Cloud computing is one of the most transformational technologies available to business leaders today. From the cloud springs innovation, speed, cost savings and better customer experience. Cloud computing can mean running software remotely over the Internet, but it also describes how it works: virtual resources, from raw computing power to application functionality, all available on demand. Adopting the cloud and realizing the business value it promises requires a strategic, well-planned journey. It’s not a simple effort. Moving to the cloud requires significant operational and workforce changes, as well as significant adjustments to platform, application, data and security architecture. This requires planning and execution at the strategic, technical and operational level.
We’re sharing this series of papers to help you understand the enterprise journey to cloud adoption and beyond.
PART 1 – UNDERSTANDING THE CLOUD AND REALIZING BUSINESS VALUE
I. FOR STARTERS… WHAT IS CLOUD TECHNOLOGY?
II. THE BUSINESS VALUE OF CLOUD COMPUTING
III. UNDERSTANDING CLOUD COMPUTING ECONOMICS & COST SAVINGS
PART 2 – A FIELD GUIDE TO MIGRATION
I. CAUTION AHEAD! CLOUD MIGRATION PITFALLS
II. STRATEGIC IMPERATIVES TO BUSINESS SUCCESS IN CLOUD
III. MULTI-PRONGED APPROACH TO CLOUD COMPUTING MANAGEMENT & TRANSFORMATION
Part 1 - Understanding the Cloud and Realizing Business Value
Time has proven that market and technology disruptors historically sweep aside those who can’t change, refuse to change, or don’t change quick enough to keep up with the disruption. We are in the midst of an exciting and fast-moving period of technology disruption. Much of this change is driven by the introduction of widely available and mature cloud services.
Cloud computing has enabled revolutionary consumer and business solutions. It has also introduced new sets of risks and questions for business leaders. Beyond the headlines and hype, this series will explain the fundamentals of cloud computing, and how you can apply cloud solutions to your enterprise to realize value.
For Starters.... What is Cloud Technology?
The cloud is a global network of servers hosted on the Internet.
From the onset, interpretations of what ‘the cloud’ is have often seemed unclear and sometimes threatening from a loss-of-control perspective. Over the last 10+ years, understanding of what the cloud is and realization of the cloud’s business and IT value has grown to the point that many organizations, from commercial companies to public entities, are recognizing significant efficiencies and gaining competitive advantage through cloud services and solutions.
Simply put, “the cloud” is a global network of servers hosted on the Internet. For a more thorough definition, let’s look to the market-share leader, Amazon Web Services: “The on-demand delivery of compute power, database, storage, applications, and other IT resources via the internet with pay-as-you-go pricing.” Cloud computing can also be viewed as a distribution of clustered and connected data centers that are available to users and companies over the Internet or through direct connections.
Cloud services providers such as Microsoft, IBM, Oracle, Google, and AWS own and maintain the network- connected hardware required for these application services, while IT provisions and uses what is needed via a web application. Clouds may be private and accessible only to a given entity, or they may be public and available to many organizations.
The Business Value of Cloud Computing
The cloud allows companies to innovate faster and refocus their valuable IT resources.
Cloud computing’s value ultimately comes as a result of economies of scale that further enable business and IT value realization through cost savings, elasticity, agility and speed to innovate.
Elasticity refers to the ability to use and pay for what you need. Agility refers to the ability to change and innovate faster through exponentially shorter resource provisioning time. In addition to these benefits, the cloud ultimately enables organizations to focus on their core competencies and offload the maintenance, provisioning and administration of physical hardware, network infrastructure and facilities to the aforementioned public cloud providers.
Before cloud computing, IT had to overprovision infrastructure to ensure enough capacity to handle business operations at the peak level of activity. Now, it is possible to provision only the amount of resources that are needed, scaling up or down automatically with the needs of the business. This reduces costs and improves the ability to meet user demands.
AGILITY & INNOVATION
Today, organizations need to move quickly to satisfy their customers, and their customers’ customers.
Whether they are consumers of services, products or government services, customers expect constantly evolving capabilities, improved levels of customer experience and better quality.
The cloud allows companies to innovate more quickly and focus their valuable IT resources on developing applications that differentiate their business and transform customer experiences rather than managing infrastructure and data centers. With cloud, organizations can quickly spin up resources as they need them in minutes instead of days, weeks or months.
The cloud also makes it easy and fast to access a broad range of technologies, such as compute, storage, databases, analytics, machine learning, and many other services on an as-needed basis. Cloud providers make these services immediately available and integrated within their cloud infrastructure. As a result, you can very quickly develop and roll out new solutions for your business using “cloud-native” services from your cloud provider, rather than having to procure – or custom- build – external services and applications. The abundance of cloud-native services also enables your teams to experiment and innovate more quickly and frequently.
