Category: Gaining Altitude in the Cloud

Grief Counseling for the CIO | Gaining Altitude in the Cloud

The accommodation and integration of disruptive technologies into the enterprise IT ecosystem is a significant issue for IT executives. And just as distributed computing did 20 years ago, successful adoption of cloud computing in its many forms requires substantial change across the IT enterprise. The rapid pace of innovation and ability of business users to deploy cloud services without IT involvement are raising these issues much faster than past transformation waves.

At Cloud Connect in Santa Clara, CA, on February 15, I’m going to have a “fireside chat” to discuss this “keeps me awake at night” issue. While I’m sure the conversation will take some unexpected turns, I plan to navigate our talk to some of the more challenging factors enterprise IT organizations face as they embrace cloud.

  • A different mindset – To be able to fully leverage the benefits of the cloud service model, IT organizations are finding they have to adjust a number of strongly held beliefs that have served them well in supporting their current environments but constrain them as they move into the next generation cloud world. These include changing their orientation and thinking about how and when to provide customization for both applications and infrastructure, embracing the power of speed to impact by utilizing commonly available components, adjusting expectations about how security and compliance issues can be resolved…and many more. Indeed, there are a significant number of mindset adjustments that, when taken together, present a steep learning curve and cultural change requirement.
  • A new framework for IT architecture – As enterprises embrace cloud service models, they find that the existing architectures, frameworks, methods, and processes need to be adjusted, and, in some cases rethought and reinvented.  .
  • A new orientation toward innovation – One of the more difficult aspects of the new cloud world is the dilemma posed by a constantly evolving marketplace with a wide array of attractive options at competitive prices. The quick access to robust functionality allows and often encourages business units and other empowered stakeholders to experiment with cloud tools and applications. If they find the functionality useful, they often scale its use, creating new layers of technology outside the constraints of IT policy, compliance, and security. The lack of widely accepted industry standards and APIs and the constant evolution of the underlying technologies further complicates the enterprise IT agenda. Traditional approaches IT organizations utilize to evaluate, integrate, and mange the introduction of applications and technologies are often unable to accommodate these conditions without restricting the very flexibility and choice that make cloud services so attractive. The result of these challenges drives many IT executives to reexamine their approach to innovation, and challenges them to adopt new thinking about the lifecycle of technology, how integration is accomplished, and compliance is assured.
  • Alterations to policies, processes, and the organization – As enterprises more deeply embrace these next generation technologies and associated changes, they find that to fully capture the benefits they must revisit some of their long held policies, adjust many of their existing processes, and facilitate and reinforce these with organizational alignment and change. New skills are required, other skills are in less demand, and the old ways interfere with or constrain progress in the new world. In most cases, these adjustments that will enable successful leverage of cloud computing must take place simultaneously with protection and maintenance of the work that will continue to be delivered from the legacy environment.

As we reflect on the size, scale, and depth of the changes cloud computing drives, I want to press my discussion partner(s) to think back to our experience with the adoption of distributed computing. We are now 20 years into that journey, and many enterprises are finding that they still maintain some applications in a mainframe environment. While it’s not possible to know how long the cloud expedition will take, it seems prudent to believe that most enterprises will be on it for at least a number of years. And, as with distributed computing, we may find that some workloads have a very long tail.

Given the realities of most large IT enterprises, it is clear that in most cases we can’t expect to achieve a clean break, making it likely that the legacy organization and the people in it will have to balance the realities of the new world while dealing with the old. As IT executives contemplate the journey ahead, they can be forgiven for nostalgia for the status quo. While our conversation next Wednesday will not solve all the problems, the grief counseling may at least help us sleep better.

Cloud Beyond the Borders – Part 2: Europe | Gaining Altitude in the Cloud

In Part 1 of this blog series, we talked about cloud computing drivers and challenges in Asia. This time Europe is our beyond the borders cloud viewing destination.

Europe does not face many of the hindrances to cloud adoption that developing countries do. European power supplies are reliable, it has excellent data connectivity to the world, and the rule of law prevails. But regulatory issues remain.

