Thought Experiment--Forget ROI
January 23, 2012
Boys and girls, today's homework assignment is a thought experiment. I want you all to put yourselves in the shoes of the CXO team making a decision to move to private cloud. There is, of course, one catch: You may not factor in ROI. We're dropping ROI because it clouds the subject (bad pun intended.) Let's skip the why-should-I-do-this experiment; I'd, of course, default to, "Because I told you so."
Let's work through this together; it may be a tough one. Many of us have been trained to make all IT-related decisions based on ROI. Some of this is self-induced, some may come from vendors with ROI spreadsheets utilizing amazing formulas, industry data and handfuls of pixie dust to show how much money you'll save over the next three years with widget X.15. For whatever reason, ROI is a big part of most IT-related decisions.
IT decisions weren't originally made this way. Instead, they were made based on the business value that would be gained from an IT system. IT was purchased based on how it would enable the business to increase profits, build better products or better service its customers. That's really what the technology should be about.
The decision to move to private cloud should be based on the competitive advantage it can provide. If we can justify that private cloud can give us the ability to do something better, faster or at lower cost than the competition, we're halfway there. Let's take a look at gaining competitive advantage with private cloud.
Let's start with some example numbers for the time it takes to bring a new service online:
1 week - Design and validate a BOM (bill of materials)
1 week - Receive approvals and submit PO
2 weeks - Wait on required gear
1 week - Rack, stack, cable and configure
3 weeks - Build service, test and validate
2 months - Total time
This is just an example; some of these times may be laughably short or long depending on your organization. Using these example numbers you have a two-month period between identifying a new service that will enable your business and having that service online. This doesn't take into account rollout of and training on the service once online. If you could cut that time in half, would that provide competitive advantage?
By using a private cloud model for delivery of IT services, this process can be trimmed to three weeks (using the same example numbers.) The infrastructure would be in place, carved into flexible pools and the tools to automate deployment of the required subset would be available to IT staff, developers or both. Through a self-service portal the first four steps above can take place in minutes.