Three Questions Haunting in the Cloud

The disruptive technology, distributed processing, lower costs of adoption were ultimately balanced by the higher total cost of ownership (TCO) including costs of management complexity.

Cloud computing, in some form or other is a paradigm shift for the consumer to use computing service, for organizations to run business or for technology companies to provide service, there’re still numerous changes need be made to consumers, as customers or as advisors to accommodate this new direction.

1. Is Cloud only a cheaper option or a real value for the business?

Cloud is not always less expensive, but it can be if it is either implemented as a variable cost or if there are specific costs in the existing IT that have not been re-engineered over time. The value that is derived is related to the defined strategy and how well the implementation delivers on the strategy. There are three phases to most good implementations - Build strategy, implement, and adjust operations to run the new cloud system efficiently.

• Most organizations today are implementing cloud to improve agility to support the business. From one of comprehensive global survey reports, the top driver going to cloud is:
  a. Reduced cost
  b. Reduced time to market
  c. Operational efficiencies
  d. Free up data center space
  e. Avoid operational expenses, preserve capital 

• Enterprises need to be realistic about the kind of savings that can be found in the Cloud. The disruptive technology, distributed processing, lower costs of adoption were ultimately balanced by the higher total cost of ownership (TCO) including costs of management complexity (server sprawl).      
      
• Lowering barriers to entry is not to lower overall cost. If you go to the cloud as cost reduction only, you might be disappointed. Cloud's key differentiator is flexibility and scale. If you need to buy that, it's a good option, but in most organizations, there'll be a hybrid solution of multiple services and in-house provision. So you have to have a robust contract, supplier and service management capability.

The value of Cloud and the ultimate aim of cloud exercise should be, as always, to simplify operations, increase business agility, and it will be even better if it can cut operational and capital expenditures significantly.

2. Is Cloud Enterprise ready?

The cloudiness of cloud computing is dissipating as IT professionals are architecting the next generation of computing architecture. Is Cloud enterprise ready? The simple answer is a resounding YES, especially in the SAAS marketplace where there is a large number of enterprise-ready solutions, available anytime, anywhere, any place mobile or otherwise.However, there’re pros and cons to consider when stepping into the cloud. 

The pros of Cloud outweigh the cons and this approach does a few key things:

(1) shortens the lead time to benefit when implementing new systems,

(2) Being cheaper is one of the advantages.

(3) Allows the internal staff to better cope and focus on other value-added activities,

(4) Removes some of the burdens for DR

(5) Cloud based implementation can help shift fixed IT costs (software licenses, servers and networking equipment) to operational expenses. Operating costs will be based on actual usage of resources, without the need to build peak-load capacity

There are also a few issues that temper that readiness.

1) Identity Management - where and how do you synchronize on-premise solutions with multiple cloud providers?

2) Application Integration - simple on premise - very hard when data may be spread out between multiple SAAS, PAAS and IAAS providers plus your On-Premise apps.

3) International - due to privacy issues, trade agreements, lawsuits, tax authorities, etc. What Cloud solution works in one country or in the US may be doomed to failure in an international setting. 

(4). It needs due diligence on value, reliability and security. It needs proper planning and proper analysis of well-established operational management. The classic cautions about the cloud are the same for enterprises of all sizes – security of data, mobility of data and workloads from one cloud to another

(5). Issues like integration in hybrid architectures and “public” or “generic” cloud where some specific requirements should be customized for the concreted business case, could be key points to drive cloud like a real option.

In spite of the cloud optimism, most of the mission critical systems still run on the traditional mainframe which means cloud to see a stage where mission critical apps are hosted and run, has still some distance to cover. . The entire IT model and function will go through many iterations before the cloud is deployed across all functions and happens on a grand scale across the enterprise and geographic boundaries. As such step-wise to deliver full value with the security in place will require the entire cloud offering to mature.

Further questions still exist, though, Time will tell as it did with other major phases of computing in the past.
1) Will everything end up on the cloud in companies in the next 5+ years? When will the majority of large companies be putting main strategic apps, data, and more on a cloud?
2) Will it become culturally acceptable for CIOs and CFOs to relinquish control and management from on-premise IT? 

