The benefits and challenges of cloud migration are well known in principle: faster scaling and less hardware to manage on one side, security, cost and legacy complexity on the other. What separates successful migrations from expensive ones is how those trade-offs are handled in practice.
The hard parts are rarely the technology. In Flexera's 2026 State of the Cloud Report, the top migration challenges were understanding application dependencies (54% of respondents), assessing technical feasibility (44%) and comparing on-premises with cloud costs (43%) (Flexera). In other words: knowing what you have, what will break, and what it will really cost.
This guide covers why organizations are migrating in 2026, the real benefits and challenges, the hidden costs most plans miss, how to choose a strategy using AWS's 7 Rs, and a practical process from assessment to optimization.
Why organizations are migrating in 2026
The classic driver, getting out of the hardware business, still applies. Several newer ones have joined it:
- Data centre exits and hardware refresh cycles: a lease or refresh deadline often sets the timeline.
- Virtualization licensing changes: many organizations are reassessing VMware estates after Broadcom's licensing changes, and AWS launched AWS Transform for VMware in May 2025 to speed up those moves.
- AI readiness: GPU capacity, managed AI services and modern data platforms are far easier to adopt in the cloud.
- Resilience and security: multi-AZ designs, managed backups and modern identity controls are hard to replicate on-premises at the same cost.
Key Benefits of Cloud Migration
From organizational streamlining to cost efficiency, the benefits of cloud migration are plenty. Let’s look at them in detail below:
1.Scalability and Flexibility
Cloud migration allows businesses to easily adjust resources to meet demand fluctuations, which is essential for growing organizations. By leveraging the scalability of the cloud, companies can quickly scale up or down based on their needs, ensuring optimal resource utilization.
This conversation on Reddit focuses on the much-needed flexibility that cloud migration provides.
2. Cost Efficiency
One of the primary benefits of cloud migration is the shift from capital expenditure (CapEx) to operational expenditure (OpEx). With pay-as-you-go pricing models, businesses only pay for the resources they consume, reducing upfront costs and enabling better financial planning. This has led to worldwide cloud service spending growing by 20%.
3. Improved Collaboration and Accessibility
Cloud migration enhances collaboration by enabling remote access and seamless teamwork across different locations. Cloud-based tools and platforms allow employees to work together efficiently, regardless of their physical location, improving productivity and agility.
Want a deeper look into how this collaboration works? A video by Free Education Academy explains how it all functions.
4. Enhanced Security and Privacy
Advanced security features, including encryption and user access controls, ensure the data protection that cloud providers offer. By migrating to the cloud, businesses can benefit from these robust security measures, reducing the risk of data breaches and unauthorized access.
5. Innovation and Speed to Market
Cloud migration facilitates faster deployment of new solutions and enables organizations to leverage modern technologies. With the ability to quickly provision resources and iterate on ideas, businesses can accelerate innovation and reduce time to market for new products and services by choosing the right platform for the product.
6. Disaster Recovery and Business Continuity
Cloud providers offer geographically distributed infrastructure, enabling organizations to implement robust disaster recovery and business continuity plans. Businesses ensure high availability and minimize the impact of potential disruptions by replicating data and applications across multiple regions.
7. Reduced Maintenance
Cloud migration reduces the burden of maintenance and updates on internal IT resources. Cloud providers handle the underlying infrastructure, including hardware, security patches, compliance, and software updates, allowing organizations to focus on their core business activities.
Enticed by the benefits? Let’s also look at the other side of the coin - the challenges.
Challenges of Cloud Migration
71% of enterprises report difficulties in moving data into the cloud, often due to legacy infrastructure challenges. Let’s look at them in detail below:
1. Security Risks
While cloud providers implement stringent security measures, there are still risks associated with cloud migration. Misconfiguration and improper data handling can lead to potential vulnerabilities. Organizations must prioritize security and implement appropriate measures to mitigate these risks.
2. Legacy Infrastructure Compatibility
Migrating legacy systems to the cloud can be challenging. Significant modifications or replacements may be required for some older applications and infrastructure because they are not directly compatible with cloud environments. This can increase the complexity and cost of the migration process.