Even though Europe is a common market, its 27 member states do not have a regulatory regime that provides a coherent EU-wide backdrop for cloud computing. The example I used in my blog on cloud computing in Asia that cited Indonesian’s data in Singapore or China applies just as well to German’s data in French and British data centers. Service providers, including Microsoft, HP, IBM, and Google, are joined by customers in leading an increasingly loud call for enactment of a coherent regulatory regime. Neelie Kroes, Vice President of the European Commission responsible for the Digital Agenda for Europe, has made this a priority for her office. Still, according to Per Dahlberg, CEO of the Asia Cloud Computing Association, Europe, in general, is about 18 months behind the United States in enterprise cloud adoption, putting it squarely between the United States and Asia.

In an interesting twist, European cloud providers are realizing that strong data protection laws may provide a competitive advantage over established U.S. players. In June 2011, Microsoft announced that, as a U.S.-based company, the Patriot Act requires it to release data to the U.S. government, upon request, without regard to where in the world Microsoft has stored that data. Soon after, several companies in North America and Europe, including defense contractor BAE Systems, Royal Dutch Shell, and the provincial health insurance system of British Columbia, announced they would cancel contracts with U.S.-based cloud services providers. Royal Dutch Shell moved its cloud data storage from Microsoft to a German firm, T-Systems. As T-Systems’ CEO  Reinhard Clemens told reporters, “The Americans say that no matter what happens, I’ll release the data to the government if I’m forced to do so, from anywhere in the world. That’s why we’re well-positioned if we can say we’re a European provider in a European legal sphere and no American can get to them.”

Despite Europe’s competitive advantages in data protection, a final hindrance seems to be European companies themselves. Informa’s Telecom Cloud Monitor reported that, in 2011, Europe accounted for only seven percent of global investment in the cloud. European firms tend to be much more risk-averse than American or Asian ones, and so far seem to prefer using the IT infrastructure they already have. But as existing systems are retired, and as the EU develops a regulatory framework, there is every reason to expect European firms will join those in the United States and Asia in the cloud.

With its first-rate infrastructure and world-class data protection laws, Europe is poised to be a major participant in the global IT cloud. As European firms realize the competitive advantage of stronger privacy standards in their home countries, American and Asian firms would be wise to learn what standards the market comes to expect.

Conclusion

While North America is projected to maintain a 50 percent share of cloud investment in the next several years, rapidly rising interest and capability will fuel investment in Europe – and Asia. These are driven by a variety of factors including broadband penetration, increased mobility, and the need to be globally competitive. But as physical infrastructure develops to meet cloud requirements, cloud uptake everywhere will begin to increasingly hinge on regulatory environments. Specifically, it will require a well-understood framework that defines jurisdiction and data protection. As these questions are settled, companies will soar in the cloud.

Is your Company on the “Observer,” “Opportunist,” “Solutioner” – or another – Cloud Adoption Path? | Gaining Altitude in the Cloud

Wondering where, how, and why CIOs and enterprises are adopting cloud, and what they’re doing to make cloud services a practical reality in their organizations? If so, you’re not alone. The reality is that significant confusion exists among both CIOs and cloud service providers (CSPs) around what’s really happening in the enterprise market. And this is understandable, as the variables in and dynamics of the cloud market are truly unprecedented.

But our recent discussions with over 50 CIOs and IT executives at Global 2000 organizations have demonstrated that a set of enterprise cloud adoption paths are beginning to emerge, each of which is driven by variations on a number of dimensions.

Here’s how we characterize the companies following each of these new paths to the cloud:

Observers

These enterprises are taking a “we’ll get there when we’re ready” stance on cloud adoption. While IT executives in these organizations recognize the agility, flexibility, and cost benefits of cloud models, they do not feel a compelling business or IT need exists to begin migration today. Indeed, instead of proactive exploration, they are more comfortable waiting for an adoption trigger.

