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Cloud Businesses: Strategic Considerations

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My talk on strategic considerations around cloud businesses, specifically around migration and pricing to product managers of a software major

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Cloud Businesses: Strategic Considerations

  1. 1. CloudBusinesses: StrategicConsiderations Tathagat Varma http://thoughtleadership.in
  2. 2. Docker's Registry Hub, Trello, Travis CI, GitHub and GitLab, Quora, Medium, Signal, Slack, Imgur, Twitch.tv, Razer, Adobe's cloud, Zendesk, Heroku, Coursera, Bitbucket, Autodesk's cloud, Twilio, Mailchimp, Citrix, Expedia, Flipboard, Yahoo! Mail … What’s Common Among…
  3. 3. Typical IT Infrastructure Real Estate Utilities (Power, AC, Fire, Security,…) Networking Infrastructure Hardware (Servers, Storage, N/W,…) Virtualization Layer App-Specific S/W (Database, …) Application Data Middleware System Software (OS,…) Application Software
  4. 4. Your “Costs” Acquisition Rentals Usage Licenses Storage Backup Idle Fixed Manpower Performance Recovery Delays Lead TimeExpertise Upgrades EOL Stagnation Limited Opportunities Revenue Erosion
  5. 5. Forget Cloud For Now, Let’s Talk Something Else…
  6. 6. Traditional • Cultivation: • Fixed Location (River) • Fixed Time (Monsoon) • Consumption: • Immediate (Perishable) • Sameplace (Limited) • Self (Farmer family) Farming Modern • Cultivation: • Any Location (Canals) • Multiple Times (Dams) • Consumption: • Anytime (Processing) • Anywhere (Transport) • Anyone (Trade)
  7. 7. 19th Century • Power • Private Gensets • Costly • Capex • Opex • Manpower • Pollution • Proximity Factories 20th Century • Power • Utility Company Supply • Anytime • Anywhere • Reliable • Metered • Cheaper
  8. 8. • Production: Automobile, Manufacturing • Utilities: Power, Water, Gas, Heating • Entertainment: Concerts, Streaming • Professional Services: Legal, Accounting, PR, HR, IT/ITES,… • Information: Research, WWW,… • Services: Transport, Leasing, Restaurants, Rental Housing, And Many More…
  9. 9. Common Pattern? Creation Consumption Creation Consumption AnyTime AnyWhere AnyOne AnyTime AnyWhere AnyOne SameOne. SameTime. SameWhere Disaggregation. Unbundling
  10. 10. What Can We Do Here? Acquisition Rentals Usage Licenses Storage Backup Idle Fixed Manpower Performance Recovery Delays Lead TimeExpertise Upgrades EOL Stagnation Limited Opportunities Revenue Erosion
  11. 11. Pizza As A Service!
  12. 12. Outsource Infra Real Estate Utilities (Power, AC, Fire, Security,…) Networking Infrastructure Hardware (Servers, Storage, N/W,…) Virtualization Layer App-Specific S/W (Database, …) Application Data Middleware System Software (OS,…) Application Software
  13. 13. Outsource Platform Real Estate Utilities (Power, AC, Fire, Security,…) Networking Infrastructure Hardware (Servers, Storage, N/W,…) Virtualization Layer App-Specific S/W (Database, …) Application Data Middleware System Software (OS,…) Application Software
  14. 14. Outsource Service Real Estate Utilities (Power, AC, Fire, Security,…) Networking Infrastructure Hardware (Servers, Storage, N/W,…) Virtualization Layer App-Specific S/W (Database, …) Application Data Middleware System Software (OS,…) Application Software
  15. 15. What’s Happening Here…?
  16. 16. Cloud computing, often referred to as simply “the cloud,” is the delivery of on-demand computing resources—everything from applications to data centers—over the internet on a pay-for-use basis. • Elastic resources—Scale up or down quickly and easily to meet demand • Metered service—so you only pay for what you use • Self service—All the IT resources you need with self-service access The Cloud https://www.ibm.com/cloud-computing/learn-more/what-is-cloud-computing/
  17. 17. • Traditional IT Infrastructure is • Capex-Heavy • Time-Intensive • Resource-Intensive • Inefficient • Stagnant / dated • Not Agile Enough Why Cloud?
  18. 18. • Infrastructure As A Service (IaaS) • Computing, Networking, Storage • Platform As A Service (PaaS) • Development Environment • Software As A Service (SaaS) • Business Applications Delivery Models
