• 12/17/2013
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Cloud Services: 5 Key Questions Before You Buy

The promise of the cloud is getting the most resources for your money. But IT leaders must carefully evaluate potential cloud services before they make the leap.

Like many technical innovations, the cloud's value proposition is that it makes IT faster, easier, and cheaper. Put another way, the implicit and explicit promise of infrastructure as a service (IaaS), platform as a service (PaaS), software as a service (SaaS), unified communications as a service (UCaaS), and similar offerings is about getting more for less. Who doesn't want that?

Startups, for example, can keep investors happy by buying resources from the cloud and only scaling them up only when their creation begins to take off. There is little or no capital investment required. Established companies with legacy technology can migrate functions to compliant platforms without having to rebuild their infrastructures. Young or old companies with big IT departments might reduce overhead by moving specific workflows and responsibilities to off-site providers.

Hooray for the cloud! But not so fast.

As technology buyers have learned-- sometimes the hard way -- it is critical to evaluate all claims carefully before committing to any new technology purchase. It's critically important to understand what you are getting so that you can recognize how new acquisitions will affect your infrastructure.

Getting from here to there in the cloud
If you have been charged with buying cloud resources, do your due diligence. Demand case studies, testimonials, white papers, and use cases that explain the offerings and demonstrate their value and savings. And remember, just because a resource is in the cloud doesn't mean it will be inexpensive to implement and maintain.

As part of your process, be sure to include various lines of business. Many organizations rely on IT to ask and answer all the key questions. That's a bad idea. You need input from all your stakeholders.

Below is my list of questions to help chart a course for moving to the cloud.

How do I define cloud computing in the context of my organization? Familiarize your team with the different models for accessing shared computing resources. The National Institute of Standards and Technology (NIST) Definition of Cloud Computing does a great job of describing the cloud's essential characteristics, service models, and deployment models. Share this document with your decision makers.

What benefits can the cloud bring to my organization? Sharing information about the cloud should prompt discussions on how different lines of business can leverage the technology. IT might see an opportunity to provision development and testing environments without disrupting the on-premise infrastructure. Sales, marketing, and product development might see opportunities for transforming how the organization uses technology to interact with customers, expand offers, and reduce costs.

This benefits-analysis may lead different lines of business to different conclusions. One group in your organization may conclude your existing infrastructure is fine without the cloud. They may argue you need better utilization of existing, on-premise resources, and suggest an internal solution such as software-defined networking. In these cases, further investigation must be done.

What competitive advantage can the cloud influence? In my experience, most companies fail to answer this question. This is a big mistake, because every technology investment should enhance competitive advantage in some way. Otherwise, why do it?

It's possible that a particular line of business sees competitive advantage in using big data to better understand how prospects and customers interact with your company. A line of business may even present compelling data that shows the sales benefit of profiling users in real-time and matching to specific offers and incentives. But what does the analysis say about the big data implementation and where data should reside? Should it be in the cloud or on-premise?

What risks does the cloud carry with it? Some cloud deployment models increase a company's risk but offer lower costs. Other models reduce risk but cost more. How should you balance costs and benefits? It's a complex question and sometimes difficult to answer. For example, a cloud-based big data solution might be much less expensive than a similar on-premise solution. But how much data can the pipe between your organization and the cloud provider handle? What type of service-level agreement (SLA) does the provider offer? What's the migration strategy if you decide to move your data at some point? Who owns the data and the analysis?

One very important risk to understand is how you will manage the cloud. Will it be with on- or off-premise tools? Whichever way you choose, do not rely solely on the service provider's tools to manage the environment or to monitor your SLAs. This can be an expensive mistake. A good third-party tool is a worthwhile add-on for managing costs.

What cost savings can the cloud deliver? Just because a cloud service increases your cost doesn't mean it's not worth doing. If the service increases IT spending by 10 percent but improves customer sales by 25 percent, it may be a wise investment.

When comparing costs, make an apples-to-apples comparison. Account for hidden IT costs that are often allocated across other departments such as power and cooling, software development, and maintenance.

The bottom line is to examine each cloud offering carefully. There is no single right way to create a better, faster, and cheaper infrastructure.

Mark Melvin is CTO of ePlus Technology, where he is involved in the strategy, design, and implementation of various datacenter, network, virtualization, and collaboration projects.


Food For Thought

Good points to think on Mark. That apples-to-apples cost comparison, however, presents the hardest to-do item for many IT groups today. I would welcome a follow-up column from you exploring your advice on that topic in detail.

What do you think readers, which of these points are you struggling with?

Apple to apples? How about apples to pineapples?

That's a good point, Laurie. Moving to the cloud would be a lot easier if IT shops knew exactly what each system costs them to operate, but an apples to apples comparison is actually quite hard to do. Companies like Apptio will provide software to help you do it. If every IT shop were carefully logging its actual costs, Apptio would probably be as big as Oracle, but that's not the case. Systems have many dependencies. IT knows approximate costs but the actual expense, say, of a database system would need to be spread in proportion over all the apps that use it.

Apples, pineapples what ever the food, keep it simple and kno...

Great points from both of you, there are a number of good tools for tracking these cost, some of the tool sets that you may be using today have add-on's to help. But even with these tools many organizations simply have no visibility to some of the expenses, they are not considered IT expenses. Power, cooling and facilities are 3 of the biggest expenses that are overlooked.  Laurianne you asked for a follow-up article, which I will try to write.  The challenge here is that almost every organization is strating from a different point. The one that gets many organizations is that they think that they have all of the costs, and they do, but they are missing the facilities costs.  In their organization this is not broken down anywhere, becasue they own the building and it is 50 years old. So this can be a positive or a negative impact on your analysis.  If the facility is not properly engineered then you may have a very inefficient data center design and this may be costing you money that you are not considering. This is why many of our clients ask us as a third part to help them with these evaluations, it brings a fresh perspective and unbiased view of the environment.  Some of this can not be done with tools either.

Look forward to other readers thoughts.

Re: Apples, pineapples what ever the food, keep it simple and...

Mark, thanks for your thoughts. I agree that bringing in outside help is sometimes the best approach. Technologies like cloud and mobility are drastically changing the ways companies are able to function, and sometimes they need some drastic restructuring in order to take advantage of that. I see a lot of organizations that just stand still and get left behind because they are afraid of change. If a company can't figure out how to allocate resources or bill for those resources, then maybe it should think about the way it is operating.

Re: Apples, pineapples what ever the food, keep it simple and...

Susan,  I agree, many organization have either suffered from analysis paralysis or fear of change and both can stiffle innovation and the ability to compete. On the resource allocation issue not only is this an important issue for companys to understand in a more accurate way, it also reflects on the overall corporate fiscal responsibility.  Which in this age of corporate compliance, all companies should be reviewing this as it may be systemic to other issues.