Opportunists

In these organizations, cloud is primarily opportunistic business unit (BU) or functional adoption of SaaS applications and collaboration tools. The IT groups in these organizations largely believe that although valuable, cloud services are evolutionary, and just another tool in the toolkit, and there is little, if any, centralized management or governance.

Solutioners

These enterprises are more systematically approaching cloud adoption by identifying, prioritizing, and deploying cloud for use cases particularly well-suited for public or private cloud delivery models. In these organizations, both IT and BUs (sometimes collaboratively) are pursuing a programmatic approach to migration. The focus is not on developing a comprehensive strategy across the entire application or workload portfolio, but rather on identifying “low hanging fruit” for use cases that can deliver immediate, demonstrable impact.

Transformers

Enterprises following this path are leveraging cloud technologies to drive wide-scale IT transformation or modernization programs across their complete application and workload portfolio. CIOs in these enterprises are seen as change agents seeking to transform the responsiveness and delivery capabilities of their IT organizations, are working to understand and assess the governance, management, and integration implications of cloud migration, and actively designing solutions to support their next generation IT organization.

Providers

These enterprising enterprises are seeking to leverage private cloud platforms and technologies to create internal cloud service marketplaces, essentially building their own internal-use equivalents of Amazon Web Services. They are looking to transform not only their IT infrastructure but also their IT business models. In conjunction with private cloud deployments, they are also implementing (or expanding) their use of cloud service catalogs and chargeback models. While on the surface it may appear that this is just implementation of traditional IT service management (ITSM) models, the difference is that IT is now facing real competition from external CSPs for the budget dollars of their BU customers.

On which path is your enterprise? Was it your intention to be on that path, or were you driven there by unintentional factors?  To learn more about the characteristics of these cloud adoption paths, and the implications CIOs must consider to drive desired levels of adoption and ensure success, please read our recently-released Executive Point of View Paper, “Emerging Enterprise Cloud Adoption Paths: The Journey is the Destination.”

Cloud Beyond the Borders – Part 1: Asia | Gaining Altitude in the Cloud

We know that cloud computing has taken off in U.S.-based enterprises since the term was coined in mid-2007, but how is it faring in other parts of the world? Where will the growth come from in this US$40.7 billion industry that Forrester Research forecasts will grow to a projected US$241 billion by 2020? While the North American market accounts for the bulk of cloud investment and infrastructure today, Ovum Associates forecast that this will drop to approximately 50 percent by 2016 in the face of strong growth in Asia and Europe.

The Asia Cloud Computing Association has identified ten factors that affect cloud adoption rates, which can be broadly grouped into three classes: regulatory, physical infrastructure, and market conditions. Regulatory concerns include data protection laws, the extent of Internet filtering, and other government policies. Physical infrastructure refers to power grid reliability, broadband penetration rates, and international connectivity. And market conditions relate to the overall sophistication of a country’s IT industry and the perceived political risk of doing business in a country.

With that, let’s first take a look at cloud computing, beyond the borders, in Asia. And as all the above factors are applicable to other geographies, next time we’ll talk about the cloud in Europe.

The IT world is looking to Asia with high expectations…and uncertainty. Everyone agrees that Asian cloud computing growth will be impressive: analysts quote industry CAGR figures of 20-35 percent from 2010 to 2014 and beyond. Nobody knows quite how much it will grow, however, because of persistent and thorny issues.

Asia consists of many countries in various stages of development. Those with well-developed infrastructure and institutions – Japan, Singapore, South Korea, Australia, and New Zealand – have experienced the greatest growth in cloud adoption to date. While Asian interest in the cloud is, in general, sky-high, many other countries lack the infrastructure to deliver. According to Per Dahlberg, CEO of the Asia Cloud Computing Association, this puts Asian cloud uptake approximately three years behind that of the United States.

What drives Asian cloud uptake? What hinders it? Answers to both questions are as diverse as Asia itself.

