CIO Archives - Page 7 Of 9

Application Development Productivity – You’ve Got to Be on the Indifference Curve! | Sherpas in Blue Shirts

November 6, 2012

The main indicator of productivity in application development (AD) – periodic reduction in the number of application defects per 1000 lines of code written in X man hours – has stood the test of time at a modular level, as have CMMI standard metrics against which any calculation of productivity can be benchmarked.

However, in the midst of mounting pressure to optimize discretionary IT spend, buyers have no option but to justify their spending via data that evaluates productivity at the enterprise level. CIOs must meet this requirement, while also facing the following two challenges:

First, they must simultaneously deliver increasing value and achieve year-on-year annual reduction in costs
Second, they have to contend with educated business users who may not have the patience to deal with a behemoth enterprise IT organization to get their functional needs fulfilled. Indeed, with the advent of market forces such as social media, mobility, analytics, and cloud (SMAC), business users today understand more about applications and technology than they ever did in the past

As a result, IT buyers must ignore all the ambient noise created by multiple metrics and focus only on the following two factors:

Business functions: The functionality that the business users are demanding, complete with SLAs
Application cost: The cost to acquire the applications that provide the required functions.

Fortunately for them, data indicates that “business functions versus cost” can be useful in benchmarking the productivity of any application development project. As the following image illustrates, for AD projects of specified complexity and type, a combination of the number of functions (F) in an application and the cost (C) to acquire that application can be plotted into an “indifference curve.” An indifference curve is a graph showing different bundles of two variables between which a consumer is indifferent. Basically, all points on the curve deliver the same level of utility (satisfaction) to the consumer.

Based on benchmarking data over many years, all points that form these indifference curves deliver an optimal level of productivity for the complexity specified.

This productivity benchmarking can be used to assess and optimize the productivity of AD projects. For instance, if a particular AD project, for example application 3 in the above image, falls below its indifference curve, it is delivering sub-optimal productivity. Thus, by using this method of benchmarking, a buyer can immediately raise a flag with its service provider and force it to either:

Reduce costs to achieve optimal productivity, or
Provide more functionality to align the project with productivity indifference curve

This benchmarking tool also delivers benefits to service providers. If their case in point AD project is application 1, which falls above the indifference curve, they: 1) have consumer surplus into which they can dig (i.e., buyers could be willing to more); and 2) can use the data to advertise their higher productivity performance to generate more business and differentiate themselves from their competition.

We’d love to hear your thoughts on this type of productivity benchmarking. Have you employed it? What lessons learned can you share with your peers?

Why Next Gen CIOs Are Actively Promoting “Shadow IT” | Gaining Altitude in the Cloud

October 9, 2012

The conventional thinking about business-led adoption of cloud services in the enterprise goes something like this:

Frustrated by a non-responsive IT organization, business users become attracted to the innovation, speed, and flexibility offered by cloud vendors and solutions
Fearing loss of control, corporate IT puts the brakes on deployments and projects of which they become aware
Undaunted, business users “swipe the credit card and go” to the cloud anyway, around and outside of normal IT procurement processes
CIOs and IT executives are shocked to learn that cloud adoption is going on behind their backs

And while many enterprise IT departments frequently spew the terms “rogue IT,” “shadow IT,” and “end-running IT” at this phenomenon, progressive CIOs are actually encouraging this behavior as a way to gain leverage and scale with a limited IT budget.

CIOs have a finite set of time and resources to accomplish what is asked of their IT organizations. Many enterprises facing significant cost pressures and budget constraints must focus almost exclusively on supporting, maintaining, and enhancing core, mission critical systems. Think trading platforms for capital markets firms, or claims processing for insurance companies. IT can support only so many new projects requested by the business, and every CIO needs to draw the line somewhere on the project list.

For projects that fall below corporate IT’s project cut line, the cloud is a win-win proposition. Business stakeholders can go ahead and acquire from a third party the capabilities they are seeking. IT ends up with a happier internal customer. And the organization overall can effectively attain greater scale from its IT budget and headcount by pushing the business to cloud providers.

