In every forum that I have been a part of in the last two years,
cloud computing has been the most talked about phenomenon by IT
leaders and business leaders alike. What makes the case of cloud
computing rather unique is the profile of adopters and potential
users that cut across different sizes of organization and across
industries.
There is a widespread belief that moving to the cloud would result
in significantly lower operating costs as opposed to running the
applications in-house by transforming the usual cost model for
running them to a completely flexible and variable one.
But models are only as good as their ability to faithfully
represent reality and good models can only be built if there is
complete clarity about what is being modeled. However well-worn and
jaded the cliché might be—the devil, as they say,
truly does lie in the details.
It is therefore of paramount importance to decide what exactly
you are trying to do by ‘moving computing into the
cloud.’ The computing cloud can be viewed at three different
levels of abstraction:
- At the bottom level, the cloud is simply a virtualized data
center that offers you variable capacity for computing, storage,
communications etc
- At the middle level, the cloud is a whole platform including
the middleware (apps servers, ESB, etc) and a complete application
development environment
- At the top level, the cloud actually provides complete business
process functionality with variable capacity and service levels on
demand. Your roadmap and cost benefit equations will be completely
different depending which layers you wish to utilize.
Cloud economics
That moving to the cloud has to make commercial sense is beyond
a doubt but in reality the cost structures vary from one enterprise
to the other and may not always stack up favorably when compared to
the costs of running the current system. Quantifying the benefit is
a tough proposition mostly because of non-standard definitions
about computing capacity and service levels, among other
reasons.
The other challenge lies in understanding the real implications of
the commercial model involved in cloud computing. Enterprises would
need to evaluate the potential savings not just of CAPEX in the
immediate term, but also potential CAPEX investments they would
need to make in the longer term.
Similarly, with OPEX, enterprises need to evaluate their current
spending on usage charges and service support costs and future
investments they are required to maintain. In some cases, the cost
of acquisition of a perfect cloud solution may prove to be higher
than the cost of the current system which may have depreciated over
time.
From a cost perspective one of the critical hidden elements that
most enterprises often overlook is the cost of change. This
cost—including the cost of acquisition, migration,
integration, and support—could potentially present a poor
business case for the cloud.
Cloud watch
While cost remains the top consideration for decisions related
to the cloud, there are some other compelling considerations that
need to be addressed. Two key factors—one a hidden cost, the
other a hidden benefit—most often do not find an appropriate
place in the cost modeling. These comprise the costs of business
continuity and change management.
- Business continuity: Organizations often spend (or need to
spend but actually don’t) a large amount of capital to make
their IT infrastructure disaster-proof and resilient to ensure
business continuity. They also need to spend a large amount of
money to manage that (mostly idle) infrastructure which rarely
actually gets used. Clouds, by definition, provide excellent
insurance against most common disasters and guarantee continuity of
operations.
- Change management: Moving a big chunk of your application
portfolio into the cloud is a big change. Several issues complicate
this change and need to be managed. This may include business
process changes because part of the portfolio moves to the cloud
and the rest remains in-house which is the most likely scenario.
This may also include changes to interactions with external
business partners. The change has to be managed efficiently without
impacting business continuity and quality of service to end users.
This is not just time-consuming but calls for significant
investments of expertise, bandwidth and money. Application
Integration might also potentially require new capital investments.
The cost of implementing this change can be significant and needs
to be modeled in the cost-benefit analysis appropriately.
IT Governance impact is another factor that goes unnoticed. Cloud
computing is still nascent. As a result, governance is relatively
low and if your applications are critical and governed by stringent
user industry compliance issues, then you have potential concerns.
Users on the cloud also need clarity on usage, processes and
methodology and it is important to take into consideration the
challenges and best practices that need to be put in place to
address them.
Enterprises also need to evaluate the load on computing based on
their business process factoring in issues like month-end peaks and
frequency of usage. Quality of service is another defining factor
as your support ecosystem is likely to be entirely different for
the cloud. Enterprises need to ensure that the support system is
accessible and that the turnaround times are minimal. More
importantly, the quality of service needs to be agile and support
the scalability of the enterprise application on the cloud.
Security is a somewhat overrated concern related to movement to
the cloud. Security is, without a doubt, an important
consideration. However proven technology exists to address security
concerns and issues effectively. The emergence of private clouds
and hybrid clouds can provide effective answers if deployed with
care.
The journey to the cloud
Drawing on our experience here is a quick checklist for you
before you embark on the cloud.
- Validate your demand and make a realistic evaluation. In cases
of geographical diversity, uneven frequency of usage and
inconsistent/unpredictable demand, it may make more business sense
for you to seriously consider moving to the cloud
- Plan your cloud strategy with utmost care. The criticality of
the business application, business demands and your existing
technology and development platforms will determine your mid- to
long-term roadmap for the cloud
- Upfront costs of migration and change management can be
defining factors to your cloud strategy. Enterprises need to make
sure that the right blueprint and roadmap is established to ensure
business continuity
This checklist is not exhaustive but definitely key to your cloud
strategy. While the cloud may deliver unmatched business benefits
to enterprises, the key is to ensure it works well for your
organization considering your specific business needs. Meticulous
planning, a well-planned strategy for adoption and implementation,
combined with a robust support ecosystem will make your journey to
the cloud a comfortable cruise.
Satish Joshi is Executive VP at Patni