• 01/23/2012
    9:50 AM
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Thought Experiment--Forget ROI

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."

Additionally, scale is simplified through standardized infrastructure components. Rather than deciding on which server, storage or switch is required per project, pre-defined components are purchased and plugged into the resource pools as capacity is required. Is your network at capacity? Add a switch to the mesh. The hardware itself becomes nothing more than CPU, RAM, storage and I/O capacity for the delivery model you've built.

The flip side of the above model is removing old or under-performing services. When an application or service is removed from the cloud, the resources are returned to the pools. In a legacy data center build, it is difficult to repurpose hardware when a service is no longer needed, and as such often doesn't happen. Scaling down occurs, and services are eventually retired. This model allows for seamless return of the underlying hardware resources to the cloud.

The last piece of competitive advantage is of course cost. Any reduction in cost without a reduction in revenue will inherently increase profits. This is why the ROI model persists so strongly. Private cloud can, and does in many cases, reduce costs, but this depends on how mature your IT organization is at the onset. Much of private cloud's cost reduction comes from the virtualization of the underlying hardware; automation and orchestration are not required for that, but help provide the business value shown here.

While cost is always quite important, it should not be the first or most important criteria. Cost is more easily modeled and budgeted for once the end goal has been defined. If you begin with an attempt to show ROI, you end up with models of very subjective soft costs showing savings over time. These are not solid foundations for such a large change. Define the advantages private cloud can provide your organization, decide whether they provide enough value to embark on the journey, and then model the costs into your budget.

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