As one CIO recently commented to us, “I actually want our business users to go to the cloud. I want them to ask cloud vendors the right questions, and, of course, I want to make sure they’re not doing anything that touches our mission critical apps. But other than that, I’m happy for them to go out to get what they need.” Of course, one of the keys here is the right questions, such as those focused on critical topics including security, data ownership, integration, availability, disaster recovery/business continuity, etc.

There’s no doubt that many CIOs are surprised internal developers are using Amazon Web Services (AWS), or that marketing is building its own custom apps on salesforce.com. The more unanticipated but understandable fact is that many of them are actually relieved to have this extra weight lifted off their heavily-burdened shoulders.

5 Things We Learned At Cloud Connect | Gaining Altitude in the Cloud

September 26, 2012

Even though email, smart phones and iPads are great virtual communications devices, nothing beats the value you can gain from face-to-face time with your peers and other industry thought leaders. If you weren’t fortunate enough to attend the Cloud Connect conference in Chicago earlier this month, we’ve captured some of the highlights of and insights from the discussions during the Organizational Readiness track (which we were privileged to lead) for you:

Change management comes to the fore – executive sponsorship and early successes are keys success factors for driving cloud-enabled transformation. While “top-down” CIO-driven programs are helpful in shifting culture and mindset, “bottom-up” adoption and innovation is also required to demonstrate the value of cloud models to skeptics. In many cases, new cloud initiatives need to be incubated and protected from the enterprise to provide freedom for experimentation. This kernel of wisdom was a result of our very interactive session with Matt O’Keefe (Morningstar), Keith Shinn (Fidelity) and Dave Roberts (ServiceMesh) about the hard choices in enterprise cloud adoption. Watch Dave in this video for tips on ensuring a successful cloud deployment in.
“Shadow IT” isn’t a dirty phrase – corporate IT needs to focus its limited resources and time on the objectives and initiatives that are deemed to be highest priority. In many organizations this means focusing only on applications and infrastructure considered to be “mission-critical.” As an unfortunate result, many projects requested by the business fail to make the cut. Thus, it’s understandable if the business decides to “end-run” IT and go to the cloud. The cloud can give enterprises additional scale with limited IT budget and go deeper in the project stack. In fact, in many cases CIOs actually encourage their business counterparts to go to external cloud service providers. The key to success, however, according to Bates Turpen (formerly InterContinental Hotels Group) and David Falck (salesforce.com), is that IT leaders , help internal customers self-provision without losing control and help business users ask the “right” questions of potential cloud vendors.
Culture changes within IT – not only is cloud reshaping the relationship between business and IT, it’s also starting to restructure the IT organization itself. The dev ops revolution is shifting IT from a CIO-driven model to a developer-driven decision-making model around infrastructure. Developers are making their own frontline choices around platforms and service providers that are then being aggregated up by managers, a distinct break from legacy models where platforms and infrastructure are mandated by the CIO. Also, as user experience becomes an integral part of a product, CIOs need to encourage their developers to think like a user and empower them to build a product from beginning to end. Watch Lauren Cooney (Cisco) talk more about the dev ops movement.
Different clouds for different folks – common enterprise concerns around cloud continue to center around security, compliance, performance and vendor lock-in. We asked the experts on our “Current Thinking in Addressing Persistent Cloud Challenges” panel, Paul Burns (Neovise) and Troy Angrignon (Cloudscaling), how to best address these questions. Their answer was : “It depends” (which is a much better answer than the vendor community could deliver just a few years ago). Options across public and private, and enterprise virtualization and elastic infrastructure clouds, provide new answers to these issues for both legacy and new applications, but also must be carefully evaluated.
Adoption is about innovation – in conjunction with the Chicago conference, we conducted a joint survey with Cloud Connect on enterprise cloud adoption patterns. While most service providers think enterprises are migrating to the cloud for total cost of ownership (TCO) reasons, agility, innovation and flexibility are actually the drivers. Thus, there’s a glaringly apparent disconnect between vendors that are focused on selling next generation infrastructure to IT, and businesses that want cloud platforms to drive top line revenue. Download the complimentary survey results.

