Tag Archives: IT Service Management

switch

Keep it Simple … the Business of Cloud

switchA complicated business, this cloud thing, if you want it to be… of course you don't want it to be, nor do your customers, but it isn't "simple" any more than IT is simple: it is made to look that way, though, by people who know what they're doing.

The cloud message I hear most comes across as a variation of the POOF methodology: "quick, easy, click here, pay there, flick the switch and POOF! You're in the cloud!" This does set an expectation that things are (and will continue to be) simple, quick, and easy (oh, and don't forget, cheap: chances are that somewhere along the way that things like "low entry costs," "cost-effective," and "no CapEx," were translated to "cheap," "cheap," and "cheap.")

Seth Godin says that "You can't sell complicated to someone who came to you to buy simple" to which I add a corollary that "you can't sell expensive to someone who came to you to buy cheap!" However you look at it, while things are (or can be) simpler and more cost-effective than they ever have been, simple to understand does not always equate to not complicated and cost-effective does not in any sense of the word guarantee inexpensive (and it is all relative: specifically to each specific set of customer requirements to which you are delivering).

In reality, you actually can do both, but you better do it well if you want it to stick (and remember, the easy-to-sign customer may end up being the one you wished you hadn't closed).

Broadly considering, no Cloud Provider, large or small, truly understand what the entire market wants or for that matter what an entire segment of customers want: part of what we are offering with today's computing and communications capability is the chance to do new things or old things better, stronger faster and cheaper. You are meant to work with them to exploit the cloud to do whatever it is they want to do, which of course starts with listening to what they want and then applying your knowledge, expertise and experience to work with them to translate those wants into needs… and how to deliver them.

I have a favourite trick in getting this process rolling at the start of a new hunt looking to start the build process of a strong, long-term relationship – you know, that space and time when you aren't yet certain of the drivers of those sitting across the table or the focus and appoach that they or their organisation takes to IT in the business, let alone their agendas!

Remember those coloured, layered plastic pages of the human body in the Encyclopedias of our youth? The first picture was of a person (which we'll liken to your cloud business answer for your customer's business problem); turn the top page to reveal first muscles below the skin, next the blood system, then the organs and finally the skeleton (which equates to what, who and how you deliver that business answer). Everything in between is, well, everything in between – but this allows you to start with the big picture if that turns out to be the right starting point – or the bones if that is what your audience needs on the day… while preparing you well for anything in-between.

Don't sell complicated as simple, because it isn't… and what you are about to do with your customers is game-changing, one way or the other and that seldom is simple.

The Business of Cloud homepage

Cloud Warnings

Questions to Ask Before Buying… the Business of Cloud

Cloud Buying Questions for Cloud Computing Service Providers, hosted by the good folk over at CompareTheCloud.net

Cloud Service Provider:  You’ve made your pitch and you’re in the door, sitting across from some subset of senior management who are waiting to hear about how you and your cloud can change their world. Well done (especially these days!)… but there just might be a few questions before the deal closes: buying cloud from you is a leap of faith – not only in your business – but in their own business and its ability to capitalise on what you are offering.

The following questions, posed in no particular order, are the nature of which you might hear coming from the other buy-side of the table:

  1. Questions and Answers signpostWhere are your Data Centres; how are they connected; who and how has the whole thing been designed and built? What is your current technology landscape and what are your plans?
  2. What happens if my applications / data / websites are unavailable (and /or remain unavailable for an inordinate amount of time? And, for that matter, what is the definition of an inordinate amount of time?) Tell me about service levels and service credits?
  3. How quickly can you restore lost data (including recovery from user error); what is the back-up regimen, frequency, retention policies? Where is the data backed up?
  4. Tell about your support model for my business users, technical users and developers. Will we have an account manager and, if yes, what does that mean?
  5. Show me how I am not locked in to you: what are the mechanisms to ensure a cost effective repatriation of applications and data (to either another provider or back into my own data centre); what are the costs and timings of such decommissioning?
  6. While at this point you foresee no problems in moving our (pick one: ERP; bespoke trading platform; SOA; etc.) to your cloud… what is your approach (from due diligence through to the actual porting exercise) and what happens if there are problems? Will there be any impact on my costs?
  7. You seem like a new and risky (or successful and growing business): what happens to my business if you should go under (or get acquired)?
  8. Where have you done any or all of the above / can I speak with a current customer bearing some relationship to mine in terms of industry sector and scale? Can I see your Customer case studies quoting business results?

Buying cloud from you is a leap of faith – not only in your business – but in their own business and its ability to capitalise on what you are offering.