Many Asian countries are developing economies with poor or outdated IT infrastructure. They see cloud computing as a way to modernize government and private IT systems, while spurring the development of home-grown industry. In its current five-year plan, released in 2010, the Chinese government designated next-generation information technology as one of seven “Strategic Emerging Industries,” designed to drive innovation for indigenous Chinese industry. The plan highlights cloud computing as a key investment area that should receive special focus. Business Cloud News reported that this will help propel cloud investment in China to a forecasted US$154 billion by 2015. China Mobile alone plans to invest US$52 billion in that time-frame to build its cloud offerings.

Another pan-Asian driver of cloud growth is increased broadband penetration. The proliferation of mobile phones with always-on 3G and 4G data connections will continue to drive migration to the cloud. As people gain faster data pipes they can take anywhere, they increasingly want to store their content in the cloud. Likewise, companies want employees to be mobile, thus necessitating the secure availability of company data anywhere it’s needed.

Finally, Asia has untold millions of small businesses with the desire, but not the IT know-how, to be global competitors. IT as a service will come to play an important role in helping these firms reach new markets and compete globally.

Of course, different parts of Asia are poised to take advantage of the impending storm at different levels. Many factors hinder cloud adoption, including shoddy power grids and connectivity issues. But cutting across all countries is the problem of fragmented regulatory regimes with wildly varying requirements for everything from data protection to vendor lock-in. For example, a nation might prohibit its citizens’ data from physically leaving the country. This prevents building regional data centers and realizing the key cloud benefits around economies of scale. Another open question revolves around jurisdiction. If a data center in Singapore holds information on Indonesian nationals, which country’s laws should govern that data and that data center? What if the information is replicated to a data center in China? A coherent pan-Asian regulatory framework will help to alleviate this, but questions around privacy, security, and freedom of speech will likely persist.

Cloud uptake in Asia will see tremendous growth over the next few years. The ultimate heights of that growth and how quickly it is achieved will depend in large part on the degree to which the region as a whole enables it via development of physical and regulatory infrastructure.

Next time up, Europe’s cloud.

Protectionism is Becoming a Cloud Computing Pain Point | Gaining Altitude in the Cloud

In September 2011, Dutch Security and Justice Minister Ivo Opstelten told the parliament that U.S. companies will be excluded from bidding for IT services contracts because of fears that the U.S. Patriot Act may allow data to be compromised. Royal Dutch Shell Plc, Europe’s largest oil company and one of Microsoft’s biggest clients in the region, last year decided to store its data in Germany with T-Systems, while leaving Microsoft to run software applications. And German authorities are considering rules to prevent U.S.-based firms from bidding for cloud solutions in Europe. These examples demonstrate that protectionism is now treading on unconventional turf and impacting the cloud computing industry.

The issues around localization are not new but are certainly amplified due to the nature of cloud computing. One looming key question is if jurisdiction of the source of the data still applies if the data processed is stored in the cloud in another jurisdiction.

In an ideal sense, laws governing the data at the source should traverse with the data anywhere and should supersede all other local laws. In fact, the U.S. government, under the Obama administration, proposed cyber security legislation with the explicit objective of barring local jurisdictions from requiring location of data processing facilities in their local area. The administration’s proposal stated:

“The Federal Government has embraced cloud computing, where computer services and applications are run remotely over the Internet. Cloud computing can reduce costs, increase security, and help the government take advantage of the latest private-sector innovations. This new industry should not be crippled by protectionist measures, so the proposal prevents states from requiring companies to build their data centers in that state, except where expressly authorized by federal law.”

And the US-EU Safe Harbor – a streamlined process for U.S. companies to comply with the EU Directive 95/46/EC on the protection of personal data – is a step in the right direction to establish guidelines around localization rules.

The Safe Harbor Privacy Principles – to which U.S. companies registering their certification must adhere – are:

  • Notice – Individuals must be informed that their data is being collected and about how it will be used.
  • Choice – Individuals must have the ability to opt out of the collection and forward transfer of the data to third parties.
  • Onward Transfer – Transfers of data to third parties may only occur to other organizations that follow adequate data protection principles.
  • Security – Reasonable efforts must be made to prevent loss of collected information.
  • Data Integrity – Data must be relevant and reliable for the purpose it was collected for.
  • Access – Individuals must be able to access information held about them, and correct or delete it if it is inaccurate.
  • Enforcement – There must be effective means of enforcing these rules.

