|By John Treadway||
|May 3, 2013 03:45 AM EDT||
My favorite and least favorite question I get is the same – “Can you help me build a business case and ROI for cloud computing?”
Well, yes… and no. The issue is that cloud computing has such a massive impact on how IT is delivered that many of the metrics and KPIs that are typically used at many enterprises don’t capture it. I mean, how do you capture Agility – really?
In the past I have broken this down into 3 buckets. Yes, some people have more but these are the big three…
Agility is reducing cycle time from ideation to product (or system delivery) – incredibly difficult to measure given that it’s hard to do apples to apples when every product/project is unique. You can do this in terms of Agile methodology task points and the number of points per fixed timeframe sprint on average over time. Most IT shops do not really measure developer productivity in any way at the moment so it’s pretty hard to get the baseline let alone any changes. Agility, like developer productivity, is notoriously difficult to quantify. I have done some work on quantifying developer downtime and productivity, but Agility is almost something you have to take on faith. It’s the real win for cloud computing, no matter how else you slice it.
In a highly automated cloud environment with resource lifecycle management and open self-service on-demand provisioning, the impetus for long-term hoarding of resources is eliminated. Reclamation of resources, only using what you need today because it’s like water (cheap and readily available), coupled with moving dev/test tasks to public clouds when at capacity (see Agility above) can reduce the dev/test infrastructure footprint radically (50% or more). Further, elimination of manual processes will reduce labor as an input to TCO for IT. In a smaller dev/test lab I know of, with only 600 VMs at any given time, 4 FTE onshore roles were converted to 2 FTE offshore resources.
There’s a very deep book on this topic that came out recently from Joe Weiman called Cloudonomics (www.cloudonomics.com). One of the key points is to be able to calculate the economics of a hybrid model where your base level requirements are met with a fixed infrastructure and your variable demand above the base is met with an elastic model. A key quote (paraphrase) “A utility model costs less even though it costs more.”
The book is based on this paper — http://joeweinman.com/Resources/Joe_Weinman_Inevitability_Of_Cloud.pdf
A hybrid model is the most cost-effective – which is “obvious” on the surface but now rigorously proven (?) by the math.
P = Peak. T = Time. U = the utility price premium.
If you add the utility pricing model in Joe Weiman’s work to some of the other levers I listed above, you get a set of interesting metrics here. Most IT shops will focus on this to provide the ROI only. They are the ones who are missing the key point on Agility. However, I do understand the project budgeting dance and if you can’t show an ROI that the CFO will bless, you might not get the budget unless the CEO is a true believer.
What is the impact of removing human error (though initially inserting systematic error until you work it through)? Many IT shops still provision security manually in their environments, and there are errors. How do you quantify the reputation risk of allowing an improperly secured resource be used to steal PII data? It’s millions or worse. You can quantify the labor savings (Efficiency above), but you can also show the reduction in operational risk in IT through improved audit performance and easier regulatory compliance certification. Again, this is all through automation.
IT needs to get on the bandwagon and understand the fundamental laws of nature here — for 50-80% of your work even in a regulated environment, a hybrid utility model is both acceptable (risk/regulation) and desirable (agility, economics, and quality).
Do a Study?
The only way to break all of this down financially is to do a Value Engineering study and use this to do the business case. You need to start with a process review from the outside (developer) in (IT) and the inside (IT) out (production systems). Show the elimination of all of the manual steps. Show the reduced resource footprint and related capex by eliminating hoarding behavior. Show reduced risk and lower costs by fully automating the provisioning of security in your environment. Show the “cloudonomics” of a hybrid model to offset peak demand and cyclicality or to eliminate or defer the expense of a new data center (that last VM with a marginal cost of $100 million anybody?).
In 1987 the stock market crashed and many trading floors could not trade because they lacked real-time position keeping systems. Traders went out and bought Sun workstations, installed Sybase databases, and built their own. They didn’t wait for IT to solve the problem – they did it themselves. That’s what happens with all new technology innovation.
The same thing happened with Salesforce.com. Sales teams just started using it and IT came in afterwards to integrate and customize it. It was obviously a good solution because people were risking IT’s displeasure by using it anyway.
If you really want to know if cloud computing really has any business value, take a look at your corporate credit card expenses and find out who in your organization is already using public clouds – with or without your permission. It’s time to stop calculating possible business value and start realizing actual business value from the cloud.
In his session at Cloud Expo, Robert Cohen, an economist and senior fellow at the Economic Strategy Institute, will provide economic scenarios that describe how the rapid adoption of software-defined everything including cloud services, SDDC and open networking will change GDP, industry growth, productivity and jobs. This session will also include a drill down for several industries such as finance, social media, cloud service providers and pharmaceuticals.
