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The high price of a cost-centric selection

The explosion of cloud onto the enterprise scene has, literally, revolutionized how businesses across the size spectrum do business, yet there's a price tag tucked into this cloud's silver lining that smart decision-makers should pay heed to.

This is the era of what I like to call the consumerization of enterprise software. It's bringing tremendous benefit to the business world, but it's also bringing a great deal of change, particularly to the understanding of how business software adoption and use is done, and enterprises of all sizes need to familiarize themselves with best practices-understanding to leverage the power of the cloud.

In reality, it would seem that picking the right cloud strategy is almost effortless. Or it should be. An abundance of choices, a great deal of transparency around costs, features and benefits, and some of the world's most trusted brands offering well-vetted solutions. For the enterprise, what's not to love in today's cloud-centric operating world?

Doing Your Homework
The reality is an enterprise needs to not only understand the myriad of options available to your enterprise, but to have a solid understanding of your needs and how you'll be using the cloud. Not doing so will be expensive both in cost and performance. Before you make a critical cloud selection, be sure you are clear not only on the type of data that will be ensconced on the cloud, but the volume of activity, and a number of other factors. So there's some homework involved. Where does a cloud-focused enterprise turn to get the info they need?

Getting There by Working Backwards
Let's begin by working backwards; first, identify how your data will be used, stored, and the volume. Then use those considerations to narrow down the wide array of options available on the cloud to find the solution best-suited for your enterprise's unique needs.

Seven Key Considerations for Cloud Selection

1. Workload and Access Are Worlds Apart
This is probably the most critical issue in cloud solution selection; and the one area in which we most frequently see companies running afoul of their work load-versus-access understanding. The outcome? Some pretty hefty data usage bills, so this is a point worth paying attention to.

Thanks to the expansion in solution options, it's much easier now for non-technical companies to adopt a cloud solution. Amazon Web Services has been a leader in this, and in providing information to enterprises for self-education. Unfortunately, many companies don't do enough homework to fully understand the difference between data usage and simply accessing a cloud-based service.

A great case in point is the availability of Microsoft SharePoint on AWS. Formerly the collaboration tool of choice for larger companies, cloud access now makes it available for much smaller companies, and access is available at a very reasonable cost. However, access and usage are two different data buckets.

If your enterprise is going to be using SharePoint frequently, then you'll be driving up your data access costs significantly. The end result? A much higher cloud bill than you, and your annual IT budget, has planned for. Your CFO won't like the bills you're going to be running up.

How do you manage this? It's important to understand how cloud solutions and billing are constructed.

Some cloud services are an "always on" type of application; it doesn't scale up or down with demand, and the more you use it, the more expensive it is for you as the cloud service is always "on." This is fine for limited-use applications, but not as cost-effective as you scale.

For higher-volume usage, demand-based cloud computing is the smarter choice. A good analogy is Netflix, the consumer king of demand-based computing. If it's say, a weekday morning, demand may be relatively less, and fewer servers are pulled into duty. Friday evening however, more servers will go online to fuel the movie-watching demands of all those people settling in on their couches to stream the latest movie.

On the other end of the spectrum are enterprise resource planning (ERP) cloud platforms. This is a system that needs to always be on, with transactional data consistently flowing in and out from different interfaces. This is not well suited to scale up or down, so it can be costlier when demand rises.

Another way to think of this is having a smart system in place to move data. Your goal is to set your data up correctly so it resides in the best "bucket" for cost efficiency. This is particularly true if you have a document or content-centric cloud solution need.

Cloud solution providers are not trying to surprise companies with outsized fees, rather there's been a rapid change in the adoption of cloud, and this has fueled both an expansion in choice and a change in the nature of the enterprise.

Which brings us to our next point...

2. New game, New paramters - the Democratization of Cloud
Expansion of new solution options means that more enterprises across industries and sizes can access the cloud. It also means lines have blurred between solutions used by large enterprises and available access from smaller companies. This section deals with the ways in which cloud has shifted both in size and specialized offering, and what it means for verticals and companies of varying sizes.

In a sense, solutions have become more democratic, and there's been a huge shift in the power of computing and what's available to smaller companies. Thanks to the cloud marketplace, software that was only available as a very expensive, large enterprise solution, is now much more readily available.

Small companies can access the cloud and do trial engagements; they can buy one or two seats in software, instead of a thousand-seat financial commitment. That's an amazing shift in the business landscape, and a very empowering one for smaller businesses.

The other paradigm shift is not only in the scale of solutions and what's available; the need for IT support has changed radically, as well. Smaller companies don't need an IT department to install and run these solutions. Partnering with a reliable external expert can often provide them all the support they need to select, install and maintain a key software solution.

The only times enterprises run into issues with cloud costs, deployment or other issues is when they try and completely "DIY." Cloud may have radically democratized solution availability, but there are still complexities in the selection, installation and management process that should not be overlooked.

3. Security and Redundancy - Batteries not Included
The issues of security and redundancy are one of the largest concerns I have around the "DIY" cloud crowd, and one of the largest areas of misunderstanding.

The core understanding all cloud solution purchasers should walk away with is that there is no security and redundancy system pre-built into any cloud solution. An enterprise needs to be responsible for its own security and backup, unless a cloud solution explicitly states otherwise.