In theory, companies that are certified under the Safe Harbor should be able to seamlessly provide cloud services in Europe and the United States.

However, I do not believe these measures go far enough, as there will still be many groups that leverage protectionism to stifle growth using data protection concerns as a basis. But these data security issues can be mitigated by contracts between vendors and buyers where the laws governing the data should travel with the data and by creation of an open standards-based cloud infrastructure that can be embraced by regulators in the United States and European countries.

Localization rules should not be the justification to create barriers to cloud adoption or squelch healthy competition. Further, this type of turf war has implications beyond cloud adoption; it could also set a bad precedent that could easily seep into other areas, such as networking hardware or storage sales, where it can also encourage protectionist sentiments.

Enterprise Cloud Goes Vertical | Gaining Altitude in the Cloud

Most enterprise cloud offering conversations to date have focused on the horizontal benefits…flexibility, scalability, auto scaling, cost savings, reliability, security, self provisioning, etc.

Advantageous as these are, CIOs are increasingly interested in learning more about cloud benefits that are specific to the industry in which their organizations operate. For example, latency requirements, failover mechanism and data encryption are important to a CIO in the financial industry. A healthcare industry IT executive will be interested in hearing more about mobility and data archiving. How the cloud can improve supply chain or logistics is important for a CIO in manufacturing industry. And a media industry IT executive, quite aware of the various platforms being used to access content, will want to hear more about Content Delivery Networks (CDN) supported by the cloud.

A growing number of enterprise cloud providers are beginning to understand this interest in vertical cloud benefits. While their focus has been on “SaaS-i-fying” their offerings to meet unique, industry-specific application requirements, the trend will continue towards “PaaS-i-fying” and even “IaaS-i-fying” their offerings.

Let’s take a quick look at some of today’s verticalized enterprise cloud offerings.

IBM’s Federal Community Cloud is dynamic and scalable to meet government organizations’ consolidation policies as mandated by the Obama administration’s CIO. It is in the process of obtaining FedRAMP certification to meet Federal Information Security Management Act (FISMA) compliance standards, a requirement for government IT contractors, and will be operated and maintained in accordance with federal security guidelines.

Savvis provides customized IaaS solutions that cater to the financial industry. Growth in this vertical has been led by providing infrastructure services – such as proximity hosting and low latency networks – which support electronic trading. Savvis has added six new trading venues and an international market data provider. Its customers can now cross-connect, or have network access, to over 59 exchanges, Electronic Communication Networks (ECNs), and market data providers. For example, it hosts Barclays Capital’s dark liquidity crossing network, LX, which aggregates its global client bases’ market structure investments.

Infosys took advantage of Microsoft Azure PaaS platform and its SQL Data Services (SDS) to provide automotive dealers with cloud-based solutions to go from a point-to-point dealer connection for inventory management to a hub-based approach. In this solution, an inventory database for all dealers is hosted at a dedicated instance of SDSin the cloud. It provides middle tier code and business logic to integrate data between participating parties and a web-based interface for dealer employees wanting to check inventory at other dealerships.

Amazon Web Services (AWS) has cloud solutions that cater to the media industry’s needs for transcoding, analytics, rendering, and digital asset management. It developed a CDN, based on CloudFront™, which provides the streaming from edge nodes strategically located throughout the United States for a robust streaming experience.

AWS’ Gov Cloud™ provides a cloud computing platform that meets the federal security compliances FISMA, PCI, DCC and ISO 27001. The Department of State and its prime contractor, MetroStar Systems, built an online video contest platform to encourage discussion and participation around cultural topics, and to promote membership in its ExchangesConnect network. The contest drew participants from more than 160 countries and took advantage of AWS for scalability. AWS hosts websites for many federal agencies such as the Recovery Accountability and Transparency Board (recovery.gov) and the U.S. Department of Treasury (treasury.gov). AWS provides multiple failover locations within the United States, a provision which meets the security requirement that only people physically located within the United States have access the data.