A Reddit thread goes deeper into this conversation, discussing all the difficulties with a legacy system.
3. Data Loss and Business Disruption
During the migration process, there is a risk of data loss or business disruption if not handled properly. Moving large volumes of data and ensuring minimal downtime requires careful planning and execution. Organizations must have robust data backup and recovery strategies in place.
4. Skill and Knowledge Gap
Cloud migration often requires specialized skills and knowledge. Organizations may face challenges in finding and retaining professionals with the necessary expertise to manage and optimize cloud environments effectively. Addressing this skill gap is crucial for successful migration and ongoing management.
5. Vendor Lock-In
Choosing a specific cloud provider can lead to vendor lock-in, where an organization becomes dependent on a single provider's services and technologies. This can limit flexibility and make it difficult to switch providers in the future.
It’s best to choose a vendor that provides end-to-end cloud migration solutions so you never have to worry about switching.
Alright, with those challenges in mind, let's dive into how you can successfully navigate them.
Hidden costs most migration plans miss
- Double running: paying for on-premises and cloud at the same time during migration, often for months.
- Data transfer: egress to the internet, cross-AZ and cross-region traffic, and NAT gateway processing.
- Licensing: some commercial software costs more, or needs different licences, in the cloud.
- Over-provisioning after lift-and-shift: servers sized for on-premises peaks keep running at full size. Flexera estimates 29% of IaaS and PaaS spend is wasted across organizations (Flexera 2026).
- Operations and training: new monitoring, security tooling and skills.
Build these into the business case, and plan for optimization in the first 90 days after each wave. See our guide to cloud cost management.
Overcoming Cloud Migration Challenges
1. Develop Comprehensive Plans
To mitigate risks and ensure a smooth migration, organizations should develop detailed migration plans. These plans should address potential challenges, outline clear objectives, and define the steps required for a successful transition. Thorough planning helps minimize disruptions and data loss.
2. Enhance Security Measures
Security remains a primary concern, with 79% of organizations identifying it as a significant challenge in cloud adoption. Implementing advanced encryption, access controls, and monitoring solutions can help safeguard sensitive data. Regular security audits and compliance checks should be conducted to identify and address any vulnerabilities.
3. Foster Skills Development
A lack of resources or expertise is cited by 78% of companies as a barrier to effective cloud migration. Organizations should invest in training and upskilling their existing staff to bridge the skill and knowledge gap. Providing opportunities for employees to acquire cloud-specific certifications and expertise ensures a smooth transition.
4. Incremental Transition
Adopting an incremental approach to cloud migration can help mitigate risks. By migrating applications and data in phases, organizations can test and validate the process, making necessary adjustments along the way.
Experts propose this incremental transition strategy, and they explore the best ways to migrate to the cloud.
Now, let's talk even more about different strategies you can deploy during cloud migration to make the transition as smooth as possible.
A practical cloud migration process
The original recommended comprehensive planning and an incremental transition. Both are right. Here's what that looks like in practice, following the assess, mobilize, migrate and modernize phases AWS uses in its Migration Acceleration Program:
1. Assess
Inventory applications, servers and data; map dependencies; capture current costs and performance; and build a business case that includes the hidden costs above. Assign each application one of the 7 Rs.
2. Mobilize
Build the foundations before moving production: a multi-account landing zone, network connectivity, identity, security guardrails, logging, backup and tagging standards. Train the team and migrate one or two low-risk pilot applications to prove the process.
3. Migrate in waves
Move applications incrementally, grouping tightly connected ones into the same wave. Replicate data ahead of cutover, test thoroughly, agree rollback criteria, and cut over during planned windows. Each wave should be faster than the last.
4. Optimize and modernize
In the 30–90 days after each wave: rightsize instances, add autoscaling, buy commitments for steady usage, and turn off the on-premises equivalents. Then modernize the applications that matter most, for example by moving to containers on managed Kubernetes or to managed databases.