3). Will it become culturally acceptable and financially acceptable for business and engineering groups to own their own systems, apps, and support, also sharing responsibility for corporate security, privacy, common data elements, etc.?
4). What the support model will look like when a company puts most of their crown jewels up in the cloud.

5). Even though the individual group now owns the apps, data, etc. on the virtual cloud. How much, if any, maintenance and fixes will be required to be done by the users, and in conjunction with the owners and supporters of the cloud systems and networks? 

3. How many enterprises are ready for cloud computing? How many CTO/CIOs really understand cloud computing and how to use it for their own enterprise needs? 

Cloud is the natural progression to the next level. While this will help the organization to focus on their core competencies leaving the SAAS, IAAS and other 'on premise' models to do the job. Even Cloud is enterprise ready. How hard shall you push IT into the cloud (the big envelop)? The large scope of Cloud Solution, planning could be more critical than implementation:
* To craft the solid cloud strategy;
* Experimenting, improving it with GRC discipline;
* Scale up with effective KPI metrics.

Some of the major challenges for the C-level executives to start using public cloud are
1). perceived loss of control
2). influence by IT vendors to sell boxes to enterprises
3). legacy applications which may not be cloud ready
4). federation is still a challenge with public clouds
5). CFOs questioning return on investment of CAPEX
6). Security concerns

·       CIOs still have to make sure they have strong contracts with good SLAs. These SLAs have to include remuneration for failure to meet service levels. CIOs have to make sure they understand and agree to the full requirements of what one is going to put in the cloud....

·       Private cloud is different to the traditional corporate IT infrastructure, but its key attribute is that the enterprise itself, and presumably the CIO has 100% control of attributes like security. Outside your own "cloud", you are at the mercy of whoever is responsible for the entire service, and vulnerable to the weakest component in that stack; in the event of any concerns during the procurement process, or indeed the development of a cloud-based sourcing strategy, then you simply adjust your procurement process to explore it and satisfy the attributes you have identified, such as security. If an offering doesn't meet these, then it is rejected.

·       Security, privacy, and compliance for data and processes may be the deciding factors in many cases. In developing cloud strategies, you need to first assess the current state and then decide on rules and policies that will govern the whole transition. To succeed with your cloud strategies, your people, processes, and technologies need to be organized effectively. Cloud-enabled business strategies can knock down functional and information silos while focusing on outcomes that drive business performance. 

·       Check List for Cloud Migration:

You must get answers to the following:
1) Do you know all the whats and whys of existing and new services and how they can be moved to the cloud?
2) Have you assessed all financial, security, legal, internal compliance, privacy, and feasibility issues?
3) Do you have a clear roadmap for moving from the current state to the cloud?
4) Have you documented all the desired benefits to provide a benchmark for the experience?
5)  Do you have transition and change management plans for moving to a cloud environment?
6) Do you have a business continuity plan in case the cloud service provider collapses or is out of business?
7) Can you later switch the service provider or move to internal clouds or come back to the original state?
8)  Does the cloud provider have connectivity and service-level contracts and does the provider have the capability to support them? Penalty clauses can be an option.
9) How does the cloud service provider ensure the privacy of your data and the services offered?
10) Is your data safe? Can you back it up and restore it?
11) What is the market standing and reliability of the cloud service provider?
12) What will be your cost for, say, the next five years?

As the 'Cloud' matures, more and more applications of increasing sophistication and specificity move towards this environment. It’s time for IT folk to recalculate the performance models and parameters to yet another new computing environment.

In summary: Virtualization has become norm in the past decade and cloud may become norm during the next decade, though the phenomenon is evolving and may take a while before it becomes de facto norm to go to cloud for any requirement, cloud computing will be the next major wave in computing architecture and will be used by most companies in one form or another. 

Posted in: CIO Debate,Cloud Computing,IT Finance,IT Transformation,Leading by Questioning,Vendor Relationship