  19. 19. • Depending on who you are and what you do, there could be several migration scenarios • While technology is important, even more important to understand business context • Let’s see some examples… Cloud Migration
  20. 20. • Drivers: • Stagnant Business with Perpetual Licensing • Raising Prices Was’t Sustainable Approach • 18-25month Release Cycles • Low Recurring Revenue 19% (2011) • Approach: • 2012: Started Offering Both • 2013: Only Add Features to Subscription • Agile Model Of Development • Changes in Sales Process, Compensation, etc. • Communication Internally, Wall St • Move from ARPU to ARR • Once Downloaded, Cloud is only for Update and Storage, But No Processing • Business Impact: • Stock Price 3x • Double-Digit Revenue Growth, More Predictable Revenue Stream • Recurring Revenue up to 70% Adobe http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/reborn-in-the-cloud
  21. 21. • Drivers: • Problems with on-prem infra • Tough to keep pace with digital demands / innovate • Approach • Start small, quick wins, demonstrate benefits • 2015: From zero cloud usage to BAU in just 8months • Results • 3,500 GBP / 3mon => 66 GBP a month / 1wk • Cost of hosting a page 13p/month TESCO Bank
  22. 22. • Drivers: • Big enough to have own infra! • Perhaps move from SaaS to PaaS??? • 2016: Moved 90% of files from Amazon to own cloud Dropbox
  23. 23. • Drivers: • Old, outdated systems • Approach: • 2014: Moved 65 apps and NASA.gov to AWS cloud in 22wks with no downtime • Results: • Web update from 20min => 2min • CPU utilisation only 1% even at peak levels, resulting in 25-30% cost savings • Able to avoid data silos NASA
  24. 24. • Why: The Purpose • What: The Goal • How: The Plan Migration Strategy
  25. 25. • Why are you undertaking migration to cloud? • Cost Reduction? • New Markets? • Faster Innovation? • … • Build a Business Case Why: The Purpose
  26. 26. • Security 93% • Performance 85% • Scalability 74% • Support 65% Top Considerations
  27. 27. • What would the success look like? • Capex DOWN 60% • Headcount DOWN 40% • Release UP 1000% • … • Establish Success Criteria What: The Goal
  28. 28. • How would the migration be performed? • Public / Private / Hybrid Cloud? • IaaS / Paas/ Saas? • Cloud Provider / Own DC? • Rearchitecture apps? • … • Plan migration strategy and execute How: The Plan
  29. 29. http://ecsnamagazine.arrow.com/how-to-stay-calm-when-migrating-software-apps-to-cloud/
  30. 30. https://www.slideshare.net/newrelic/cloud-migration-cookbook-webinar
  31. 31. https://www.slideshare.net/newrelic/cloud-migration-cookbook-webinar
  32. 32. • Consumption Based • Subscription Based • Advertising Based • Market-Based • Value-based • … Pricing Models
  33. 33. • Pay What You Consume, And As You Go • Ex: Disk, CPU, Network Traffic • Common for IaaS Consumption Based
  34. 34. • Pay for Time, Irrespective of Usage • Common For SaaS Subscription Based
  35. 35. • Free or Low-Priced But Must Accept Ads Advertising Based
  36. 36. • Fluctuates Based on Demand / Supply • You can Buy on Current Price and Use Rightaway, Or • Bid for Lower Price and If Market Reaches That Price, You Get It Market Based
  37. 37. • Cloud is Business: It’s not just about IT infrastructure but the TCO of Business! • Identify the key drivers: why are you migrating to cloud? • Establish the success criteria: what will success look like? • Evaluate your migration strategy: your context is unique to you! Recap
  38. 38. • IaaS vs. PaaS vs. SaaS, https://youtu.be/KgL3BfAc9Cs • The Present And Future Of Cloud Pricing Models, https://www.ibm.com/ blogs/cloud-computing/2013/06/present-future-cloud-pricing-models/ • Cloud Computing Pricing Models: A Survey, http://www.sersc.org/ journals/IJGDC/vol6_no5/9.pdf • https://www.engadget.com/2013/05/09/adobe-creative-or-cloudy/ • http://nvlpubs.nist.gov/nistpubs/Legacy/SP/ nistspecialpublication800-145.pdf • http://www.computerworlduk.com/cloud-computing/how-tesco-bank-has- adopted-aws-cloud-as-business-as-usual-in-eight-months-3629767/ • https://www.wired.com/2016/03/epic-story-dropboxs-exodus-amazon- cloud-empire/ • https://www.g2techgroup.com/nasa-migrates-to-aws-cloud/ • https://aws.amazon.com/solutions/case-studies/all/ References

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