Why On-Prem To Cloud Migration Still Matters for Enterprises
On-prem to cloud migration remains one of the highest-stakes infrastructure decisions enterprises make.
Get it right, and you unlock speed, flexibility, and the ability to scale without pre-purchasing capacity. Get it wrong, and you spend 18 months burning budget on a project that delivers a cloud environment more expensive and harder to manage than what you had before.
A Forrester survey of IT decision-makers found 72% of companies blew past their cloud budgets in the latest fiscal year. It's a stubborn trend with no real improvement over time, pointing to a core disconnect: most migrations are just infrastructure swaps, not operational overhauls. Servers change location, but teams keep handling costs, performance, & governance the same old way.
This guide covers how to approach migration in 2026, and how to avoid the pitfalls that derail most enterprise projects. We’ll cover:
- What Is On-Prem To Cloud Migration
- Common Drivers for Migrating From On-Prem to the Cloud
- On-Prem To Cloud Migration Models & Approaches
- Key Challenges In On-Prem To Cloud Migration
- Why Many On-Prem To Cloud Migrations Underdeliver
- A Practical Framework for Successful On-Prem To Cloud Migration
- On-Prem To Cloud Migration vs. Hybrid and Multi-Cloud Strategies
- Measuring Success After On-Prem To Cloud Migration
- Common Mistakes To Avoid During On-Prem To Cloud Migration
What Is On-Prem To Cloud Migration?
On-prem to cloud migration is the process of moving applications, data, & infrastructure from company-owned servers to cloud environments. Those environments are typically managed by providers like AWS, Azure, or Google Cloud.
The scope varies. Some organizations move a handful of workloads to test the waters. Others pursue full data center exits. Most land somewhere in between, migrating selectively based on which workloads benefit most from cloud economics & which need to stay on-prem for compliance, latency, or cost reasons.
Common Drivers for Migrating From On-Prem to the Cloud
Cost Restructuring
Shifting from capital expenditure to operational spending lets organizations pay for what they use rather than what they think they'll need three years from now. For workloads with variable demand, this is a genuine financial advantage.
Speed & Agility
Cloud infrastructure provisions in minutes. For engineering teams shipping features, running experiments, or launching in new markets, the weeks-long lead time of on-prem procurement is a competitive disadvantage.
AI & Data Workloads
Organizations building ML pipelines, running inference at scale, or experimenting with large language models need elastic compute that on-prem infrastructure can't provide without massive capital outlay.
Talent & Operational Pressure
Maintaining on-prem infrastructure requires specialized staff. As that talent gets harder to find and more expensive to retain, cloud's managed services become a practical alternative.
On-Prem To Cloud Migration Models & Approaches
Not every workload should migrate the same way. The right approach depends on the application's architecture, business criticality, and how much you're willing to invest in reworking it.
Rehosting (Lift & Shift)
Rehosting, also known as lift and shift, means moving the application as-is to cloud infrastructure. No code changes, no architectural rework. It's fast & low-risk, but you inherit every inefficiency from the on-prem environment.
Replatforming
Replatforming makes targeted modifications to use cloud-native services, like managed databases or serverless functions, without a full rewrite.
Swapping a self-managed database for a managed service like Amazon RDS or Azure SQL is a common example. You get some cloud benefits without the cost & timeline of a full refactor.
Refactoring
Refactoring redesigns the application to be cloud-native. This means rearchitecting for containers, microservices, serverless, or a combination.
This is the approach with the highest investment upfront, but the highest long-term return in scalability, performance, & cost efficiency. Reserve this for applications that are strategic & will run in the cloud for years.
Hybrid & Phased Migration
Hybrid & phased migration migrates your infrastructure in stages, keeping some workloads on-prem while moving others to the cloud.
This is the most common approach in practice. Gartner projects 90% of enterprises will adopt hybrid cloud by 2027. The reason is pragmatic: not every workload belongs in the cloud, and a phased approach lets you validate assumptions before committing fully.
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Key Challenges in On-Prem To Cloud Migration
Cost Predictability & Budget Overruns
The most common migration failure mode isn't technical. It's financial. Organizations underestimate egress fees, overestimate savings from retiring on-prem hardware, and fail to account for the operational cost of managing cloud environments post-migration.
