data file corruption or missed table in data replication or duplicated data points.
Determining the cost of lost data can be a complicated process that relies on multiple factors, including decreased productivity, response expenses, penalties and regulatory expenses, and damage to reputation. Moreover, the type of information lost, and its corresponding value also significantly impacts the total cost of the data loss.
Potential risk #4 – Incorrect migration planning
Insufficient due diligence and planning before migrating to the cloud can lead to a lack of clear understanding regarding what to migrate and what to keep on-premises. This can result in sensitive data and applications being impacted during the migration process.
Additionally, choosing an incorrect migration approach, such as lift and shift or rearchitecting, can lead to increased migration time, costs, and reduced productivity.
Potential risk #5 – Extra latency and bandwidth demand
Organizations often underestimate the bandwidth needed for migrating workloads to the cloud. There is a point during the cloud migration process, where data or services will co-exist on-premises and the cloud. At this moment, ample bandwidth is needed for seamless communication between the services. Without enough bandwidth, latency issues will creep in and continue to grow, resulting for less-than-ideal customer experience and increased customer supports costs.
Potential risk #6 – Skill sets gap
Moving to cloud-based platforms requires a shift towards digital technology. For instance, DevOps practices and automation, which can be unfamiliar to traditional telecom teams. Organizations often underestimate the negative impact of cloud skills shortage. Inefficiencies such as sub-optimal architecture, improper migration, and significant delays cause companies to spend more than planned.
These risks can have different impacts across greenfield and brownfield operators based on various factors such as operator ageing, IT availability, network infrastructure and customer base.
Telco cloud migration risks – Greenfield vs. Brownfield Operator
Risks | Greenfield operator | Brownfield operator |
---|---|---|
Incompatibility | Low (zero) | High |
Security | High | High |
Data loss | Low (zero) | High |
Migration strategy | Low (zero) | High |
Extra latency/Bandwidth demand | High | High |
Skill sets gap | High | Moderate |
Planning and budgeting telco cloud migration
As is observed in various reports, it is challenging to estimate costs even with specific strategies on paper. Having a detailed view of all possible factors are crucial to estimate and manage migration costs more effectively. Below are various cost factors involved in cloud migration:
Pre migration costs
Pre-migration costs mainly consist of infrastructure costs along with a few indirect costs.
Migration costs
The cost for a cloud migration project can be broken down into two main categories
Post migration costs
These costs are O&M and management costs post cloud migration for all applications.
Budget Factors | Cost distribution (Greenfield operator) | Cost distribution (Brownfield operator) | ||
---|---|---|---|---|
Factor | Percentage | Factor | Percentage | |
Network Upgrade Infrastructure costs | Nil | 0% | Low | 15% |
Cloud Infrastructure Costs | High | 60% | High | 25% |
Indirect Costs pre migration | Nil | 0% | High | 2% |
Migration Costs | Nil | 0% | High | 30% |
Indirect Costs Fees | Nil | 0% | Low | 3% |
AMC and subscription Costs | High | 10% | High | 10% |
Skill Development | High | 15% | Low | 5% |
Monitoring and maintenance | High | 15% | Low | 10% |
Getting it right: Budget vs. risk
In Summary
As telcos embrace the many benefits of the cloud, managing the cost of telco cloud migration is an ongoing challenge. To ensure migration costs don’t go off the charts, telcos need to:
About the Author
Sayali Kulkarni
Head – Practice Portfolio Management
Sayali has over 12 years of experience working with diverse technologies in the Telecom and IT industry. Her expertise lies in the NextGen technology program, portfolio management, and business strategy development. Over the years, Sayali has managed end-to-end NextGen product development and complex, multimillion-dollar network and digital transformation programs. This has included deploying NextGen technology, OSS and BSS elements, cloud deployments, and legacy-to-cloud migrations.