Tag: cloud computing

The Good and Bad News in Governing Cloud-Based Services | Gaining Altitude in the Cloud

Cloud-based services are distinctly different from traditional outsourcing not only because of the obvious cost and agility benefits but also because they fuel the need for a different kind of management of the services. From a management perspective the governance is transformational because it allows the governance team to change their focus on how they manage the services.

The distinction between managing cloud-based services and traditional outsourced services is critical to the outcomes and value achieved from the service.

In traditional outsourcing, the customer has a lot of say, particularly up front, in terms of designing the solution. The solution often starts with taking over what the customer currently has and then moves into a transformation journey. The customer is responsible for defining how the service components fit together and also is responsible for managing the use of those components.

But this tends to lead customers to overbuy. For example, in infrastructure the customer tends to buy more service space and more storage than is needed at any particular point in time just to ensure coverage for peak usage times and volume growth. Because it is cumbersome to contractually change the volumes, the customer ends up buying usage in step changes with the net result of overbuying.

But the real issue is how much time and effort it takes to manage this traditional kind of service. The governing cost in time and effort can overshadow the benefits of the service.

In contrast, the fundamentals of cloud-based or next-generation services are usage-based pricing combined with bundling. The customer buys bundled services rather than discrete components, and this impacts service management. For example, in traditional outsourced services, the customer manages how much capacity is needed for storage, how many licenses to purchase, etc. In the newer service models, the customer manages a few metrics around usage rather than managing the components that allow utilizing the service. The newer models enable customers to avoid the trap of overbuying.

But more importantly, cloud-based and next-gen service models profoundly change the governance aspect in the following ways:

  • Governance is much simpler and communication with the vendor or service provider is much simpler.
  • Governance efforts focus on how the organization consumes the services and on spending time helping the business units to better use the service for more value outcomes instead of managing the vendor or provider.
  • Governing demand management is much easier and reduces the complexities of billing and invoicing to keep track of usage.

The real issue of simplicity in governing cloud-based and next-gen services carries both good and bad news. The good news is that the simplification of management tasks means the customer will need a smaller management team. The bad news: The team will need a different set of skills. Instead of skills in managing vendors, purchasing, and invoice tracking, the governance team needs skills in change management, project management and business transformation.

OpenStack Hong Kong Summit 2013 – The Battle Is On | Gaining Altitude in the Cloud

The OpenStack Foundation invited me to be a part of its Hong Kong Summit on November 5-8. While the event traditionally has focused on developers, this year the Foundation also made it a point to include leading adopters. The OpenStack-based cloud service providers community consisted of innovative start-ups, medium-small sized companies, and the big boys, such as Blue Box, Canonical, Cisco, Cloudscaling, DELL, DreamHost, eNovance, Gigaspace, HP, IBM, Mirantis, Nebula, NetApp, Piston Cloud, Rackspace, Red Hat, RightScale, SwiftStack, VMware, and Yahoo.

While my work spans global technology and IT services, with a wider area of interest than only cloud (or OpenStack), I was happy to be a part of this event and witness the passion, commitment, and real investments being made in OpenStack.

So what did the Summit tell the market?

What’s working

  • Despite being only three years old, OpenStack has made significant progress as one of the leading cloud platforms for infrastructure services
  • The OpenStack community, comprised of developers, sponsors, and users, is rapidly growing (over 1,600 developers and 250 companies)
  • There is a growing intent within the OpenStack foundation to communicate with the outside world about the increasing adoption and maturity of the OpenStack platform
  • Different technology companies are now integrating OpenStack and its support in their product strategy, even though some of these organizations believe that OpenStack may disrupt their business model
  • Various buyers from technology companies are asking these providers about their OpenStack strategy, and even pushing them to support it

What are the challenges?

  • As technologists at heart, OpenStack developers are passionate about the coolness of the technology, but have difficulty articulating the business impact and market perspectives
  • While it’s easy to track the number of OpenStack downloads, there’s no process to track or estimate the real adoption
  • OpenStack’s inability to communicate with buyers that despite the rapid “new developments and features” (which this Summit further propagated), there are multiple functions that are enterprise ready across its compute, storage, and network projects
  • Despite rapid growth in the community, the number of contributors working dedicatedly full time on OpenStack is not significantly growing, and there is a constant dearth of suitable talent
  • With the increase in community in terms of number of contributors, geographies, expertise, etc., a method for channelizing this energy in a meaningful way is missing

Despite the challenges, OpenStack is perhaps the strongest candidate for being the leading cloud platform and may soon witness an inflection point. It is providing a new lease of life to hosting providers that are now transforming to offer cloud services and could simply not have afforded a proprietary technology. It is enabling global collaboration to solve real business problems, and offering a true enterprise-class cloud platform that many adopters (especially those frustrated with proprietary expensive technologies) are finding very useful.

The David versus Goliath battle between open source and proprietary technologies will always continue. However, there are times when one solution can change the entire industry and buyer perception. OpenStack has that capability and, despite being fairly new, its on-the-ground adoption, and increasing developer base suggests that it can be a flag bearer of open source cloud platforms, much the same way Linux was for open source operating systems.