Game hosting companies are running their games in the cloud for faster delivery and scalability. And AWS’ S3 platform provides the storage capacities for gaming companies such as Zynga and Playfish.

GNAX’s healthcare cloud specifically caters to the healthcare industry and understands the nuances of HIPPA. It provides a private cloud solution to healthcare companies that scales up and down depending on patient volume.

Of course, there are both pros and cons to adopting vertical-specific cloud offerings.

Pros:

  • Customized solutions based on industry regulations
  • Immediate creation of competitive advantage

Cons:

  • Vendor lock-in
  • Proprietary workloads may not be migrated

These issues can be mitigated through a careful sourcing methodology, now being provided through cloud agents who negotiate the contracts with multiple vendors as per the needs of the client organization.

As illustrated above, there are significant benefits to be gained from industry-specific cloud solutions, and I predict we’ll see an increasing number of them emerging in the near-term.

Cloud Connect 2012 Organizational Readiness Track | Gaining Altitude in the Cloud

This blog originally appeared on Cloud Connect Blog. Read the original post.


“The technology is the easy part.  It’s the cultural issues that are hard.”

This quote from a recent conversation with a Fortune 500 CIO perfectly summarizes why we’re holding the first-of-its-kind Organizational Readiness track at Cloud Connect.  As enterprise adoption of public and private clouds continues to accelerate, the majority of focus continues to be on technical issues. Organizational and cultural issues though are starting to pose significant barriers and challenges as CIOs work to implement their cloud strategies. Just a few of these emerging issues facing enterprise IT include:

  • What does our future IT organization need to look like? How do our key roles, processes and skills need to change?
  • How do we overcome internal resistance to cloud adoption? How do we help employees make the paradigm shift, and rethink IT, services, and even their own roles?
  • How does our governance need to change in a world where business users have much more choice and control?
  • How we ensure we have the internal skills we need to support cloud? How can we compete in the market for increasingly scarce talent?

Just as the shift from mainframe to client / server architectures drove a wave of transformation for IT organization and governance, so is the migration to cloud services.  The focus of our track will be on exploring the “soft issues” around enterprise cloud adoption, and discussing emerging models for success for building next generation IT organizations.

The track will include sessions that will surface the around real organizational, cultural, skills that are emerging with enterprises migrating their environments to the cloud. These sessions include “Will Culture Eat Your Strategy? How to Turn the Tables,” where Simon Wardley will lead a discussion around how IT leaders can overcome the cultural barriers to change. We’ll have a series of panels and discussions on how enterprises are navigating the organizational changes being driven by cloud, which will include IT leaders from Best Buy, eBay, Novartis, InterContinental Hotel Group and others. David Linthicum’s session on “In Search of Mad Cloud Skills” will help us understand the new cloud skills that will be required in the enterprise, and where to find them.

Failing to address the organizational issues associated with transformational change can doom even the best cloud strategies and technologies. Join our Organizational Readiness track to learn how to effectively prepare your organization to embrace the change that’s coming with your migration to cloud.

Not registered for Cloud Connect yet? Visit the conference registration page to learn how to join what I’m sure will be an exciting and insightful event. Enter the promo code EVEREST for 25% off!

Don’t Fret the Cloud “Name Game” | Gaining Altitude in the Cloud

There’s a lot of noise in the industry today about whether or not infrastructure appliances, engineered systems, datacenter-in-a-box, and other similar solutions can be labeled “cloud.”

The basis for this debate is rooted in assertions that the public cloud model, or more aptly Amazon’s, is the only cloud model. There’s no doubt that Amazon is the poster child for the cloud industry, and was around when the cloud buzz was making inroads; and therefore subsequent “definitions” of cloud have become inspired by Amazon’s delivery model. Moreover, the idealistic pursuit of converting IT into a pure utility, as well as addressing overarching pain points of enterprise IT, are also driving some of the arguments. But does doing so restrict the benefits an enterprise can derive from cloud principles?