With the cloud, organizations can easily deploy an application in multiple physical locations around the world with just a few clicks. This means lower latency and better experience for customers and at minimal cost.
Understanding Cloud Computing Economics and Cost Savings
Cloud Economics - Reference View
A financial advantage for organizations who move to cloud computing is the change from large upfront IT capital investments (CapEx) to paying as you go for what you use, or operating expenses (OpEx). This is a game changer for businesses. Business initiatives focused on adding or enhancing business capabilities through technology do not require huge upfront capital investments, precise service-cost estimates or complex infrastructure and platform sizing. The technology can be expensed as identified and implemented in an iterative fashion. This approach allows companies to innovate and test, versus commit massive investments to evolving business initiatives.
This OpEx model does require a reset to how your organization traditionally finances IT. Here’s an example.
Consider how a capital investment in technology worked before cloud at a traditional infrastructure operation at a Fortune 500 retail firm with a large online/ecommerce presence. Executives invested millions in server hardware, storage, networking, and software to meet the demand between October and February – peak months for a B2C retailer.
Much of that infrastructure sat idle the rest of the year. The firm made huge capital investments to make sure that gear was up to date for the peak season every year.
In the year 2010, this was a standard investment in the business. In today’s business world, there would need to be other business drivers to justify this practice – or else it would be an investment in obsolescence.
Today, businesses should consider investing in peak demand with cloud resources. A capital investment is not necessary. Cloud technology can be configured to scale up for the demand, scale down when the peak is over, and the business will only pay for what was used.
In summary, financial paradigm shifts include:
how IT resources are planned, budgeted and funded;
how IT resources are procured;
how operating models are structured and funded;
and how IT resource costs are accounted for within financial statements.Cloud computing cost savings can be recognized in at least four distinct ways:
by lowering the opportunity cost of running technology;
by allowing for a shift from capital expenditure to operating expenditure;
by lowering the total cost of ownership (TCO) of technology;
Part 2 - A Field Guide To Migration
Migration to the cloud will vary significantly by organization. Understanding the value that can be gained by your organization, prioritization according to desired business value and carefully planning your migration are important to any cloud adoption journey.
Caution Ahead! Cloud Migration Pitfalls
While significant value can be realized by moving to the cloud, the migration process should not be oversimplified. It’s true that many forward-thinking organizations have achieved the desired results and value from their enterprise cloud adoptions, but some others are slower to mature, capture less value and in some cases end up in situations where they are spending more than they did for previous data center or on-premise environments.
Moving to the cloud requires significant operational and workforce changes, as well as significant adjustments to platform, application, data and security architecture. A limited strategy and poorly planned effort to migrate your application portfolio to the cloud is unlikely to yield the benefits that cloud computing can provide. In fact, in some cases, that approach can result in IT architectures that are more complex, risk-exposed, and costly than before.
Further, attempts by IT to operate in the same way within the cloud as in on- premise operational models often lead to gaps in services, misaligned talent needs and the introduction of added business risk.
Many companies have made the mistake of believing that they can achieve the desired value of the cloud by simply moving their application portfolio to the cloud in a “lift & shift” fashion. This approach produces poor results for three key reasons:
- Legacy Systems – Existing business applications were created following traditional IT application architecture. As a result, these applications often have monolithic architectures and are configured for fixed/static capacity that was typical of their tenancy within previous data centers. Some benefits can be achieved with an “Infrastructure-as-a-Service” approach with legacy systems, but moving them to the cloud without rearchitecting won’t take full advantage of the inherent scaling, resiliency or other dynamic features of the cloud.
- Team & Skills – The typical IT workforce of an enterprise whose systems have been developed in the traditional IT framework and housed on premise or in a data center will need to be reskilled or upskilled for the cloud environment.
- Operating Model – The IT services definition and operating model for traditional IT ecosystems changes significantly in cloud with the elimination of roles, responsibilities and processes and the addition of new services, processes, roles and responsibilities.
Adopting the cloud and migrating enterprise IT requires significant operational and workforce changes.
Strategic Imperatives to Business Success in Cloud
To fully recognize the value of cloud, organizations will need to invest upfront. For a small IT footprint, a migration journey can be a 6-to 9-month timeframe. For Fortune 500 organizations, it may amount to a multi- year effort to migrate to the cloud.