If you attended Cloud Connect, our readers would enjoy hearing what you took away from the conference sessions, as well as your concerns, issues and successes on cloud adoption within your enterprise, so feel free to share away!

Video: Lauren Cooney Explains Why Your Dev Team Just Became the CIO at Cloud Connect Chicago | Gaining Altitude in the Cloud

September 24, 2012

Lauren Cooney, Senior Director, Software Market & Developer Strategy at Cisco, explains the new cloud computing world order. The consumerization of IT is changing the CIO’s perspectives, and user experience is ascending as a top priority. Lauren talks about empowering the developers and create a better product and better user experience.

Follow Lauren on Twitter @lcooney.

Lauren was a speaker in the New World Order: Your Dev Team Just Became the CIO session — part of the Organizational Readiness track at Cloud Connect Chicago, which Everest Group’s Scott Bils chaired. For more Organizational Readiness resources, visit www.everestgrp.com/ccevent.

Top 5 Takeaways from the Enterprise Cloud Adoption Survey | Gaining Altitude in the Cloud

August 28, 2012

The enterprise cloud adoption survey jointly conducted by Everest Group and Cloud Connect in mid 2012 shows very interesting trends. Unlike other surveys, this effort includes all the cloud market participants such as cloud providers, buyers, third-party advisors, consulting firms, and cloud enablers. This ensures a 360^o view of the market.

The survey summary report is now available and can be downloaded here.

The top five messages emerging out of this survey effort are:

Buyers are willing to transform their infrastructure and business application landscape leveraging cloud models. The growing need for data intensive applications, quicker time to market, flexible infrastructure, and data management is driving this transformation. The survey indicates that over 85% of enterprise buyers have already deployed or plan to deploy cloud-based infrastructure solutions.
Buyers and providers of cloud services need to find a common ground on understanding challenges in cloud adoption. Though security and integration challenges top the list, the buyers believe that their management is more than willing to deploy cloud solutions whereas providers see lack of management buy-in from the buyers as an important barrier.
There is a disconnect between what the buyers hold valuable and what the providers believe is important in cloud adoption. Adopters believe that cloud model enables them to improve top line by increasing productivity and reducing the time to market. Moreover, reduction of total cost of ownership does not drive their cloud adoption whereas providers see it as the most important factor.
Cloud delivery models are significantly impacting the traditional IT buying centers. The survey shows that a considerable portion of IT budget is increasingly getting allocated to the businesses. Moreover, individual business leaders (including C-level executives) have more say in cloud decisions over IT, procurement, or the finance team.
Overall, the sentiments of buyers of cloud services remain very positive. Most of them met their objective, especially from cloud infrastructure solutions. The survey reveals that ~65% of buyers met their objectives from cloud deployment and ~90% decision makers believe that their cloud adoption will increase in the future.

The survey shows that though currently a large part of cloud adoption is driven by industry-agnostic offering, there is a considerable demand for industry specific solutions. We believe that industry flavors will become prominent once a critical mass of cloud adoption is achieved.

Though the survey showed disconnect between the perspective of buyers and providers in cloud adoption, it also revealed common ground on various aspects. For example, in key decision criteria for cloud evaluation, both the buyers and providers believe that security, contract terms and SLAs, fair pricing, and tenure of the provider are important parameter. We believe these common grounds are good for the industry and development of the cloud market as it aligns the expectations of various market participants and should help in creating relevant cloud services.

Overall the enterprise cloud adoption survey shows that despite all the challenges, confusion, barriers, and other issues, market participants are upbeat about cloud adoption. The buyers are quite satisfied with the outcome of cloud adoption within their enterprise IT set-up. Not only is this positive for the industry, but it also establishes the fact that, unlike other hyped-up trends, cloud delivery models are here to stay.