Private cloud providers make their business case based on security, lower total cost of ownership (TCO), manageability, tight integration, and some other “public cloud-like” benefits. But while they do not always possess the scalability, payment options, and other aspects of public cloud services, is it fair to limit the cloud ecosystem to a particular definition, and term other solutions “cloud washing”? Similarly, various SaaS providers that believe they are the “true cloud application providers” have defined the criteria for a “true SaaS application”, in turn expecting other cloud applications to satisfy their self-anointed criteria to become a SaaS provider. Does this add value to cloud discussions?

Unfortunately, the public cloud provider-driven “definition debates” – that revolve around the pay-per-use aspect of public cloud vis-à-vis a minimum capacity commitment required in a private cloud, the virtually infinite capacity of infrastructure public cloud vis-à-vis requirements to buy “infrastructure boxes” that impact the scalability and flexibility in a private cloud, the minimum capex in public infrastructure cloud vis-à-vis expensive hardware procurement in a private cloud, etc., are doing more harm than good. In retaliation, private cloud providers have also started poking holes into public cloud providers’ security, financial stability, commitment, quality of service delivery, and other seemingly relevant aspects. These assertions are also futile.

The fact is, the name or definition assigned to a given cloud-type solution is moot. The real issue is whether the customer sees value in and gains benefit from a cloud offering. Does it improve IT management? Does it save money? Does it improve IT delivery? Does it help the business become more agile?

Failing to take this client-centric view and instead utilizing the prescriptive, self-created definitions of cloud services can significantly inhibit cloud uptake and the potential benefits from its usage. Just because a cloud solution does not satisfy an “industry definition” should not prevent an enterprise buyer from evaluating it, as long as it offers cloud-related benefits and serves the intended purpose.

Our discussions with a wide range of enterprises show a growing propensity to embrace the hybrid cloud model. And our recent research, in which we analyzed the cost of operations under various infrastructure set-ups such as legacy, virtualized, private cloud, and hybrid cloud), found that the hybrid cloud model is definitely more cost effective and flexible as compared to other cloud models.

But, a word of caution: buyers must differentiate between a silo collection of different private and public cloud solutions and a hybrid cloud. A true hybrid implies the coordinated orchestration of private and public cloud to manage workloads.

So, where should buyers begin? Move beyond the futile “name game” and evaluate serious private and public cloud offerings to create a hybrid cloud environment that can transform their IT organization.

Can your IT Outsourcing Contract Coexist with the Cloud? | Gaining Altitude in the Cloud

This blog originally appeared on Gigaom.com. Read the original post.


If your enterprise is committed to a long-term managed services or information technology outsourcing (ITO) contract, you might be looking longingly at the agility and efficiencies of cloud-based delivery models. If you’re like many enterprises that rely on managed services, you might be less than thrilled with the quality, responsiveness and flexibility you’re getting. Cloud seems like a better path, but you’re contractually obligated, potentially for several more years.

Meanwhile, your business users are continuing the drumbeat for more agility and flexibility — all at lower cost, of course. Adding to the pressure is the fact that your competitors are using cloud to reallocate capital and operating resources to driving innovation and value, placing your company in an untenable — and unsustainable — competitive position. It’s probably also the case that your service provider has no contractual, economic or technical incentives to suggest cloud migration strategies that might improve your position.

Seems you’re stuck. Right?

Maybe not. Just because you’re in a long-term relationship with a service provider does not mean you’re out of options. Most managed services agreements were written without cloud in mind. So, if you’re creative, you might find ways to renegotiate or possibly bring in a new vendor with cloud offerings that fit your business and workloads.

