Zen 2.0

Where the Cloud Architecture camp is focused on how to create the best architecture to handle the business needs, the Cloud Business camp is zeroed in on translating the architectural benefits into financial terms. It’s great that enterprises can have ubiquitous access and elasticity, but if it costs them 10x more in investment for a 2x return, that’s not going to fly. In this section we will look at some of the business benefits of Cloud Computing:

• Reduce Cost
• Minimize Risk
• Increase Agility
• Maintain Focus

Reduce Cost

One large enterprise has outsourced their test and development environments to an outsourcer, and paying approximately $10,000 per environment per year, regardless of whether the resources are virtual or physical. They have 3000 such environments, so they are essentially paying $30 million per year on just test and development environments. They did a user survey to find out the utilization of these environments, and all the developers responded saying that these environments are heavily utilized and there’s tight handoff from one team to another. An audit, however, revealed that overall, the environments are utilized < 10%, and that 70% of the environments are logged into once per year by developers.

Another large financial services firm said that their infrastructure is utilized less than 2% overall.

Enterprises can lower CAPEX by not having to procure additional hardware and software but to use cloud providers and their pay-per-use utility pricing to handle resource spikes; they can lower OPEX by abstracting the hardware differences, and providing self-service capabilities to the end users so IT don’t always have to be the middle man; and they can lower their CAPEX and OPEX by increasing utilization of these expensive resources, or reduce the amount of resources required to accomplish the same tasks.

Minimize Risk

It still shocks me that in this age, companies are still running some of their mission critical applications on servers sitting under a IT administrator’s desk. But more often than not, when I talk to enterprises, this very scenario always comes up. IT administrators do this for different reasons. Some just don’t want to give up control; some don’t want to go through the arduous procurement process; some don’t have the time; and some simply don’t see why it’s a problem. In majority of these cases, if enterprises can provide these IT administrators the ability to quickly migrate these servers into the Cloud, they are more than willing to do so.

The Cloud, by design, is architected to be highly available and fault tolerant. Any one component going down should not affect the availability of applications. The Cloud is one way for enterprises to reduce risk of mission critical applications going down.

Another way that Cloud helps enterprises reduce risk is it can give IT more control over the resources. Imagine a large organization that allows their end users to procure their own hardware and software because IT simply doesn’t have the cycles to manage that. Soon enough there will 100 different hardware suppliers and 1000 different software suppliers. IT will have no idea how these resources are being used and what the utilization levels are. In addition, this scenario presents a huge security risk to the enterprises, as there’s no control of the procurement process.

The Cloud centralizing the procurement and management of hardware and software, IT can maintain control but at the same time provide users the resources they are looking for. It will be a win-win situation for both sides.

Increase Agility

Joe Weinman, AT&T’s VP of Strategy, said that “an on-demand service provider typically charges a utility premium — a higher cost per unit time for a resource than if it were owned, financed or leased.” Joe is absolutely correct here, and the recent McKenzie report validates this as well. To determine whether Cloud Computing is the right approach, enterprises must look at other business benefits in addition to hard cost.

What is it worth to an enterprise when they can respond faster to business requirements and enable businesses to bring products to market quicker? For example, going from 8 weeks to 3 days to 10 minutes in provisioning of resources to run enterprise services or spinning up 500 servers in minutes to test an application.

The global economy is forcing companies to be global as well. One such company has 10’s of 1000’s of developers/consultants spread all over the world, all requiring quick access to test and development environments. It’s impractical for this company to build and operate data centers around the world, and it’s also not the company’s core competency and strategy to have all these data centers. One of the things they are looking to do is build a “cloud abstraction layer” on top of multiple clouds, and allow developers to request resources. Depending on the developer’s location and resource requirement, the software will automatically provision the right resources and inform the user when ready. The ability to distribute the workload onto multiple clouds gives this company the flexibility and speed to respond to business needs. How much does this worth?

Maintain Focus

Like the company described above, most enterprises do not consider building and operating data centers as their core competency. These enterprises consider it to be more of a distraction to their core business. By utilizing the service provider clouds, the enterprises can maintain their focus and accelerate innovation on their core business.

The classic example here is the New York Times case study, where the developers processed 4TB of data in matter of minutes to convert scans of 15 million news stories into PDFs for online distribution. Instead of worrying about taking months to procure hardware for this one time task and spending much more money, New York Times took it to the Cloud and completed the task in less than 24 hours and with much less money.

The Cloud allows allow IT organizations to focus on providing the best infrastructure possible, and developers to focus on their applications instead of the infrastructure.