Oct. 27, 2016 10:30 AM EDT Reads: 2,073
DevOps is speeding towards the IT world like a freight train and the hype around it is deafening. There is no reason to be afraid of this change as it is the natural reaction to the agile movement that revolutionized development just a few years ago. By definition, DevOps is the natural alignment of IT performance to business profitability. The relevance of this has yet to be quantified but it has been suggested that the route to the CEO’s chair will come from the IT leaders that successfully ma...
Oct. 27, 2016 10:30 AM EDT Reads: 16,632
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
Oct. 27, 2016 10:15 AM EDT Reads: 1,397
We are always online. We access our data, our finances, work, and various services on the Internet. But we live in a congested world of information in which the roads were built two decades ago. The quest for better, faster Internet routing has been around for a decade, but nobody solved this problem. We’ve seen band aid approaches like CDNs that attack a niche's slice of static content part of the Internet, but that’s it. It does not address the dynamic services-based Internet of today. It doe...
Oct. 27, 2016 10:15 AM EDT Reads: 2,021
Ask someone to architect an Internet of Things (IoT) solution and you are guaranteed to see a reference to the cloud. This would lead you to believe that IoT requires the cloud to exist. However, there are many IoT use cases where the cloud is not feasible or desirable. In his session at @ThingsExpo, Dave McCarthy, Director of Products at Bsquare Corporation, will discuss the strategies that exist to extend intelligence directly to IoT devices and sensors, freeing them from the constraints of ...
Oct. 27, 2016 10:15 AM EDT Reads: 3,198
Intelligent machines are here. Robots, self-driving cars, drones, bots and many IoT devices are becoming smarter with Machine Learning. In her session at @ThingsExpo, Sudha Jamthe, CEO of IoTDisruptions.com, will discuss the next wave of business disruption at the junction of IoT and AI, impacting many industries and set to change our lives, work and world as we know it.
Oct. 27, 2016 10:02 AM EDT Reads: 134
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
Oct. 27, 2016 09:15 AM EDT Reads: 2,156
By now most people have either created their configuration management solution or are just embarking on this journey. In his session at @DevOpsSummit at 19th Cloud Expo, Marco Ceppi, a DevOps Engineer working at Canonical, will discuss how to take configuration management to the next level with modelling and orchestration. He will also discuss how and why people are moving from a machine-centric view to a service/application-oriented view of deployments, and how you can leverage the knowledge a...
Oct. 27, 2016 09:00 AM EDT Reads: 2,047
@ThingsExpo has been named the Top 5 Most Influential M2M Brand by Onalytica in the ‘Machine to Machine: Top 100 Influencers and Brands.' Onalytica analyzed the online debate on M2M by looking at over 85,000 tweets to provide the most influential individuals and brands that drive the discussion. According to Onalytica the "analysis showed a very engaged community with a lot of interactive tweets. The M2M discussion seems to be more fragmented and driven by some of the major brands present in the...
Oct. 27, 2016 08:45 AM EDT Reads: 11,585
In the 21st century, security on the Internet has become one of the most important issues. We hear more and more about cyber-attacks on the websites of large corporations, banks and even small businesses. When online we’re concerned not only for our own safety but also our privacy. We have to know that hackers usually start their preparation by investigating the private information of admins – the habits, interests, visited websites and so on. On the other hand, our own security is in danger bec...
Oct. 27, 2016 08:15 AM EDT Reads: 522
Enterprises have been using both Big Data and virtualization for years. Until recently, however, most enterprises have not combined the two. Big Data's demands for higher levels of performance, the ability to control quality-of-service (QoS), and the ability to adhere to SLAs have kept it on bare metal, apart from the modern data center cloud. With recent technology innovations, we've seen the advantages of bare metal erode to such a degree that the enhanced flexibility and reduced costs that cl...
Oct. 27, 2016 07:45 AM EDT Reads: 523
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, wil...
Oct. 27, 2016 07:30 AM EDT Reads: 1,952
As software becomes more and more complex, we, as software developers, have been splitting up our code into smaller and smaller components. This is also true for the environment in which we run our code: going from bare metal, to VMs to the modern-day Cloud Native world of containers, schedulers and microservices. While we have figured out how to run containerized applications in the cloud using schedulers, we've yet to come up with a good solution to bridge the gap between getting your conta...
Oct. 27, 2016 07:30 AM EDT Reads: 1,612
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Oct. 27, 2016 07:00 AM EDT Reads: 5,020
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...
Oct. 27, 2016 07:00 AM EDT Reads: 4,935