This pattern happens constantly: teams budget for the migration itself, but not for the ongoing optimization work that keeps cloud costs from drifting upward month over month.
Performance & Latency Risks
Applications that perform predictably on dedicated hardware sometimes behave differently in shared cloud environments.
Network latency, noisy neighbor effects, & misconfigured autoscaling can degrade performance in ways that are hard to diagnose without deep observability. Workloads with strict latency requirements need careful architecture planning before migration, not after.
Security, Compliance, & Data Governance
Cloud changes your security perimeter. The shared responsibility model means your provider secures the infrastructure, but data encryption, identity management, access controls, & compliance posture remain your responsibility.
Organizations in regulated industries like finance, healthcare, & government need to map compliance requirements to cloud controls before moving a single workload.
Operational Complexity & Skill Gaps
Running the cloud well is a different skill set than running on-prem well. Teams that are experts in managing physical servers, storage, & networking don't automatically know how to optimize Kubernetes clusters or tune autoscaling policies. Managing multi-account cloud architectures requires a different skill set entirely.
In our experience, closing this skill gap takes about 6 to12 months. Organizations that don't invest in training or tooling during that window end up overspending and underperforming.
Why Many On-Prem To Cloud Migrations Underdeliver
Most migration projects succeed at the literal task: the workloads move to the cloud. Where they fall short is in delivering the business outcomes that justified the migration in the first place.
We've seen the same pattern across dozens of enterprise environments. The migration team focuses on getting workloads running in the cloud by a deadline. Optimization gets deferred while the next project takes priority, and it never gets the resources or attention it needs.
Six months later, the cloud bill is higher than anyone expected, performance is inconsistent, & the teams managing the environment are stretched thin.
The root cause is treating migration as a project with an end date rather than an operational shift that requires continuous investment. VMware's 2025 cloud report found that 31% of IT leaders report wasting more than half their cloud spend, with nearly half seeing over 25% waste.
That waste accumulates gradually over months: unoptimized configurations, orphaned resources, & oversized instances that nobody revisits.
A Practical Framework For Successful On-Prem To Cloud Migration
Assessing Workloads & Readiness
Start by categorizing every workload along three dimensions: business criticality, migration complexity, and expected cloud benefit. Not everything should move, and not everything should move at once.
Workloads with variable demand and low latency requirements are natural early candidates. Workloads with strict compliance needs or tightly coupled dependencies need more planning.
Designing The Target Cloud Architecture
Decide the migration model (rehost, replatform, refactor) for each workload based on its strategic value and the team's capacity. Avoid the trap of rehosting everything with plans to optimize later.
For workloads that will run in the cloud long-term, invest in the right architecture upfront. It's significantly cheaper to design for cloud-native efficiency before migration than to refactor after.
Building Cost And Governance Guardrails
- Before you migrate a single workload, put guardrails in place:Budgets & tagging policies for cost attribution
- Access controls & identity management
- Cost alerts & resource lifecycle policies
- Automated rightsizing from day one.
The organizations that control cloud costs successfully build these guardrails into the migration itself, not as a retrofit six months later. A strong cloud cost optimization strategy starts before the first workload moves.
Continuous Optimization Post-Migration
This is where most organizations drop the ball. Once workloads are running in the cloud, they need continuous optimization: rightsizing instances, tuning autoscaling, managing purchasing commitments, & validating that performance meets SLOs.
Manual reviews can't keep pace with the rate of change in cloud environments. Too often, teams try to run quarterly optimization cycles on environments that drift daily. By the time they review, the waste has already compounded.
On-Prem To Cloud Migration vs. Hybrid and Multi-Cloud Strategies
Migration doesn't have to be all-or-nothing. Full migration to the public cloud is one option, but for most enterprises in 2026, it's not the only option and often not the right one.
Hybrid strategies keep latency-sensitive, compliance-bound, or cost-predictable workloads on-prem while moving everything else to the cloud. This gives teams the control of on-prem where it matters most without giving up cloud speed & scalability everywhere else.
Multi-cloud strategies distribute workloads across providers to avoid lock-in & optimize for each provider's strengths.
