Cloud IT and Business ROI

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Why deploy business in the cloud? What part and form of the business? and How? Business investment assumes that the answers will line up to allow a return. Lack of alignment will certainly dis-allow it.

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Cloud IT and Business ROI

  1. 1. Cloud IT and Business ROI An Archestra notebook. © 2013 Malcolm Ryder / archestra research
  2. 2. How it Counts The “return” on business investment in The Cloud is the quality of capability that the business sustains by running in an environment of cloud-based facilities. The purpose of the investment is to obtain a strategically superior position with minimal collateral damage. Obtaining the position can mean living there or just visiting; it can mean starting new things there or migrating old things to it. © 2013 Malcolm Ryder / archestra research It is a matter of ecological compatibility, where the business at minimum avoids disadvantageous restraints on speed and effectiveness that other environments would impose; thereby it obtains the advantage of higher probability of realizing potential benefits from its efforts.
  3. 3. We already know this, but… • Cloud computing grows on the other side of a complete break from the past of business IT. The logic of investing in it is as distinct from distributed enterprise IT computing as distributed was from the mainframe. • The spend on the cloud IT approach, in every aspect of its runtime reality, goes mainly to new things rather than to continuing the IT evolution of the past. • But the business understanding of how to spend on it is hardly unfamiliar. We can trace the logic between the investment and the returns along paths of familiar commitments and concerns. The following sketches are not about facts and figures. They are pictures of a line of business thought.
  4. 4. Deploy Business In The Cloud The “decision space” of business deployment planning is fourdimensional. The first three – why, what and how – synchronize at a fourth point: when. Synchronicity requires co-operative management. Managers must justify their joint decisions to deploy at point (x, y, z)… x WHY: Portfolio z y WHAT: Lifecycle A Multi-Dimensional Problem
  5. 5. A Portfolio Decision Cloud IT does not “translate” or “evolve” enterprise IT. Instead, it is an alternative. The question is, for one dollar spent on enterprise versus one dollar spent on cloud, which dollar is better spent? In general comparison, does the difference look like this? If yes, then when, and on what, should re-allocation start? 4 returned returned 4 3 2 3 2 1 1 1 2 3 4 1 invested Enterprise IT Business Environment 2 3 invested $$$ Cloud IT Business Environment 4
  6. 6. Where Business Attention is Focused: Cloud IT covers these areas differently from before Business Benefit Opportunity Capture Enhanced Features Infrastructure Administration 1. Easy 2. Fast 3. Cheap 1. Cheap 2. Safe 3. Fast Business Need Transformation Adaptation Support Expansion Business Value Criterion Required Aligned Deliverable Available DESIGN DEVELOP CONTROL IMPLEMENT 1. Safe 2. Fast 3. Cheap DISTRIBUTE MAINTAIN © 2013 Malcolm Ryder / archestra research “Greenlight” Priority Points Current IT Cost Drivers 1. Easy 2. Cheap 3. Safe Risks of Scale
  7. 7. Where Business Spend is Focused: Cloud IT lowers cost and raises dollar effectiveness Business Benefit Opportunity Capture Enhanced Features “Greenlight” Priority Points 1. Easy 2. Fast 3. Cheap 1. Cheap 2. Safe 3. Fast Enterprise distributed IT challenges that are distinctively and inherently lesser in cloud IT. Future business presumes an ability to successfully take on new areas and arrangements of pursuit. Success is made vs. time-toreadiness and sunk cost (premiums, options, penalties, legacies) The expense of assets and changes increases as conventional enhancement methods drive up complexity in order to meet requirements Infrastructure Administration 1. Easy 2. Cheap 3. Safe Operational maintenance of site infrastructure struggles with carrying the burden of non-business expertise and with economy of scope Risks of Scale 1. Safe 2. Fast 3. Cheap Inefficient capacity plus expensive problem management (expertise and automation) constrain and compromise the financial balance of supply and demand
  8. 8. Cloud IT characteristics exploited by the Business Dollars spent on the cloud leverage benefits and drive advantages via… R&D COSTS Shared investment by vendors and VCs Vetted systems integration Continuous testing RELIEF FROM ONSITE MAINTENANCE Remote service management UPGRADES of INFRASTRUCTURE Simplicity and continuity in replacements FUTURE DEVELOPMENT VELOCITY / TIME TO VALUE Massive open development community DEPLOYMENT EFFICIENCY Synchronicity with demand Cheap increase in Scale
  9. 9. Lifecycle Management Decision RENOVATE Solution Translate current app to cloud and use it RE-ENGINEER Solution OR Re-build app in the cloud and use it REPLACE Solution OR Shop for existing cloud app and use it “Initially, one might assume that migrating to the public cloud scenario would not pose any upfront investment costs because there are no hardware or software procurement costs. However, there will be a need for program planning and technical support, software engineering support for “porting” the applications over to the new cloud environment, and testing support for the transitioned applications during the migration to ensure the system is working correctly in the new environment.” – Booz Allen Hamilton, The Economics of Cloud Computing
  10. 10. Execution Decision Model and validate the actual dominant control points (incumbents) versus the preferred dominant control points (policy). As needed, close gaps. Operator: control of use Provider: control of quality Supplier: control of assets HYBRID CLOUD PUBLIC CLOUD Build new factory Federate factories Rent other factory OPERATOR Internal IT COO Business Unit PROVIDER Integrator Business Unit Service Manager SUPPLIER Vendor Integrator Service Provider © 2013 Malcolm Ryder / archestra research PRIVATE CLOUD
  11. 11. In short, Business POV on ROI • Not how to use IT differently, but how to use different IT • Not using cloud to improve enterprise IT, but using cloud IT to improve business • Not IT decisions about how to support the business, but business decisions about how IT makes sense • Not IT economics for the business, but business economics of IT operations • Not infrastructure as business assets, but IT as business resource

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