Cloud Migration in 2025: A Step-by-Step Strategy for Australian Businesses

Cloud migration is a significant undertaking that can transform your business—or cause major disruption if poorly executed. This step-by-step guide helps Australian businesses plan and execute cloud migration with minimal disruption, managing data sovereignty and optimising cloud spend. With the right strategy, cloud adoption delivers agility, cost efficiency, and competitive advantage.

Why Australian Businesses Are Moving to the Cloud in 2025

The Australian Government has deepened its commitment to cloud adoption, with the DTA signing a three-year whole-of-government agreement with AWS in January 2025. Over 140 Commonwealth, state, and territory agencies already use cloud services for critical operations. For private businesses, cloud migration is no longer optional—it's essential for competitiveness, security, and operational resilience.

Scalability: Scale resources up or down based on demand without capital investment
Business continuity: Built-in redundancy and disaster recovery capabilities
Security: Enterprise-grade security infrastructure managed by cloud providers
Remote work: Enable staff to work from anywhere with full access to systems
Innovation: Access to AI, analytics, and emerging technologies without building infrastructure

The 6Rs of Cloud Migration

Microsoft's Cloud Adoption Framework identifies six strategies for migrating applications to the cloud. Choosing the right approach for each workload is critical to success:

Rehost (Lift and Shift)

Move workloads as-is to cloud virtual machines. Fastest path to cloud with minimal changes. Best for: Applications that work well but need to move quickly, legacy systems with limited remaining lifespan.

Replatform (Lift, Tinker, and Shift)

Make minor modifications to leverage cloud services without full redesign. For example, moving a database to Azure SQL Managed Instance. Best for: Applications that would benefit from managed services without major refactoring.

Refactor (Re-architect)

Redesign applications for cloud-native architecture using containers, serverless, and microservices. Maximum benefit but requires significant investment. Best for: Core business applications that will run for years and benefit from cloud-native features.

Repurchase

Replace existing applications with SaaS alternatives. For example, moving from on-premises Exchange to Microsoft 365. Best for: Standard business applications where SaaS versions are mature and cost-effective.

Retire

Eliminate applications no longer needed. Migration is an opportunity to rationalise your application portfolio. Best for: Legacy applications with low usage or that duplicate functionality.

Retain (Hybrid)

Keep some workloads on-premises while migrating others to cloud. Not all applications belong in the cloud. Best for: Applications with data sovereignty requirements, latency sensitivity, or regulatory constraints.

Comprehensive Migration Process

Following Microsoft's Cloud Adoption Framework, successful migrations follow a structured methodology:

Phase 1: Define Strategy

Establish business justification and expected outcomes. What are you trying to achieve? Cost reduction? Improved agility? Better security? Define success metrics before you begin.

Phase 2: Plan

Inventory discovery: Document all applications, servers, databases, and dependencies
Application assessment: Categorise applications by 6Rs—which strategy for each?
Business case: Calculate costs, benefits, and ROI for migration
Skills assessment: Identify training needs and potential skill gaps
Timeline planning: Create realistic project timeline with milestones

Phase 3: Ready

Landing zone setup: Establish cloud environment with security, governance, and networking
Identity configuration: Set up Azure AD or AWS IAM with proper access controls
Network architecture: Design connectivity between cloud and on-premises resources
Security baseline: Implement security controls before migrating any data
Governance framework: Establish policies for cost management, compliance, and operations

Phase 4: Migrate

Pilot migration: Start with non-critical workloads to validate approach and build confidence
Wave planning: Sequence migrations from low-risk to mission-critical applications
Data migration: Move data securely with validation at each step
Application testing: Thorough testing before cutover to production
Cutover execution: Execute planned cutovers during maintenance windows
Post-migration validation: Verify all functionality and performance in the cloud

Phase 5: Govern and Manage

Cost optimisation: Right-size resources, implement reserved instances, clean up unused resources
Performance monitoring: Establish baselines and alerting for cloud workloads
Security monitoring: Implement cloud-native security tools and SIEM integration
Operational procedures: Document runbooks for common operations and incident response

Australian Data Sovereignty and Compliance

For Australian businesses, data residency is not just a preference—it's often a regulatory requirement. The ACSC recommends that organisations handling sensitive information use cloud providers and services located in Australia.

Australian Cloud Regions

Microsoft Azure: Australia East (Sydney) and Australia Southeast (Melbourne) regions
Amazon Web Services: Sydney region (ap-southeast-2) with multiple availability zones
Google Cloud: Sydney region (australia-southeast1) and Melbourne (australia-southeast2)

Compliance Considerations by Industry

Government: Must comply with PSPF and use providers on the IRAP-assessed list
Healthcare: Health records may be subject to state-specific legislation beyond the Privacy Act
Financial services: APRA CPS 234 mandates specific information security requirements
Legal: Professional privilege requirements may affect data handling and storage

Always verify region settings during cloud setup. Data residency is configured at the resource level—creating a storage account or database requires explicitly selecting the Australian region. Misconfigurations can result in data being stored overseas.

