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White paper: Governing the Cloud Paradox


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Large global organizations seeking to add cloud-based capabilities to their service delivery mix face a wide range of challenges. Key among them is to achieve the flexibility and agility enabled by cloud technologies without unduly compromising oversight of IT service delivery throughout the enterprise. In this respect, the cloud presents a "careful what you ask for" dilemma. While on-demand computing and pay-as-you-go consumption models appear attractive both to clients and service providers, in reality these benefits can undermine control and pose a variety of risks if not properly governed. Effective cloud initiatives must therefore be integrated into the organization's existing service delivery model, and governed like any other delivery method.

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White paper: Governing the Cloud Paradox

  1. 1. GOVERNING THE CLOUD PARADOXBalancing Flexibility and OversightBy Stanton Jones, Emerging Technology Analyst,
  2. 2. INTRODUCTIONLarge global organizations seeking to add cloud-based capabilities to theirservice delivery mix face a wide range of challenges. Key among them is toachieve the flexibility and agility enabled by cloud technologies withoutunduly compromising oversight of IT service delivery throughout theenterprise.In this respect, the cloud presents a “careful what you ask for” dilemma.While on-demand computing and pay-as-you-go consumption models appearattractive both to clients and service providers, in reality these benefits canundermine control and pose a variety of risks if not properly governed.Effective cloud initiatives must therefore be integrated into the organization’sexisting service delivery model, and governed like any other delivery method.This ISG white paper examines the challenges businesses face in managingcloud initiatives, and examines the role of governance mechanisms to ensuresmooth integration as well as continued alignment to business needs over thelong term.GOVERNING THE CLOUD PARADOX ■ STANTON JONES 1
  3. 3. DEFINING THE CLOUD PARADOX The challenge is exacerbated by the manner in whichAs a “self-service” delivery model, cloud offers significant cloud technology is currently being deployed in manypotential advantages across the enterprise. Consider: enterprises. Ideally, development and implementation ofInfrastructure as a Service (IaaS) models can allow a cloud strategy is a partnership between the CIO, COO,business units to directly provision computing and business unit leaders and other senior executivestorage resources; Platform as a Service (PaaS) can free stakeholders. In reality, business heads who perceive thedevelopers from ever-present concerns about the CIO as not moving fast enough often circumvent the ITunderlying infrastructure; and Software as a Service department to work directly with providers across the(SaaS) can enable business users to rapidly configure entire cloud stack. As a result, many CIOs now face thesoftware to match requirements, rather than waiting unenviable task of reining in renegade business units thatmonths or years for IT to deliver a solution. pursue ad hoc cloud initiatives. And that task becomes more onerous if the CIO lacks a credible, flexible, on-Despite these benefits, this emerging model presents demand IT platform to offer internal customers.risks. For one thing, delivery “as-a-service” is a dramaticdeparture from traditional IT, which focuses on buying There’s no silver bullet to solve this quandary. Ultimately,hardware and building software – usually over months the CIO typically remains accountable for the cloudand years. Even for customers who source a significant delivery model. But as noted earlier, if the CIO isn’t up toportion of their IT and buy it “as-a-service,” cloud the task, the business will find a solution without dramatically speeds up the delivery cycle – to a Governance oversight is therefore essential if a CIO is tospeed that most traditional outsourcing firms are not yet address the cloud’s flexibility/control paradox. But as inready to embrace. traditional environments, getting governance right is easier said than done. The goal, specifically, is to strike aPerhaps a bigger concern is decreased certainty and balance between the benefits of self-service delivery andpredictability around who’s ultimately in control of the the imperatives of corporate oversight. Going too far inenvironment – and who’s accountable for results. one direction poses unacceptable risks, while going tooTraditionally, accountability stopped with the CIO, since far in the other negates the benefits offered by the cloudall solutions were sourced from his or her department. in the first place.Cloud changes the game dramatically by democratizingtechnology throughout the organization, leaving In a cloud environment, governance mechanisms addressaccountability gaps around key areas like demand the myriad challenges discussed earlier around themanagement, information security and cost oversight. fundamental operational and architecture changes cloud delivery models bring to the enterprise. Specific areasIn a traditional service delivery environment, moreover, a where governance plays a role include demandcustomer pays essentially a flat monthly rate for management, capacity and utilization planning andinfrastructure and software, making budgeting and analysis, and service level and chargeback management.planning relatively straightforward. In a self-provisioned,on-demand cloud delivery model, meanwhile, variationsin usage raise the specter of dramatic spikes and valleysin monthly spend.Who’s in Charge?The decentralization that accompanies cloud deliverycomplicates oversight and raises some thorny questions:Who is matching capacity with demand? Who is ensuringwe’re not paying more than we planned to pay? Are wein compliance?GOVERNING THE CLOUD PARADOX ■ STANTON JONES 2