We’ve identified seven business strategic imperatives for cloud migration success:
1. Define your strategy, goals, objectives and capture executive sponsorship.
◦ Choose your transformation approach. Involve all key stakeholders in determining whether your enterprise will be an aggressive or opportunistic transformer.
◦ Articulate IT and business goals. Create a well-defined set of outcome-oriented aspirations for both the short and long term in line with your approach. In alignment to the advantages of cloud relating to agility, elasticity, security and lower cost, many organizations set their strategy based on what is most critical.
◦ Secure buy-in. Ensure commitment and investment from senior management, particularly finance leaders, who must support the transfer from capital to operations and maintenance investments/accounting.
2. Evaluate the current IT ecosystem.
An initial understanding of your existing environment is necessary to develop a business case for migration. Through data on actual utilization of your on-premise resources, you can create a more accurate forecast of the total cost of ownership (TCO) to run these workloads in the cloud. Before beginning any cloud migration, take a careful look at the existing IT ecosystem to understand existing infrastructure, network configurations and integration requirements, operating systems, development platforms, data and middleware platforms, data architectures, security requirements and architecture, and your business application portfolio. It is important to understand the lifecycle state of all of these ecosystem components to assess motivations and alternatives for consideration during your migration.
3. Assess your legacy application portfolio for refactoring, re-engineering, re-platforming or retiring.
As we mentioned above, careful planning is important to capturing cloud value. Planning includes the assessing of your current applications to understand readiness for cloud architecture.
While an Application Portfolio Assessment will not reveal your entire current TCO, it will arm you with the TCO of future modernized cloud footprint. This includes developing your migration strategy by collecting application portfolio data and rationalizing applications using the seven common migration strategies:
This includes leveraging cloud-provider or proprietary tools to collect and present detailed information about application dependencies and utilization to help make more informed decisions as you plan your migration. You map, classify, and validate interdependencies between upstream/downstream applications and libraries. This includes third-party, commercial software, open-source, in-house developed applications, and everything in between that you deem to be in scope.
The end goal is a clear migration strategy and understanding of what must be done for each application to prepare it for migration to the cloud.
4. Plan for organizational change management.
A typical heavily automated cloud operating model will require significant shifts in IT behaviors and mindsets. Invest in both change management and the talent development of cross- functional skills across infrastructure, security, application environments and IT cloud operations.
5. Adjust measures and KPIs to reward modern behaviors.
Measure and reward your technology team for standardization and automation rather than, say, for availability. Reprioritize KPIs from SLA adherence to services certification and learning, and from provisioning time to ongoing cost reduction through innovative thinking.
6. Chose a cloud computing platform such as Microsoft, AWS, Oracle, Google, or IBM.
Choosing a cloud provider is an important success factor of your cloud computing adoption. You should choose your providers after you have assessed your application migration candidates (see item 3 above) but in parallel with analyzing and preparing these workloads for migration. When it comes to selecting a cloud provider, your requirements and evaluation criteria will be unique to your organization. When it comes to selecting a cloud provider, your requirements and evaluation criteria will be unique to your organization and many historical differentiators are no longer relevant as the big providers have largely matched up on security practices, core services capability, tools and frameworks, administration and financial management tools and processes, certifications and reliability and performance.
That said, there are some common considerations to keep in mind. Here’s a partial list we start with at Impact Makers when advising clients:
◦ Provider’s service development roadmap
◦ Synergies with existing development platforms and directory services implementations
◦ Strength of scalability
◦ Whether you have a cloud native or agnostic/third-party services strategy
◦ Pricing discounts available
◦ Migration tools
◦ Your desire for cloud-provider native business services beyond the core services
◦ Hybrid cloud or multi-cloud capabilities
7. Transform and build up your workforce.
Develop a detailed workforce transformation plan that accounts for current state assessment of roles and responsibilities, future state skills and capabilities, training needs, hiring needs and third-party professional services engagement to assist with these and other integrated transformation work streams where integrated teams can drive knowledge transfer and on-the-job training.
The end goal is a clear migration strategy and understanding of what must be done for each application to prepare it for migration to the cloud.
Partner with us to see where cloud can take your business.
Impact Makers works with customers to deliver and enable strategic business advantage with cloud services. Our cloud consultants leverage comprehensive and mature practices to enable customers to see all facets of their cloud ecosystem. Every project has unique elements that must be incorporated into a comprehensive strategy in addition to identification and execution of technical work.
As an AWS Advanced Consulting Partner, Impact Makers’ comprehensive cloud framework includes the AWS Well Architected Framework and industry best practices in addition to elements like compliance , asset and metadata management, business strategy alignment, service portfolio management, support model definition, service design and deploy, and CloudOps.