Four steps:

  1. Review the contract. Make sure you know your contract before booking meetings with your service provider or a cloud vendor. Pay particular attention to the process for negotiating changes to the agreement, as well as minimum volume commitments and what happens if your workloads exceed those minimums. Your contract is probably silent on how new workloads are to be serviced, but check that as well.
  2. Focus on work volume, not dollars. Most master services agreements are built around units of work performed in each time period rather than a dollar volume commitment. And once minimum volumes are met, most agreements allow customers to take additional volumes to other vendors and platforms.
  3. Look for a high-value test case. Identify a basket of workloads that are well-suited to cloud migration. Public cloud examples might include dev/test or backup and archival. Private cloud examples might include high-volume transaction workloads running on legacy systems that can be forklifted to a virtualized environment. Use this list of workloads when engaging your service provider and/or cloud vendor. It will focus the conversations on specific, immediate paths forward and help you build financial and technical cases to support your eventual decision.
  4. Amend, if it makes sense. It might not. The reality is that your current service provider likely is not technically equipped to deliver cost-effective, reliable cloud services. If that’s the case, they’ll do everything they can to discourage you from going down that path. Thus, the reality may be that in order to preserve your competitive position, you simply can’t wait for your current provider to figure it out. If that’s the case, you’ll want to move new workloads and cycles beyond your contractual minimums to a provider with the right cloud credentials.

A win/win?

Let’s assume your current provider is up to the task. Here’s where to look for the win/win:

Successfully migrating a set of workloads delivers value to you (increased agility, reduced costs, more productive employees), and also to your service provider (new capabilities and infrastructure roadmaps that they can sell to other customers). With a mutual win for both parties, the stage is set to work with your service provider to forge a contract amendment that makes the next workload migration more procedural. Sweeteners for a deal might include shared cost savings, bonuses for hitting KPI metrics, or a contract extension.

Of course, all of this assumes they can deliver the goods, and that’s probably a long shot.

This time it’s different

Start planning now for your next rebid. Cloud has so fundamentally changed the procurement landscape for managed IT services that your procurement process must fundamentally change as well. Map out your RFI/RFP game plan to:

a) attract service providers who “get” cloud

b) build a next-generation set of performance metrics and incentives into the contract, and

c) account for new elements of value that only cloud providers can offer.

In the next generation IT outsourcing world, service providers are going to look very different from what you find in today’s marketplace. There will be more of them, their capabilities will be different, and the value propositions they offer will need to be accounted for in how you evaluate your choices. Management and governance will follow new models, and metrics will be fundamentally different.

Today, the market is unsettled, and until that changes, the ball will be in your court to procure IT outsourcing agreements that put your company in the best position to reap the competitive benefits of cloud strategies.

Embrace the Berg: the Real Power Lies Beneath the Surface | Gaining Altitude in the Cloud

As we’ve noted in previous blogs and white papers, mobility can unleash the next wave of healthcare productivity and provide dynamic channels to foster wellness.

Yet, in the complex healthcare environment, mobility is more than just crafting a mobile app for the iTunes Store. To us, that is just the tip of the iceberg, since the infrastructure and institution must be readied to accommodate mobility and capture the full power of mobile two-way data streams through seamless integration of data, companion devices, legacy apps, web interfaces and internal processes to optimize workflow while maintaining robust security and compliance. All this is critical, as in healthcare, conflicting and less than fully current data can lead to devastating impacts.

While a simple clinician/facility locator app can be created and deployed with a minimal amount of effort, something like a context-aware mobile video consult demands clean instant access to a “complete single record of truth.” To provide that, the infrastructure must be upgraded to support the roaming bandwidth demands, a streamlined access process needs to be instituted, patient records must capture the most current feeds from a variety of data sources and be presented in a context-aware workflow that intuitively supports decision-making, and any entry must properly interface with legacy apps, and securely and surely prompt the desired follow-on actions. And all this must be done without comprising data privacy.

Disregarding the needed investments below the surface can at best lead to a bland, unappealing healthcare mobility offering. At worst, it can lead to devastating medical and information errors. While there are numerous, productive baby steps along the way that incrementally accumulate to fully unleash the power of mHealth, healthcare companies should develop a clear vision, supported by a robust organization and investment plan, to bring it successfully to fruition.

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