I will be speaking more about the survey results at Cloud Connect Chicago on September 12. We also have an excellent speaker lineup for the Organizational Readiness track, including thoughts leaders from Cisco, InterContinental Hotels Group, salesforce.com, Morningstar, Fidelity, Neovise and Cloudscaling. Read my blog from earlier this month for a sneak preview of the track sessions. Use code EVERESTGRP to receive 25% off conference passes or claim a free expo pass. I look forward to seeing you at Cloud Connect!

Gain the Insights You Need for Next Generation IT Success: the Organizational Readiness Track at the Cloud Connect Conference | Gaining Altitude in the Cloud

August 6, 2012

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

GE’s Jack Welch once stated, “Change before you have to.” While it’s certainly sage advice, with virtually everything in the cloud computing world evolving so rapidly – the offerings, the providers, the implementation strategies, and the buyers, who these days are most typically business users rather than IT – it’s dauntingly difficult to decide what, how, when and with whom to change.

Yet, following in the footsteps of the highly successful, inaugural Organizational Readiness track at the Cloud Connect conference in February 2012, the sessions at the September 11-12 event in Chicago are all designed to cut through the clutter, and provide deep insights on the organizational issues that are threatening to thwart cloud-oriented next generation IT success.

In “New World Order: Your Dev Team Just Became the CIO” session, industry analyst Vanessa Alvarez and Cisco’s Laura Cooney will discuss the emergence of developers as decision makers, what organizations are doing to adjust to this revolution, the technologies to look at, and pitfalls to avoid.

With budgets increasingly migrating to “shadow” IT driven by business users, it is more critical than ever for CIOs to understand how to serve and enable this new buyer group in a next generation IT environment. During the “Tough Questions You Need to Ask” session, business users who have driven major cloud initiatives will provide answers to questions CIOs may be afraid to ask.

The panel session “Hard Choices in Enterprise Cloud Adoption” will feature three 15-minute drill-down presentations that provide insight into the major choices and decisions organizations face around:

Open versus Closed Cloud Infrastructures, and the pros and cons of each
Forklift versus Greenfield, and how to determine if you should first focus on moving existing applications to a virtualized environment, or deploy a new infrastructure for greenfield applications
Now versus Later, to help CIOs evaluate whether they should accelerate or put a hold on their enterprises’ move to the cloud

“Current Thinking in Addressing Persistent Cloud Challenges” will examine Security and Compliance, Performance, Vendor Management and Lock-In issues, and provide practical, real-world examples of how panelists’ and other organizations are creatively addressing them.

If you haven’t yet registered for Cloud Connect, I hope you’ll visit the conference registration page and sign up today. Use code EVERESTGRP to receive 25% off conference passes or claim a free expo pass. You’ll unquestionably gain strategic, tactical and actionable insights on how to shine much needed light into all things cloud. As Chair of the Organizational Readiness track, I look forward to seeing you in Chicago in September!

Download the Enterprise Cloud Adoption Survey Results.

Is Budget Leakage Sinking Corporate IT’s Boat? Enterprise Cloud Adoption Update | Gaining Altitude in the Cloud

July 18, 2012

A lot has changed in the short six months since our initial blog on on the emerging enterprise cloud adoption paths. Recent discussions with cloud infrastructure service providers clearly show that CIOs and corporate IT seem to be interested in talking about cloud, and RFP flow is definitely increasing, but we’re not seeing conversion to contracts and revenue. One statement by a leading cloud service provider was particularly interesting:

“The cloud RFPs we’re seeing from enterprise IT are really strange, and poorly thought out. It’s like they’re just going through the process to get someone off their back…”

At the same time, there does appear to be an acceleration of enteprise spend on cloud, including SaaS, PaaS, and IaaS.

So what gives?