  4. 4. Demand Management: Many large organizations Service Level Management: Today’s cloud service have developed sophisticated IT service delivery levels tend to reflect the platforms they support: frameworks, processes and tools to ensure the simple and standardized. The price of this right IT projects are selected, funded and standardization is that service levels cannot be implemented. These frameworks are typically easily negotiated or changed. Nonetheless, business-driven, and are commonly based on the effective monitoring and management of service “funnel” premise, whereby a set of projects goes levels in a cloud environment is just as critical as in into the funnel for the IT organization to work on. a traditional managed services agreement. The size of the funnel depends on the size and maturity of the IT organization. Cloud technology Invoice and Chargeback Management: Unlike in changes this model by widening the funnel, giving traditional managed services, cloud costs are very business units and individual analysts more power closely linked with business decisions: Use more to move projects forward. Demand will always be service, pay higher fees to the cloud vendor; use unlimited, but supply will, conversely, always have less service, pay lower fees. Awareness of the constraints. As such, ensuring a demand consequences of business decisions is therefore management framework is still in place – even critical in this new delivery model, and effective with the new service delivery model – is crucial. organizations use cloud invoices and associated chargebacks to establish linkages between Capacity Planning: Tightly linked with demand business decisions and cost outcomes. While the management, capacity planning is typically processes involved may seem straightforward, performed by IT, and is designed to ensure that scaling invoice and chargeback management “IT capacity” is adequate to meet business across an enterprise can be a daunting task. demand. When a funnel is in place, capacity is Simple questions like, “Is my invoice accurate?” easier to predict and secure. However, when the can be exceptionally difficult to answer without funnel widens or becomes more flexible, effective governance mechanisms and tools in predictability becomes far more elusive. Public place to ensure visibility. cloud solves this problem by ensuring excess Effective management of the cloud paradox enables capacity is always available. However, many large businesses to be smarter about their use of cloud as a organizations currently favor private and virtual new service delivery model, and ensures companies get private clouds, which don’t have the scale of the the expected value from their investment. In many public cloud model. The dynamism and “on- respects, integrating cloud into the service delivery mix is demand” nature of capacity in private and virtual only the first step. The true challenge lies in effectively private delivery is therefore limited. Ultimately, balancing the “democratization” of IT services via cloud the business needs to understand that, even with with the need for corporate governance over this new cloud, capacity is not infinite. service delivery model. Utilization Analysis: Once demand and capacity plans are developed, day-to-day operations must remain consistent and aligned. While this requires tools that provide visibility into cloud utilization, many of today’s cloud platforms and services offer only a very basic level of visibility. Organizations are therefore finding they need to invest in smaller third-party tools or build bespoke applications to gain the required insight into their environments.GOVERNING THE CLOUD PARADOX ■ STANTON JONES 3
  5. 5. Stanton Jones is Emerging Technology Analyst with ISG.Contact the author at or +1 281 795 2636.Information Services Group (ISG) (NASDAQ: III) is a leading technology insights, market intelligence and advisory servicescompany, serving more than 500 clients around the world to help them achieve operational excellence. ISG supportsprivate and public sector organizations to transform and optimize their operational environments through research,benchmarking, consulting and managed services, with a focus on information technology, business process transformation,program management services and enterprise resource planning. Clients look to ISG for unique insights and innovativesolutions for leveraging technology, the deepest data source in the industry, and more than five decades of experience ofglobal leadership in information and advisory services. Based in Stamford, Conn., the company has more than 700employees and operates in 21 countries. For additional information, visit 072312 © Copyright 2012 Information Services Group – All Rights Reserved