The Banking Industry Underestimates Costs of Cloud Migrations

Cloud computing is a growing part of the IT industry and is seen collectively as a solution to manage data and systems effectively. In numerous areas, cloud computing is being used as the standard for deploying application areas include; banking, telecommunications, and logistics. However, migrating IT infrastructure and applications to the cloud can induce hidden and overlooked costs. This study examines the cloud migration process of ten international corporate banks, to explore and understand costs occurring during a cloud migration. We have identified that the banking industry underestimates cloud migration costs and that budgets are exceeded. The top five cost categories that are underestimated: (1) managing dependencies of applications, (2) legislation, (3) support required from other non IT departments, (4) re-architecting of applications, and (5) hiring of external contractors. Main reasons for overspending are: (1) lack of proper and rigorous business cases, (2) knowledge deficit related to cloud migrations and the corresponding IT-architecture, and (3) no clear cloud migration strategy. Cloud computing is a transformative technology which requires a rigorous approach to remain within budget and deliver the desired results.