Cloud Cost Management

Cloud costs can spiral unexpectedly if not actively managed. Implement cost governance from day one:

Budgets and alerts: Set spending limits with notifications before exceeding thresholds
Reserved instances: Commit to 1-3 year terms for predictable workloads to save 40-60%
Right-sizing: Regularly review resource utilisation and downsize over-provisioned resources
Auto-scaling: Configure resources to scale automatically based on demand
Cleanup automation: Automatically identify and remove unused resources
Tagging strategy: Tag all resources for cost allocation and reporting

Common Migration Pitfalls to Avoid

Underestimating complexity: Dependencies between applications are often poorly documented
Insufficient testing: Rushing to production without thorough testing causes outages
Ignoring security: Cloud misconfiguration is a leading cause of data breaches
Neglecting training: Staff need new skills to manage cloud infrastructure effectively
Poor change management: Users need preparation for new ways of working
No rollback plan: Always have a path back if something goes wrong
Forgetting to decommission: Leaving old systems running wastes money and creates security risk

Hybrid Cloud: The Best of Both Worlds

Many Australian businesses choose hybrid cloud rather than full migration. This approach keeps some workloads on-premises while running others in the cloud. Hybrid is particularly relevant for:

Organisations with significant investment in on-premises infrastructure
Applications with strict latency requirements
Workloads with regulatory constraints on data location
Businesses in gradual migration phases

Choosing the Right Cloud Provider

Microsoft Azure

Best for: Organisations already using Microsoft 365, Windows Server, and Active Directory. Azure's integration with Microsoft products is unmatched. Strong for enterprise workloads and hybrid scenarios with Azure Arc.

Amazon Web Services (AWS)

Best for: Organisations wanting the broadest service selection and most mature platform. AWS leads in innovation and has the largest ecosystem of third-party integrations.

Google Cloud Platform (GCP)

Best for: Data-intensive organisations and those prioritising analytics, AI/ML, and Kubernetes. GCP leads in data analytics and machine learning capabilities.

How We Researched This Article

This article was compiled using information from authoritative industry sources to ensure accuracy and relevance for Australian businesses.

Sources & References

•
Microsoft Cloud Adoption Framework
Microsoft's comprehensive cloud migration methodology
•
DTA Secure Cloud Strategy
Australian Government cloud adoption policy and best practices
•
ACSC Small Business Cloud Security Guides
ACSC guidance on securing cloud environments for Australian businesses

* Information is current as of the publication date. Cybersecurity guidelines and best practices evolve regularly. We recommend verifying current recommendations with the original sources.

Frequently Asked Questions

How long does cloud migration take?

Timeline varies dramatically by scope. A simple lift-and-shift of a few servers might take 4-8 weeks. Migrating 20-50 users to Microsoft 365 typically takes 2-4 weeks. Comprehensive migration of complex environments with multiple applications can take 6-18 months. Always plan for longer than initial estimates—unexpected dependencies and issues are common.

What are the biggest migration risks?

Data loss during migration, extended downtime affecting business operations, unexpected costs from poor planning, application compatibility issues, security gaps from misconfiguration, and staff productivity impacts during transition. Mitigate through careful planning, comprehensive testing in a staging environment, phased approach with pilot migrations, and clear rollback procedures.

Should we do the migration ourselves or engage a partner?

For small migrations (basic Microsoft 365, single application), internal IT may manage with vendor documentation. For complex migrations involving multiple applications, data migration, and hybrid architecture, engaging an experienced partner significantly reduces risk. The cost of a partner is often less than the cost of extended downtime or failed migration.

How do we ensure data stays in Australia?

All major cloud providers have Australian data centres. During setup, explicitly select Australian regions (Azure Australia East/Southeast, AWS ap-southeast-2, GCP australia-southeast1). Implement policies preventing resource creation in non-Australian regions. Regular audits should verify data residency compliance. For sensitive workloads, consider sovereign cloud options.

What happens to our existing hardware after migration?

Plan for decommissioning: maintain parallel operation during transition (typically 30-90 days), securely wipe and dispose of storage devices following ACSC guidelines, evaluate whether hardware has resale value or should be recycled, document the decommissioning for audit purposes, and update asset registers and support contracts.

Will cloud be more expensive than on-premises?

It depends. Cloud eliminates capital expenditure and provides flexibility, but operational costs can exceed on-premises for stable, predictable workloads. Create a detailed 3-5 year TCO comparison including all costs: hardware, power, cooling, staff time, licencing, and opportunity cost. For many SMBs, cloud is cheaper when total costs are properly calculated.