Strategies for Cloud Migration
There are six major types of cloud migration strategies. Let’s look at each of them in detail:
1.Rehost (Lift and Shift)
This strategy involves directly transferring existing applications and infrastructure to the cloud without significant modifications. It is a quick and straightforward approach that is suitable for organizations looking for a fast migration with minimal disruption.
2. Replatform
Replatforming involves making some modifications to applications to leverage cloud capabilities better. This strategy allows organizations to optimize their applications for the cloud environment while still maintaining core functionalities.
3. Refactor
Refactoring involves redesigning and rebuilding applications specifically for the cloud. This strategy enables organizations to fully leverage cloud-native features and architectures, resulting in improved performance, scalability, and cost-efficiency.
4. Retire
As part of the migration process, organizations should identify and retire outdated or unnecessary systems. This strategy involves phasing out legacy applications that are no longer relevant or can be replaced with more efficient cloud-based alternatives.
5. Retain
In some cases, certain applications or workloads may need to be retained on-premises due to specific requirements or dependencies. A hybrid cloud approach allows organizations to keep critical systems on-premises while migrating other components to the cloud.
6. Repurchase
This strategy involves replacing existing on-premises software with cloud-based alternatives. Organizations can adopt software-as-a-service (SaaS) solutions that provide similar functionalities, eliminating the need for local installations and maintenance.
Now that you're familiar with the strategies adopted for cloud migration, let's look at the types of cloud deployment models from which you can benefit.
Cloud migration tools in 2026
- AWS Transform: AWS's agentic AI service for discovery, wave planning and migration of VMware, mainframe and .NET workloads, generally available since May 2025 (AWS).
- AWS Application Migration Service (MGN): block-level replication for rehosting servers with minimal downtime; integrated with AWS Transform.
- AWS Database Migration Service (DMS): continuous replication for database migrations, including moves to a different engine.
- AWS DataSync and Snowball: online and offline transfer for large data sets.
- Note for planners: AWS Migration Hub stopped accepting new customers on 7 November 2025, and AWS points new projects to AWS Transform instead (AWS docs). Older runbooks that start with Migration Hub need updating.
How SquareOps helps
SquareOps plans and runs cloud migrations to AWS, Google Cloud and Azure: portfolio assessment and business cases, landing zones and security guardrails, migration waves with minimal downtime, and post-migration optimization and modernization. Our 24x7 SRE team can operate workloads after they move.
Types of Cloud Deployment Models
Cloud deployment can be of four types depending on the organization's needs. We have detailed each of the following:
1. Public Cloud
Public clouds offer highly scalable and cost-effective solutions. They are owned and operated by third-party providers, providing shared resources to multiple tenants. Public clouds are ideal for organizations seeking flexibility and cost optimization.
2. Private Cloud
Private clouds provide dedicated resources and enhanced control over the cloud environment. They are typically owned and managed by the organization itself or a trusted provider. Private clouds offer greater customization and security, making them suitable for businesses with strict compliance requirements.
3. Hybrid Cloud
Hybrid clouds combine the benefits of both public and private clouds. Organizations can leverage public clouds for scalability and cost-efficiency while using private clouds for sensitive data and critical workloads. Hybrid clouds provide the flexibility to move applications and data between environments as needed.
4. Multi-cloud
Multicloud environments involve using multiple cloud providers to optimize workloads and avoid vendor lock-in. Different cloud providers' strengths can be leveraged by organizations for specific applications or services, ensuring the best fit for their requirements.
Learn more about which cloud model suits which organization through the above YouTube video by Software Architecture Academy.
Alright, now that we've discussed what the benefits of cloud migration are along with the challenges and how to overcome them effectively, let's tie it all together so you can migrate to the cloud with a breeze.
Conclusion
Cloud migration's benefits are real: elastic capacity, faster delivery, stronger resilience and access to modern services. So are its challenges. Most failures come from what wasn't known at the start: hidden dependencies, underestimated costs, and treating migration as a one-time move rather than the start of continuous optimization.
Assess honestly, build the foundations first, migrate in waves, and optimize as you go. Planning a migration? Talk to SquareOps about an assessment.