While there are a number of factors in play, we’re finding the biggest one is the role of the business user, and how cloud is eroding the monopoly corporate IT has traditonally had over information technology, services, and even infrastructure. People tend to forget that developer teams are frequently embedded in business units and deparments. They have budget approval limits, but typically high enough that they can spin up dev / test environments on Amazon AWS, for example, with no flags being raised. They no longer have to go to corporate IT to get a server provisioned, or a test environment setup. This is IT budget now flowing through the business, though through technical and not business resources.

As a result, IT is under significant pressure as it sees its budget dollars being threatened. It hasn’t fully figured out the implications of cloud for its IT organization, but can’t appear to be a roadblock to the business. What we see, although not in every enterprise IT organization, is a pretty substantial increase in tire-kicking, pilots and “RFPs” to give the illusion of progress.

Based on an additional set of conversations, analyses, and insights from recent client work, we’ve updated our enterprise cloud adoption framework to more strongly reflect the business buying dynamic. This new framework is defined by two major dimensions:

Change Agent – is the primary driver of cloud adoption led by business or IT?
Adoption Approach – is the organization looking at how cloud and next generation platforms could fundamentally transform its business or IT environment? Or is it looking at more tactical, incremental opportunities being presented by cloud applications, platforms, or infrastructure?

Based on these factors, here’s our new framework and overview of the different ways we’re seeing enterprises migrating to the cloud:

Enterprise Cloud Adoption Paths

A quick note on the different models:

Innovators

By far the most common enterprise adoption model we’re seeing is driven predominantly by business users implementing cloud solutions for new business capabilities, improved agility, flexibility, or reach. This adoption is coming in several flavors:

SaaS – in the majority of cases, business users are directly deploying SaaS business or collaboration apps at the individual, departmental, or business unit level.
PaaS / IaaS – for deploying new custom apps, or in some cases replatforming existing apps, developers with reporting lines into the business are deploying cloud with limited involvement from corporate IT.

Adoption is largely driven by individuals, departments, or functions around and outside of IT (even in the case of IaaS and PaaS). Business users want to innovate, recognize they can do it themselves, and feel empowered to do so.

Opportunists

The next most common model is corporate IT driving cloud adoption, albeit for specific, focused use cases. The goal is not broad transformation for “how IT does business,” but targeted adoption to prove the model, or to demonstrate improvements in efficiency and cost. Some of the most frequent use cases include:

Test / dev environments (under IT control)
Corporate and marketing websites
Backup and archival
Email and collaboration
Virtual desktop infrastructure (VDI)

The private cloud is still the preferred model for corporate enterprise IT, with most CIOs looking to play it safe with known enterprise vendors like IBM, VMware, or VCE. Note that the 20 percent in the Cloud Adoption Paths graphic above does not refer to the percentage of enterprise IT organizations that are pursuing cloud, but rather the number of companies in which cloud adoption is being driven predominantly by an “IT opportunist” model.

Modernizers

While they are the exception, a few enterprises’ CIOs are using next generation IT platforms to drive wide-scale modernization and transformation of their environments. These CIOs are viewing private, public, and hybrid cloud models as vehicles for fundamentally changing their infrastructure strategy, and are actively seeking to get their organizations out of the data center business. Although rare, two of the more interesting examples we’ve recently seen include:

State Street – Chris Perretta, CIO at State Street, is seeking to drive $600 million in cost reduction by 2014 by leveraging private clouds to streamline application development. State Street historically has relied heavily on internally developed, custom software, with app dev representing 20-25 percent of the total IT budget. Through standardizing on common, private cloud developments platforms (based on x86-based public cloud models) and encouraging code sharing and reuse, State Street believes it can reduce test times by 30 percent, and the overall amount of code written by 30-40 percent. As with other examples we’re starting to see, standardization and simplification is being leveraged to drive significant improvements in process and cost efficiencies.
CP Rail – finding itself unable to keep pace with user demands, CP Rail launched a broad, multi-year infrastructure transformation initiative to dramatically reduce cycle times and costs, while still supporting increasing volumes. It has already developed a global hybrid cloud dev/test network across operations in Canada, India, and Singapore, which relies heavily on AWS. Interestingly, CP Rail places as much emphasis on process (agile development) and organizational transformation as it does on technology. For those interested in more of the details, a great presentation describing the initiative is available here.

