We’re all in the cloud now right? But what does that actually mean? To some, your applications could exist solely in Public SaaS, PaaS and/or IaaS, to others it could simply be using Office 365 and some development work. If you think this statement can be interpreted many ways, try explaining it to a CEO who doesn’t know, doesn’t care, just wants the business to run with this technology. How do you explain what the cloud actually is to a non-technical person who holds the purse strings? How do you get them to understand that this is a fast-moving environment that will utterly transform their, or their competitor’s business?
Through our inquiries at Gartner we’ve often reviewed cloud strategy documents or business cases aimed at the C suite. Often, we’ve had to explain to the authors that their reasons why to invest in cloud aren’t as commercially focused as they are technically. IT leaders need to justify this move to cloud in a contextualised way, allowing the CEO to understand what this will mean for the business.
1. The cloud isn’t new
Think about what the cloud is doing to IT applications, infrastructure and operations: We’re moving from where we build and run the IT systems and apps to where it is supplied to us as a standardised, scalable service paid for on usage. Back in the 19th Century, industry had to generate its own power, using a horse, a water wheel, a windmill or a steam engine. At home we had a log fire. We all had to be experts in running these. Then along came Electricity. Generated by a power station, piped into our home or factory at a standard voltage, reliable (eventually!) and billed on usage. For the home the light bulb replaced gas or oil (making it somewhat safer and cleaner). But once electricity was available to the house, then innovations such as the refrigerator, kettle, toaster, vacuum cleaner and others came. In the factory, electricity made higher output engineering available, making the steam engine, water wheel and windmill redundant.
The lessons we can take to the CEO is that IT is now being standardised and automated on a usage based model which will allow an innovation environment which will be agile, scalable and all the good things we’ve come to expect from the cloud.
The problem is, just the same as we couldn’t expect Thomas Edison to predict microwave ovens in every household in 100 years, we can’t ask our IT organisation to predict the products or services we will have in the future. Which leads us to the next point:
2. Think Revenue, not Cost
Senior management think Revenue, Cost and Risk. It’s a pretty simplistic way of looking at things, but useful for this blog. IT has traditionally been a cost to the business. Admittedly with the efficient usage of existing IT systems we have seen both cost savings and revenue increases, but these are not usually recorded in the balance sheet as such. When we talk about the cloud we have the opportunity to talk about how we will make more money. There are thousands of examples we could use, but in essence we are now looking at how data can be used more efficiently, correlated with other data sources to see new patterns and automatically exploit these patterns through product change, supply chain change and advertising. This all means that IT can use data to make new products and services rapidly, provide better customer insight and service and innovate new business models – All which has a direct revenue impact on the balance sheet. We’ve written about the high level ways of making money from the digital change in the “6 Methods to Earn New Digital Revenue” research note found here. It is important to always think about how the cloud service will affect your way of handling data, how you can correlate it using machine learning or new data sources and how you can automatically provision the infrastructure and applications to exploit it. The cloud will make you money, unlike Mr Edison and the electrical supply powering the light bulb, you can potentially see a new digital future you can succeed in.
3. The Cloud is not another Data centre!
Hopefully as you look at the capabilities beyond compute, network and storage, you’ll see the public cloud providers have a huge range of capability across applications, security, migration, middle ware and many others (there are over 200 product lines in the major cloud providers. Since they develop new applications so fast this figure is rising rapidly). To treat the public cloud as another data centre (purely driven by the desire to save money) would be like using the full ERP suite as simply a spreadsheet. This also leads into the final point:
4. Multi Cloud does not always mean vendor autonomy
Vendor lock in is emotive subject. With most vendors, we have been locked in voluntarily as they have often been the best solution for our requirements at that time. But as our requirements change or our business grows, this vendor commitment can grow, exceeding the initial budget and expectations. We’ve always tried to reduce cost to the business and therefore these increased bills have become a target for our provisioning team. In the public cloud, utilisation will inevitably grow as business becomes more digital. Multiple discount schemes are available based on volume commitment, but some organisations want to “hedge their bets”, trying to play one cloud provider off another. This strategy is not a successful as it might be in comparison to negotiating with hardware vendors since the cloud is not just another data centre (see above). Some organisations look to a container strategy, as these are portable between cloud providers (if done correctly). However often the cloud provider’s egress bandwidth costs are overlooked and this can become a very large cost quickly. Also the temptation to use some of the cloud native tools can lock you in to that particular provider since there are no open APIs in the top 3 hyper scale public cloud providers. Gartner has written on how to manage vendor lock in with cloud providers in the “A Guidance Framework for Managing Vendor Lock-In Risks in Cloud IaaS” research note here.
So in short, the conversation should go like this:
Technical Director: “Dear CEO, I’m going to show you how we can make more money by using the public cloud, delight our customers with our innovations and insight and reduce the cost of doing business by using this great agility.”
The CEO: “Where do I sign?”
It’s a very simplistic way of looking at the public cloud and there are other factors such as data residency, legacy, latency and geopolitics that will influence this (that’s coming in the next blog), but often the advice I give during our inquiries is “Think of the business benefit first”.