Thursday, February 13, 2014

CIO’s Dilemma: What Lifts to the Cloud; What Sticks on the ‘Ground’ (Premise)

Cloud computing is beginning to define modern IT, but there will be many roadblocks on the way.

Cloud computing is beginning to define modern IT. Many companies start reaping Cloud benefit, and even more, organizations are pushing IT stuff into Cloud envelope. However, there are situations when it DOESN'T make sense to go Cloud. The debate is continually on: What shall you afford putting in the cloud and what must stay on premise?

IT leaders have to look at the risks, costs and functionality: Default position is to move utility-type services or ones which don't create a differentiation to your company out to the cloud. Email, Collaboration, CRM, Voice, and Contact Center are all examples. These are critical systems for your business, but they are more of a utility for the company and with a strong cloud provider with a track record of delivering these at a high level, it makes sense to consider moving them. Cloud doesn't make sense when you are trying to get from using it exceeds your own cost of operations. Otherwise, if at the end of the quarter you baseline your OpEx and using cloud induces a higher cost than the in-house alternative, then you'd better have a mid or long term going-forward strategy.

One of the biggest decision factors though is the overall maturity of the organization; from a contract management, vendor management, and services integration perspective. If these capabilities aren't in place, then adding cloud services can end up in SLA issues, security issues, or an inability to make a smooth exit / transition when necessary. What it takes to become a services culture to support Cloud. There is no denying that Cloud is a disruptive IT strategy that drives a services-oriented delivery model, which, in most instances, can provide a tangible measurable, quantifiable value, but it takes an IT Transformation initiative to get the most of the value from Cloud and not everyone is ready. The decision what goes to the cloud should not just look at technology but the process maturity and the culture discipline to maximize the value of cloud.

The other part which is always a consideration is data privacy & protection. The data up in the cloud is outside of your direct control. This can be a good thing if you don't have a strong information protection program, tools, and personnel, but it can also be a risk for your company depending on what data is leaving your control. Making sure that you fully understand the data protection and privacy controls and processes are a must for any decision to move to the cloud. For some companies, this won't be a concern at all. For others, this will be a strong driver not to move to the cloud. Knowledge of risk becomes relevant in the context of impact to business as it translates to the top and bottom line revenue, SLAs and adopting a risky solution will translate into higher costs or risk treatment, improving the reliability of an unreliable solution will add to your costs...

Tailor Cloud Solution to meet different business needs: Cloud has different flavors and types, Hybrid, Private, and Public; SaaS, PaaS, and IaaS, etc. There are important considerations such as mission criticality, integration requirements, data volumes, pricing model, and competitive differentiation required. For example,  if there is a need for an application to support a business function where you have to maintain competitive differentiation, then the public nature of a cloud application may not be the best choice. Further, keep the PROD environments as they are (due to the security and privacy concerns), but move DEV and QA to the cloud.

Craft a holistic strategy by leveraging multiple factors. Risk, service level agreements, regulatory requirements, service stability, longer-term plans etc. need to be considered. If a decision is made purely on costs, then that's a very high-risk strategy, and it will create lots of issues in the future. Based on the above risk parameters, you need to create a modernization decision framework that will decide which part of the IT portfolio will exist where. For high business risk apps, it is better to be hosted on Private Cloud. For medium or low business impact apps, it can be moved to the public cloud and enable seamless upstream and downstream app portfolio integration. Scale / Cost, Control, and Risk Management., etc. are all key factors to consider.

Cloud is here to stay, and cloud solutions are becoming more mature, there is real value and every business should get their feet wet and learn what the questions or decisions are,  so they can use the tools available when the need arises, but you have to consider all aspects.Still, Cloud is a journey, it takes well planning and optimized processes to move up seamlessly. 


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