Transformers

These are enterprises using cloud and other next generation IT platforms to create new disruptive business models, transformational improvement in growth and profitability, and strategic advantage. The starting point for their discussion is not around cloud technology, but how to use the agility, flexibility, reach, and cost effectiveness of cloud to enable new business strategies. Business executives are typically the emerging change agents. The best example in the public domain is:

Netflix – the classic example of a transformer is Netflix, which cannibalized its highly profitable DVD-by-mail model with an online subscription-based streaming model. After concluding it couldn’t build data centers and infrastructure quickly enough to meet user demand, the company famously leveraged AWS to scale its streaming and back-end operations. Netflix has not added data center capacity since 2008, and currently runs all streaming apps, infrastructure and back-end applications in the cloud. Those interested in learning more should check out a great recent presentation from Adrian Cockcroft, Netflix’s Cloud Architect.

While Transformers is the rarest adoption path today, we do believe it will become far more frequent as the market matures, and as cloud changes the competitive dynamic in some industries.

Note that there are still a small (and shrinking) number of enterprises that are still purely in “Observer” mode, and not actively deploying SaaS, Paas, IaaS, or private clouds anywhere across their organizations. We haven’t reflected them in our framework, and struggle to see any enteprises where at minimum there isn’t at least an individual or department using a cloud-based collaboration or productivity app.

Stay tuned, as we’ll soon be posting more here about implications for both enterprises and the cloud service provider community.

Cloud Connect and Everest Group Launch Global Enterprise Cloud Adoption Tracking Survey | Gaining Altitude in the Cloud

May 30, 2012

Download the Enterprise Cloud Adoption Survey Results.

The market conversation around enterprise adoption of private, public and hybrid cloud models has been surprisingly light on facts. Data, surveys and analysis tend to focus either on predicting overall market sizes for cloud services (which often strain credulity of even the most ardent cloud supporter), or on high level surveys around planned cloud adoption and perceived issues. While interesting from a broad market perspective, they provide little insight for IT executives facing hard choices around cloud migration. Decision makers are faced with little hard data on the use cases that are actually being implemented in the enterprises and the value that they’re generating. This gap creates challenges not just for enterprise CIOs but also for cloud service providers and consultants.

In conjunction with Cloud Connect and UBM TechWeb, Everest Group is excited to announce a new tracking survey focused on better understanding where the “rubber is hitting the road” with enterprise cloud adoption. Targeted at enterprises and vendors alike, our Enterprise Cloud Adoption Survey will focus on identifying global enterprise cloud adoption trends and patterns and where enterprises are seeing value today from the cloud. Our survey will help readers gain visibility and insight into questions such as:

What are the use cases that are driving adoption of SaaS, PaaS, IaaS and private cloud?
How are cloud adoption patterns and uses cases are differing by vertical? By geography?
What cloud infrastructure models are most frequently being deployed (private, public, hybrid)?
What cloud management platforms are gaining traction in the enterprise? Where are open source options (OpenStack, CloudStack) being adopted?
How does the value being delivered by cloud deployments compare to expectations?

We think some of the more interesting insights will come from seeing how these responses change and trend over time. Our goal is not to provide just a one-time shapshot of adoption, but to conduct an ongoing survey several times a year to surface key trends and patterns. The results from our first joint survey will be announced in conjunction with Cloud Connect Chicago, to be held September 10-13 at the Hyatt Regency O’Hare.

ERP and the Cloud: Enterprise Migration Quietly Begins | Gaining Altitude in the Cloud

May 22, 2012

Given how much of the typical large enterprise IT budget is consumed by ERP, we’re not surprised to find a growing curiosity among many CIOs to understand how cloud delivery models could reduce costs. On the surface, you wouldn’t think that production ERP applications would be at the top of the list for cloud migration. ERP apps are mission critical, complex and highly customized, often with significant data security and compliance requirements.

