Tracks/Track 11 — Economics of Build vs Buy/N11-6
Track 11 — Economics of Build vs Buy

N11-6: AI Migration Economics

The economics of migrating between AI providers, from open source to commercial, or vice versa.

3 Lessons~45 min

🎯 What You'll Learn

  • Calculate migration costs
  • Plan risk-managed transitions
  • Design fallback strategies
  • Measure migration ROI
Free Preview — Lesson 1
1

Lesson 1: Migration Cost Framework

AI migration costs fall into 5 categories: Engineering labor (integration rebuilding), Data migration (reformatting and re-embedding), Model retraining (fine-tuning for the new platform), Testing and validation (ensuring quality parity), and Opportunity cost (features not built during migration).

Engineering Labor

Rebuilding integrations for the new platform.

Typically 50-80% of the original integration cost
Data Re-Embedding

If switching vector databases, all embeddings must be regenerated.

Can take days to weeks for large datasets
Quality Validation

Proving the new system matches or exceeds the old system's quality.

Requires extensive A/B testing before cutover
📝 Exercise

Estimate the total migration cost for switching your primary AI provider. Include all 5 cost categories.

2

Lesson 2: Risk-Managed Transition Design

Never do a hard cutover for AI migrations. Use the blue-green deployment model: run both systems in parallel, route a small percentage of traffic to the new system, compare quality and cost metrics, and gradually shift traffic over 4-8 weeks.

Blue-Green Deployment

Run old and new AI systems simultaneously with traffic splitting.

Start with 5% traffic to new system, increase weekly
Quality Parity Check

Automated comparison of old and new system outputs on the same inputs.

Must pass statistical significance tests before increasing traffic
Instant Rollback

If new system degrades quality, route 100% back to old system within minutes.

The safety net that makes migration risk acceptable
📝 Exercise

Design a blue-green migration plan for your AI system: traffic split schedule, quality gates, and rollback triggers.

3

Lesson 3: Post-Migration ROI Validation

After migration, validate ROI within 90 days: (1) Cost comparison (new vs old system at same volume), (2) Quality comparison (accuracy/satisfaction metrics pre and post), (3) Engineering impact (time saved or spent on the new system vs old). If ROI is negative at 90 days, the migration was a mistake — acknowledge and plan the correction.

Cost Validation

Monthly cost on new platform vs projected savings.

If actual savings <50% of projected, investigate the gap
Quality Validation

A/B test quality metrics before and after migration.

Any quality regression should trigger investigation
Honest Assessment

If the migration made things worse, acknowledge it and plan correction.

Sunk cost fallacy kills engineering organizations
📝 Exercise

Design a 90-day post-migration ROI validation plan with specific metrics, targets, and correction triggers.

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02
03const router = new AgentRouter({);
04strategy: 'COST_EFFICIENT_SLM',
05fallback: 'FRONTIER_MODEL'
06});
07
08await router.guardrail(payload);
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Module Syllabus

Lesson 1: Lesson 1: Migration Cost Framework

AI migration costs fall into 5 categories: Engineering labor (integration rebuilding), Data migration (reformatting and re-embedding), Model retraining (fine-tuning for the new platform), Testing and validation (ensuring quality parity), and Opportunity cost (features not built during migration).

15 MIN

Lesson 2: Lesson 2: Risk-Managed Transition Design

Never do a hard cutover for AI migrations. Use the blue-green deployment model: run both systems in parallel, route a small percentage of traffic to the new system, compare quality and cost metrics, and gradually shift traffic over 4-8 weeks.

20 MIN

Lesson 3: Lesson 3: Post-Migration ROI Validation

After migration, validate ROI within 90 days: (1) Cost comparison (new vs old system at same volume), (2) Quality comparison (accuracy/satisfaction metrics pre and post), (3) Engineering impact (time saved or spent on the new system vs old). If ROI is negative at 90 days, the migration was a mistake — acknowledge and plan the correction.

25 MIN
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