When I started writing this, I had planned a list of a few questions only, intending to discuss each a little more including views as to how to answer: along the way it has become the start of a solid list of tough questions which might prove of value all along the supply chain (and I’d also suggest that, if a customer doesn’t ask such questions, that a larger opportunity just might exist to start a journey where you can start adding extra value from day one of the sale process by posing and answering those questions together… never a bad way to start a relationship!).

At this point I’d like to throw the floor open to you: what are the questions a service provider should be asked?  And which are the questions a provider should be well prepared for?  And what are the killer questions that might have caught you off-guard?!

The Business of Cloud homepage

 

cloud-cost-savings-outlook-rainy

Grey Clouds over Cost Savings

Grey Clouds over Cost Savings

A great piece by Michael Queenan of Nephos Technologies 

when a Cloud blog starts with "If you are looking at Cloud for just cost savings you’re going to be disappointed" I know I've found one of the good ones (and thanks to @MJQueenan for the mention)

cloud-cost-savings-outlook-rainy

 

HBR

The Truth About Cloud Economics: a brief intro to an HBR article

HBR-Logo1

The truth is, companies adopting cloud computing often miss the risk and depth of change needed to take real advantage of what is on offer

Not that this is so different from pretty much everything I've seen in a thirty year information technology career: from back office apps to front office transformation and from IT services outsourcing to full blown BPO, it is almost always resistance to change (attributable too often to poor communications) that can, on review, be identified as a root cause of the failure!

HBR state:

But the truth is, companies adopting cloud computing often miss the risk and depth of change needed to embrace a cloud economics model as they embrace cloud services. It turns out that the financial model for cloud computing has far more nuances for both a company and its cloud services provider than many people understand up front.

So what is the financial model for cloud computing? Let's start by saying it's a combination of how people make money in the cloud and the risks associated with adopting new payment styles. Many people assume it's all about moving to a "pay-as-you-go" (PAYG) model and while this is certainly a big piece of it, it also involves operating versus capital expenses, subscriptions to services, and customers paying for outcomes (not technology). The good news is that these models are already familiar to most businesses.

Companies routinely spend money on items vital to the business. They also trade operating expenses for subscriptions and services necessary for business operations, but not directly related to the business. This includes those that would otherwise be too expensive to own and operate (think electricity). They expense nonessential items to someone else who specializes in offering these items as a service.

Cloud computing is no different. Why should a toy or cosmetics company own and operate multiple data centers? It's much easier and economically sound to pay for a service for a short time period and then stop paying for it when you're finished with it, rather than wasting money on something another company can do better, faster and cheaper. But this can present issues for both the consumer of the cloud service as well as the provider.

For companies, cloud computing's new economic model stands in stark contrast to the traditional economic model of IT where we buy technology from a vendor as a capital investment and continue to invest in maintaining and servicing it over time. Traditionally, much of the money allocated to technology has been locked away in capital expense allocations used for buying physical goods. However, cloud services are just that, a service, and require reallocating money to operating expense budgets. This can be a big change when your company must still pay to maintain existing infrastructure. It may even mean that new lines of expenditure must be created if cloud services don't replace existing services. (And you don't need us to tell you how hard it is to create new lines of expenditure.)

The reward for this potentially painful transition to operating expense is that the business gains flexibility and the ability to buy the services they need when they need them. But if you're a CFO, you'll have to decide whether you like consistent or variable expenditures. Operating expenses can be difficult to predict and control because service subscriptions can come from anywhere at any time. Ask yourself if you have a predictable cloud requisition/governance strategy that makes future service acquisitions easy.

For cloud services providers, the PAYG model's flexibility lets customers scale their services up or down based on their needs. If the consumer can easily add or subtract resources and pay for cloud services in small increments, the provider has no guarantee of future business. Therefore, to reduce this risk, the provider must dictate service terms and conditions in its favor. But here's the problem: if the consumer assumes most of the risk, then he will never host a critical application with a cloud service provider. That would limit cloud computing's market growth to the set of noncritical applications or to small-to-midsize businesses that would rather use cloud services than build a $500 million data center in the U.S.

On the other hand, if cloud providers assume all the risk, then in most cloud environments (with multiple consumers), the amount of liability within a provider's service could be greater than the value of the company (which we all know is no way to run a business). And if the service provider cannot afford the insurance premiums necessary to cover the liability without raising prices to the level that the service becomes too expensive to consume…well, you get the picture.

So, to combat this kind of risk, cloud providers will enter into what are called "enterprise agreements," where the two parties can define the parameters of the relationship based on mutual risk sharing. Essentially, this ensures that each party has a vested interest in the financial success of the other party. There's risk, but there's also reward for better service.

In the end, providers that deliver better service and better guarantees will ask for — and get — more money. Consumers, on the other hand, will get the flexibility of "pay-as-you-go." As long as they can figure out a way to pay for it.

The original article can be seen here