That’s why we think one of the more interesting, underreported stories in cloud are the examples of large enterprises that have migrated existing ERP environments to private, hybrid and community cloud models. We’re actually finding quite a number of quite interesting, global scale ERP cloud deployments particularly among SAP customers. Why SAP? While Oracle is obviously the other large enterprise ERP heavyweight, as we’ve discussed here before, Oracle’s licensing policies are creating roadblocks for customers to migrate to even virtualized models, let alone private or public clouds.

The market for SAP cloud services is surprisingly robust with at least 10 major service providers that deliver SAP ERP capabilities via managed or host private or hybrid cloud models, including IBM, T-Systems, Fujitsu, Accenture CSC, CapGemini and others. T-Systems alone already supports 500 customers and 1.9 million SAP users via cloud-based models. Not surprisingly, most of these service providers started by originally providing SAP hosting services and have since extended their offerings. What’s the customer value proposition for SAP in the cloud?

Cost variablization – given the significant capex investments associated with SAP deployments and upgrades, cost variability is central to cloud-based SAP offerings. Nearly all providers offer consumption-based pricing models for SAP cloud services.
TCO reduction – many service providers are claiming the ability the reduce TCO for customer SAP environments by 30+% through the typical cloud levers. Several providers have customer references that have achieved these efficiencies and more in live production.
Flexibility – service providers are touting the ability of cloud-enabled deployments to more rapidly and easily provide new capabilities to users.
Standardization – in conjunction with cloud migration, many enterprises desire to consolidate data centers, rationalize SAP instances and standardize global processes to drive efficiency and flexibility.

Unlike other enterprise cloud use cases focused more on business agility and flexibility, in most cases cost appears to be the major driver of SAP cloud migration. Some of the more interesting examples include:

British American Tobacco (BAT) – just last month BAT announced a seven-year, US$160 million deal with T-Systems to consolidate its current SAP deployments into a single, cloud-based instance by 2016. The deal will enable BAT to variabilize its SAP costs through a usage-based pricing model.
Domino Sugar – leveraging Virtustream’s virtual private cloud platforms, Domino Sugar has been able to reduce SAP costs by over 30%, while actually improving availability and performance for several thousand users. As with BAT, SAP costs are variabilized and based on actual resource consumption.
Shell – to drive standardization, increase flexibility and shift to consumption-based pricing, Shell migrated its SAP environment to private cloud models (delivered by T-Systems) in support of 102,000 global employees across 100 countries.

Other notable enterprise examples include Audi, Freeport McMoran, Siemens, and Suntory.

Why haven’t we heard more about these and other examples? With the exception of IBM, most leading SAP cloud service providers and many of the early enterprise adopters of SAP in the cloud aren’t U.S.-based and are outside of the cloud hype and “echo chamber.” Also, details on many of these deployments tend to be tightly held both by both service providers and customers.

While many segments of enterprise cloud appear to be stuck in pilots and proofs of concept, ERP is surprisingly providing some early examples of large scale enterprise cloud migration.

Where Are the Transformers? Enterprise Cloud Adoption Roadblocks | Gaining Altitude in the Cloud

May 4, 2012

As discussed here before, a number of different enterprise cloud adoption paths are emerging. These patterns range from “Observers,” who are taking a reactive, wait and see approach to migration to “Transformers,” who are using private and public clouds to drive wide scale IT transformation and modernization programs. Not surprisingly these transformers are the Holy Grail being pursued by many cloud service providers and enterprise IT vendors. The opportunity to drive significant pieces of an enterprise IT environment to cloud environments (private and public) in multi-year transformation efforts creates visions of big services, hardware, and in some cases software dollars.

While many service providers are crafting go-to market strategies around these types of client opportunities, they’re running into an interesting challenge. They’re not finding a lot of Transformers out there yet. Enterprise cloud adoption, particularly for IaaS, is still largely focused on specific use cases or initial pilots. While many CIOs have long-term visions for cloud-centric future state environments, few CIOs are actually doing it today.

