The more I speak with executive IT leaders nowadays, the more I hear the same: help me cut costs, reduce my risks, and show quantifiable and near-immediate value to the business. What’s not being said today is more important, though – and alarming in its absence. “Where can I do this? What else should I look at?” CIOs who have already cut budgets, people, and nonessential projects are scanning their enterprise assets and struggling to figure out their next big move. Maybe they’ve already gone so far as to transition email and collaboration systems into the Software-as-a-Service (SaaS) cloud, have been evaluating alternatives in lieu of pursuing expensive on-premises LOB application upgrades, have been migrating to and standardizing on more innovative computing platforms like WS2008 R2 and Azure, and have signed up with an inexpensive hosting provider to manage their growing collection of legacy systems. What else can be done?
To answer one question with another, have they considered moving their non-production (back-end supporting) mission-critical SAP, Microsoft, Oracle (Siebel, JD Edwards, Peoplesoft), and other enterprise business systems to an Infrastructure-as-a-Service (IaaS) cloud? Pundits warn that the cloud is not ready for your business applications, much less your mission-critical ones. After all, traditionally hosted on-premises business applications reflect too many complex integration points (connecting ERP to your analytics, reporting, faxing, warehousing, tax calculation, and other bolt-on systems, for example) subject to potential performance, security, and availability issues. Combined with data complexities, the need to meet stringent SLAs, and all the risks associated with change, “clouding” enterprise applications might seem like the last place a CIO should look to make changes.
Ah, but here’s the thing: while these issues or challenges certainly hold true for production systems (and are starting to be well-addressed, by the way), the arguments against using the cloud for enterprise applications really start to fall apart when we consider moving behind-the-scenes non-production systems to the cloud. Non-production systems used for training technical teams and end user communities, piloting or demonstrating new systems, installing and quickly evaluating functional enhancements, or quickly smoke testing new functionality used automated test tools, can be ideal cloud candidates.
Let’s back up a moment. What is the cloud but simply a term reflecting a number of alternative deployment options or methods of delivering IT, platforms, or finished software solutions? It’s just another platform, another option, and a quickly provisioned relatively cheap one at that. The new question on the lips of IT leaders everywhere should be: “why can’t we toss this into the cloud?”
The cloud can dramatically increase a business’s time-to-value. Most IaaS providers can turn around an organization’s request for compute resources, i.e. the servers and storage resources along with network and other infrastructure services, in minutes to hours. With all the hassles surrounding new system procurement, OS and database licensing, rack-and-stack, and the requisite installation services, the best that most IT departments can promise is several days to weeks or longer. Such time-frames do little to appease business leaders or executive teams that a CIO is doing everything possible to decrease time-to-deploy, reduce the risk of delaying new projects, and show quickly delivered quantifiable business value.
And the cloud can offer financial alternatives as well. From pay as you go models, to converting CAPEX to OPEX, cloud providers give IT organizations a level of financial flexibility they probably don’t have available today. When you consider the acquisition and operational costs of servers, OS licenses, related disk space, and so on (for each of your non-production SAP, Oracle, and Microsoft business applications), the numbers grow quickly. Factor in the benefits related to rapid deployment and the ability to spin up new and wind down no-longer-needed computing resources, and it shouldn’t be difficult to not reduce costs by 1/3 to 1/10th vs traditionally hosted, internally managed systems but to deliver real business value faster than you’ve done before. True, you lose the tax deductions for depreciation. And there’s cases where regulatory bodies simply eliminate the cloud as a hosting or platform alternative. But in many cases an organization can gain both business flexibility and increased IT employee bandwidth at precisely the time they need it – as our global economy begins to recover and an organization’s business teams begin pushing IT to dust off all those projects shelved over the last 3 years.
A typical Fortune 2000 company running a mix of ERP, Supply Chain, Customer Relationship Management, Portal, and similar mission-critical business applications is likely running a combination of development, test, technical sandbox, business sandbox/prototyping, demonstration, upgrade, and end-user training systems for every production system. To put the cloud opportunity into perspective, there’s conservatively a 3:1 ratio of “cloudable” non-production systems to production systems (because systems in the promote-to-production process – like development and test – might be more effectively housed alongside the production system). Once we start doing the math, the full impact of these lower costs @ rapid time-to-value @ little to no risk should become apparent. Factor in the ability to move supporting bolt-on non-production (and perhaps production?) systems to the cloud, and the numbers grow even more impressive.
Let me know if you’d like to walk through a real-world risk-informed cost savings model. I could share some work we’re developing, and together we could build something very realistic. In the meantime, think about and share with me here the non-production systems in your own workplace that you could transition to the cloud, and all the benefits (besides increasing time-to-value and reducing costs) you might reap in the process…
Best to you!