Last week, I met with a number of our top clients near the GreenPages HQ in Portsmouth, NH at our annual Summit event to talk about successful adoption of cloud technologies. In this post, I’ll give a summary of my cloud adoption advice, and cover some of the feedback that I heard from customers during my discussions. Here we go…
The Market for IT Services
I see compute infrastructure looking more and more like a commodity, and that there is intense competition in the market for IT services, particularly Infrastructure-as-a-Service (IaaS).
- "Every day, Amazon installs as much computing capacity in AWS as it used to run all of Amazon in 2002, when it was a $3.9 billion company.” – CIO Journal, May 2013
- “[Amazon] has dropped the price of renting dedicated virtual server instances on its EC2 compute cloud by up to 80 percent […] from $10 to $2 per hour…” – ZDNet, July 2013
- “…Amazon cut charges for some of its services Friday, the 25th reduction since its launch in 2006.” – CRN, February 2013
I think that the first data point here is absolutely stunning, even considering that it covers a time span of 11 years. Of course, a simple Google search will return a number of other similar quotes. How can Amazon and others continue to drop their prices for IaaS, while improving quality at the same time? From a market behavior point of view, I think that the answer is clear – Amazon Web Services and others specialize in providing IaaS. That’s all they do. That’s their core business. Like any other for-profit business, IaaS providers prefer to make investments in projects that will improve their bottom line. And, like any other for-profit business, those investments enable companies like AWS to effectively compete with other providers (like Verizon/Terremark, for example) in the market.
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With network and other technologies as they are, businesses now have a choice of where to host infrastructure that supports their applications. In other words, the captive corporate IT department may be the preferred provider of infrastructure (for now), but they are now effectively competing with outside IaaS providers. Why, then, would the business not choose the lowest cost provider? Well, the answer to that question is quite the debate in cloud computing (we’ll put that aside for now). Suffice to say that we think that internal corporate IT departments are now competing with outside providers to provide IaaS and other services to the business and that this will become more apparent as technology advances (e.g., as workloads become more portable, network speeds increase, storage becomes increasingly less costly, etc.).
Now here’s the punch line and the basis for our guidance on cloud computing; how should internal corporate IT position itself to stay competitive? At our annual Summit event last week, I discussed the progression of the corporate IT department from a provider of technology to a provider of services (see my whitepaper on cloud management for detail). The common thread is that corporate IT evolves by becoming closer and closer to the requirements of the business – and may even be able to anticipate requirements of the business or suggest emerging technology to benefit the business. To take advantage of cloud computing, one thing corporate IT can do is source commodity services to outside providers where it makes sense. Fundamentally, this has been commonplace in other industries for some time – manufacturing being one example. OEM automotive manufacturers like GM and Ford do not produce the windshields and brake calipers that are necessary for a complete automobile – it just isn’t worth it for GM or Ford to produce those things. They source windshields, brake calipers, and other components from companies who specialize. GM, Ford, and others are then left with more resources to invest in designing, assembling and marketing a product that appeals to end users like you and I.
So, it comes down to this: how do internal corporate IT departments make intelligent sourcing decisions? We suggest that the answer is in thinking about packaging and delivering IT services to the business.
GreenPages Assessment and Design Method
So, how does GreenPages recommend that customers take advantage of cloud computing? Even if you are not considering external cloud at this time, I think it makes sense to prepare your shop for it. Eventually, cloud may make sense for your shop even if, at this time, there is no fit for it. The guidance here is to take a methodical look at how your department is staffed and operated. ITIL v2 and v3 provide a good guide here of what should be examined:
- Configuration Management
- Financial Management
- Incident and Problem Management
- Change Management
- Service Level and Availability, and Service Catalog Management
- Lifecycle Management
- Capacity Management
- Business Level Management
Assigning a score to each of these areas in terms of repeatability, documentation, measurement, and continuous improvement will paint the picture of how well your department can make informed sourcing decisions. Conducting an assessment and making some housekeeping improvements where needed will serve two purposes:
- Plans for remediation could form one cornerstone of your cloud strategy
- Doing things according to good practice will add discipline to your IT department – which is valuable regardless of your position on cloud computing at this time
When and if cloud computing services look like a good option for your company, your department will be able to make an informed decision on which services to use at which times. And, if you’re building an internal private cloud, the processes listed above will form the cornerstone of the way you will operate as a service provider.
Case Study: Service Catalog and Private Cloud
Implementing a Service Catalog, corporate IT departments can take a solid first step to becoming a service provider and staying close to the requirements of the business. This year at VMworld in San Francisco, I’ll be leading a session to present a case study of a recent client that did exactly this with our help. If you’re going to be out at VMworld, swing by and listen in to my session!
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