So why aren’t we seeing more Transformers in the market? Our experience suggests that in many cases there are a set of tactical (and often mundane) issues preventing CIOs from getting to the cloud more aggressively. While by no means comprehensive, several of the issues we frequently see are:

Licensing handcuffs – legacy enterprise software vendors clearly understand the business model disruption that cloud represents. Not surprisingly, most enterprise software houses are in no hurry to get their customers to the new world. For example, nearly all of Oracle database licensing policies are still based on physical server CPUs. One notable exception is with Amazon AWS, for which Oracle does support a “BYOL” (bring-your-own license) model based on virtual cores; at this time, Amazon is the only cloud service provider certified by Oracle. In addition Oracle software licensing also provides no or limited technical support for major non-Oracle virtualization platforms such as VMware, KVM, Xen and Hyper-V. Needless to say, if you’re a CIO running an Oracle shop (as many Fortune 500 companies are), there are significant constraints to migrating to even private cloud environments. While not every legacy enterprise software vendor has staked out a position as extreme as Oracle, many are still using licensing as leverage to drive clients to preferred models (or keep them there).
Shortage of skills – cloud expertise and experience is hard to find. Without cloud architecture and solution skills, enterprises are finding it difficult to drive wide-scale transformation efforts. While retraining would seem to be the obvious answer, CIOs that have tried going down that path are finding it to be a dead end. As discussed at our Organizational Readiness track at Cloud Connect Santa Clara last February, IT leaders are finding that the cloud paradigm shift is a bridge too far, and that most of their current employees are unable to make the shift. The lack of internal talent, combined with the wariness to trust vendors and service providers, is leading to a real constraint to further adoption, particularly in IaaS and private cloud models.
Analysis paralysis – private cloud provides an interesting example of the proliferation of options facing enterprise IT. Private clouds can be provided in a variety of flavors, with important choices to be made around delivery model (VPC vs dedicated), location (on-premise or hosted), asset ownership (customer or service provider), platform (proprietary vs open source) and, of course, vendor. Given the skills shortage mentioned above, even sophisticated enterprise IT shops are challenged with the variety of vendor and service options in the market, particularly given the pace of change. Of course the recent flare-up of IaaS platform wars doesn’t help make these choices clearer for risk-averse CIOs. The result of too many choices? It’s not uncommon for us to see clients experiencing “vapor lock,” not really knowing what to analyze, let along what methodology to use. Clients are finding the frameworks, methodologies and tools they’ve historically used to make similar decisions in the past aren’t applicable or relevant in the cloud paradigm. As simple as it seems, many of our clients simply don’t know where to get started.

Why isn’t security and compliance on the list? Because in many cases, we’re finding that security and compliance is a red herring that IT is hiding behind. This is not to say that there are not workloads and use cases where security and compliance issues prevent certain public cloud models; however, these situations in reality are the minority. A variety of examples exist of enterprises leveraging the cloud today while still maintaining compliance with PCI, HIPAA and other mandates (most of which are open to auditor interpretation anyway). Best practices, tools and architectures for addressing common security issues are also becoming more prevalent, as are more mature CSP offerings and security practices for common use cases. Net, net: where there’s a will there’s a way, and in most cases if CIOs are truly interested in getting to the cloud, there are secure, compliant ways of getting there.

Overall, we believe that the wave of transformation is coming in the enterprise. Early movers exist and are achieving the promised payoff. Unfortunately the timing and shape of the wave for the mainstream organization is not as clear as those in the enterprise IT world would like, and the pace is being shaped primarily by a set of factors that are largely non-technical and beyond the IT leader’s control.

Announcing our inaugural conference: Everest Group Engage, The Pragmatic Edge: Designing Your Future. Learn more.

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Application Development Productivity – You’ve Got to Be on the Indifference Curve! | Sherpas in Blue Shirts

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