The misunderstanding behind cloud security and backup assumptions come, I believe, from customer assumptions about dealing with global-brand cloud solution providers. There's a belief the solution will be "secure." The reality is the solution will perform well, but the purchaser needs to ensure his or her own backups and security.

In very simple terms, purchasing a cloud solution is similar to buying a bike. The bike will perform according to your needs, budget and manufacturer specifications. But just buying the bike does not automatically mean you'll get a lock, repair kit, and a Triple AAA extension for tire repair service if you get a flat. Those things need to be bought separately.

That's where a resource other than a cloud provider is needed to configure, manage and maintain the cloud environment.

4. Data Housing Options to Ponder
Bare metal, cloud, hybrid: what does each option mean for the enterprise, and how should a company evaluate where, when and how they should trust their data in the cloud?

The best approach is to think of options from the terms of risk management.

The key questions to ask when evaluating options and risk are:

  • Is my data critical?
  • If so, how is it being protected?
  • What is the performance of that data?
  • In other words, how will I be using it?

For example, Amazon has a "cold storage" option that is really inexpensive and extremely valuable for companies needing to maintain data records. However, it is not intended for active use. If you need to access that data, you'll end up paying for the storage and the cost of moving it out of cold storage and accessing it. It's called ‘data gravity' and quite often getting your data out of large public clouds is expensive and sometimes tremendously difficult.

Paying twice for your data is never a good deal. Understanding that data is critical to your current business, and leveraging the cloud so that it's both immediately accessible and affordable is a different cloud strategy than ensuring safe storage of historical data.

Cloud is the ideal on-demand solution, but an enterprise needs to be smart in understanding how much and when they'll need to pull data.

5. Not Your Grandfather's Software Purchase Process
Thanks to the cloud, purchasing a software solution is a dramatically streamlined process. In the past, software acquisition would go something like this: a line of business people would say "here is my requirement," then there would be an extensive acquisition process for the chosen software. The cloud has changed all of that.

Now, a member of the business team may go online and do a search. I call it my "Here's my ten search terms" approach to identifying both what the ERP system need is, and what the most popular, proven or positively reviewed options exist out there.

For example, a construction company chief business officer may say: "here's my ten search results for my web search investigating an ERP system that serves the construction space, but is also capable of dealing with multiple currencies." He or she will get the web results and recommendations pretty quickly, then do some internal review before acting on the suggestions.

But that's only half the story. Before the cloud, not only would there be an extensive in-house RFP and vetting process, how the final selection was processed has also changed.

Before, an enterprise decision maker would look at a possible software solution. Of the possible choices, the best one still only meets 50% of their total needs. Before cloud (BC), the company would proceed with buying that solution, spend money on customization, and also purchasing additional solutions until their needs are finally met.

Now, it's as easy as purchasing multiple apps to meet the enterprise's core business needs. This is a major sea change in how solutions are purchased.

A good analogy is the iPhone. If you're a runner or multiple-sports enthusiast, you may find that one app is not what you need to track and evaluate your performance. You may have an app for running, one for cycling, and more. Using a curated selection of apps delivers the performance monitoring results you're looking for without building an expensive single monitoring solution. Collectively, your needs are met, and in a labor- and cost-effective way. This is very similar to the way smart, budget and performance-conscious companies are utilizing cloud-based solutions today.

6. Getting What You Need: The Professionals' Role
The tremendous power of the web is its ability to provide a wealth of information, and the ways in which it can empower professionals to take on new areas of expertise. Having said this, sometimes professionals should just stick to their knitting, and leave cloud solution-selection off of their to-do list.

To be even more blunt: selecting the wrong cloud service provider can easily cost an enterprise upwards of six figures. In addition to the hard financial cost, the wrong solution can equal delays in service, access to data, and more.

This is where bringing in managed service expertise to guide your enterprise makes sense. A dedicated cloud professional can more than pay for itself, in many cases, by pointing your enterprise to the right cloud solution, along with implementation, management and more.

An external expert can help ensure, with the complete neutrality, that you're getting the performance you are expecting for your investment.

7. Taking the Heat - Be the hero
Finally, a third party, like a service level agreement (SLA) solution provider, exists strictly to ensure your enterprise is getting maximum value from its cloud commitment.

An independent, third party SLA can be relied upon to "take the heat" when a change or correction is needed, or to simply fine-tune your cloud platform for maximum productivity. Outside of the realm of internal company politics or other concerns, the SLA resource is focused on one thing exclusively: to ensure your enterprise gets maximum value from its SLA, and as an outside party is well positioned to "take the heat" necessary to ensure the sometimes complex SLA is designed and maintained to provide you with your best value.

The Take-Away
In summary, it's a great time to be an enterprise, thanks to the accessibility and relative cost savings of the cloud. Take a moment to savor the robustness, versatility, and range of options available today.

Then, take a little longer to prepare your enterprise to take maximum advantage of cloud performance, leveraging the power of external resources and internal enterprise review to guide your choice of the optimal cloud solution.

More Stories By James Pathman

James Pathman is CEO of Data Resolution, an award-winning Microsoft partner enterprise and a leading global provider of hosted technology solutions for businesses of all sizes. More information: www.dataresolution.net, or contact: jim@dataresolution.net.

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