Both approaches add operational complexity. The tooling needed to manage multi-cloud effectively is harder to build than the architecture itself. The teams that succeed usually invest in a single optimization layer across environments rather than managing each one separately.
Measuring Success After On-Prem To Cloud Migration
Migration success isn't "workloads are running in the cloud." That's completion, not success. Meaningful migration metrics include:
- Cost Efficiency. See if you are spending less than the on-prem total cost of ownership, including the people & tools required to manage the cloud environment. This can be done by tracking cost per transaction or cost per user, not just the monthly bill.
- Performance. To see if latency, throughput, & error rates meet or exceed on-prem baselines, measure against SLOs, not just uptime.
- Operational Velocity. Track deployment frequency, lead time from commit to production, & mean time to recover from failures. Migration should accelerate engineering, not just change where the servers sit.
- Governance Posture. To see if compliance controls, access policies, & data governance requirements are met, track policy violations, access anomalies, & audit readiness scores, not just pass/fail at audit time.
Common Mistakes To Avoid During On-Prem To Cloud Migration
Lifting & Shifting Everything With No Optimization Plan
Rehosting is a valid starting point, but without a concrete plan & timeline for post-migration optimization, you're just renting someone else's data center at a premium.
Treating Migration as a One-Time Project
The organizations that get the most from cloud treat it as an operating model. That means investing in optimization, governance, & skill development long after the migration is "done."
Ignoring Post-Migration Cost Drift
Cloud costs don't stay where you set them. Without continuous monitoring & adjustment, waste accumulates silently.
Underinvesting in Cloud Operations Skills
Your team's on-prem expertise doesn't automatically transfer. Budget for training, tooling, & external support during the transition window.
Get Started With Sedai
The hardest part of on-prem to cloud migration comes after the move: making sure your cloud environment stays optimized for the long term.
That's what Sedai is built for. Engineering teams at companies like Palo Alto Networks use Sedai's autonomous optimization platform to manage over 89,000 production changes across their cloud, with zero incidents.
FAQ
What is on-prem to cloud migration?
On-prem to cloud migration is the process of moving applications, data, & infrastructure from servers in your own facilities to cloud environments managed by providers like AWS, Azure, or Google Cloud. The scope can range from moving a few workloads to a full data center exit.
Why do enterprises migrate from on-prem to cloud environments?
The most common drivers for migrating from on-prem to the cloud include:
- Cost restructuring from capital expenditure to operational spending
- Faster deployment speed & infrastructure provisioning
- Access to elastic compute for AI & data workloads
- Reducing the operational burden of maintaining physical infrastructure & specialized staff
What are the main approaches to on-prem to cloud migration?
The four primary models are:
- Rehosting (lift & shift)
- Replatforming (targeted modifications for cloud services)
- Refactoring (full cloud-native redesign)
- Hybrid/phased migration
The right approach depends on each workload's complexity, strategic value, & performance requirements.
How long does an on-prem to cloud migration typically take?
Simple lift-and-shift projects can finish in weeks. Complex enterprise migrations involving hundreds of applications & compliance requirements. Architectural changes typically take 12 to 24 months. Phased approaches spread the work & reduce risk.
What are the biggest risks in on-prem to cloud migration?
Budget overruns are the most common risk. McKinsey found 75% of cloud migrations exceed their budget. Other major risks include performance degradation from misconfigured environments, compliance gaps from the shared responsibility model, and skill gaps on cloud operations teams.
How can organizations control costs during cloud migration?
Build cost guardrails before migrating: budgets, tagging policies, resource lifecycle rules, & automated rightsizing.
After migration, invest in continuous optimization rather than periodic reviews. Organizations that defer cost management to "phase two" consistently overspend.
Should enterprises choose cloud-only or hybrid after migration?
Many enterprises in 2026 end up with hybrid architectures. Gartner projects 90% will adopt hybrid cloud by 2027. The decision depends on workload characteristics. Compliance requirements, latency sensitivity, & cost predictability all factor into which workloads belong where.
How do you measure success after migrating from on-prem to cloud?
Track cost efficiency (cost per transaction, not just the monthly bill), performance against SLOs, deployment velocity, & governance posture.
The real test is whether the cloud is delivering the business outcomes that justified the migration, not just whether workloads are running.