While hybrid cloud platforms will be the norm in enterprises, OpenStack will be the leading contender for creating private and public clouds. Both cloud service providers and enterprise buyers will adopt this platform to develop scalable infrastructure to support business growth.


Photo credit: Phil Wiffen

Video: PEAK Matrix Assessment of Enterprise Cloud Service Providers | Gaining Altitude in the Cloud

Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix™ provides a detailed assessment on the service provider landscape in a given market. In this video, Practice Director Chirajeet Sengupta outlines the positioning of cloud application and infrastructure service providers on the PEAK Matrix.

Download the preview of the report referenced in this video
Learn more about PEAK Matrix
Learn more about Cloud Vista™ research

What I Learned at Cloud Connect: The Cloud Is Moving to a Different Level | Gaining Altitude in the Cloud

My first impression when I recently attended this year’s Cloud Connect conference is that there is a significant increase in interest in all things cloud, as there were more attendees than at last year’s conference. What impresses me most as I reflect on the case studies and insights discussed at the event is the fact that cloud services are showing clear signs of moving from the domain of the business users into the core of the enterprise. And there is a completely different kind of usage of the cloud at this core level.

At the business-user level, cloud provides a fairly straightforward capability, whether that be CRM through Salesforce or application development and testing through Amazon.  But when the enterprise adopts cloud, usage and benefits move to another level.

One of the most notable case studies presented at Cloud Connect highlighted how Revlon completely transformed its IT to the extent that it was able to create a degree of flexibility that it had never known before.

Revlon’s cloud benefits included a significant $17 million reduction in cost while providing agility in rapidly developing applications and the ability to move applications and functionality around the world at a whim.

The most striking aspect of value Revlon achieved was its disaster recovery capabilities. The night before Hurricane Sandy hit, Revlon moved the processing in its data center on the East Coast to a Mid-Atlantic location. Then they discovered that during the hurricane there were no users on the network, so they were also able to get through their release updates at the same time.

This enterprise-level agility in moving workloads around while also creating rapid application releases — and at a much lower price point — brings to light the potential for cloud to change how IT is done in enterprises.

Only a year ago we saw cloud services validated primarily by the business users. This year’s Cloud Connect case studies demonstrated that validation has moved into the core of the enterprise with CIOs fundamentally embracing it to the degree that it completely changes the way they do business.

What will be the cloud’s impact over the coming year?


Download the Revlon case study

Watch the Everest Group Vice President Jimit Arora’s video interview with David Giambruno, Revlon’s CIO.

System Integrators Join the Party in the Cloud | Gaining Altitude in the Cloud

Many folks, even those who follow the technology services industry closely, attribute the cloud computing ecosystem to the public/cloud hosting service providers and SaaS/platform providers. While these two categories of service providers indeed form the backbone of the cloud universe, others also play pivotal roles in enabling cloud services. The following image illustrates the service provider categories that constitute today’s cloud ecosystem:

it providers

With the expansion of cloud services, enterprise buyers are steadily realizing that they need help not only from pure technology providers, but also from firms that serve as system integrators (SIs).

Yet, in a universe in which hosting providers (Rackspace, AWS, etc.), SaaS/platform providers (Salesforce, Workday, etc.), and cloud enablers (CISCO, VMware, etc.) deliver the core resources to enable cloud-based services, is there enough room for SIs to establish their importance?

The answer is a resounding yes. SIs are, and will continue to be, an integral part of the cloud vendor ecosystem. Here’s why:

SIs provide a roadmap for transition to cloud

SIs have inherent design and consulting capabilities, and help buyers put in place a roadmap for transition. They make the cloud integration and deployment process more seamless and customized to each buyer’s requirements.

SIs bridge the gap between cloud solution owners and the enterprise buyer community

Enterprise buyers seeking to migrate to the cloud will need a facilitator to interact with and among multiple players in the vendor ecosystem. It is the SIs who act as this bridge between cloud technology providers and the buyer community.

SIs help manage multiple large complex buyer environments

Given their multiple complex environments with varying requirements, large global enterprises really need a party to serve in the role of moderator. SIs are well equipped to take on this responsibility due to their global delivery and management capabilities.

Additionally, after setting up a cloud environment within their organizations, buyers will most likely need support from SIs to maintain and manage the new system. With increasing moves toward cloud-enabling large IT stacks rather than just specific applications or infrastructure, it is only logical that the role of SIs will become more critical for enterprise buyers that are about to take the leap of faith by transitioning to cloud services.

For more details on how IT service providers and SIs fit in the cloud ecosystem, please see Everest Group’s recently released research, Enterprise Cloud Services – PEAK Matrix Assessment and Profiles Compendium, which profiles the players on the proprietary Everest Group PEAK Matrix.

And keep watching this space for a deep-dive into providers of cloud application and infrastructure services through a series of blogs.


Photo credit: cuatrok77

Awarding Enterprise Adoption of Cloud Computing | Gaining Altitude in the Cloud

Originally posted on CloudAve


One of the longest-running criticisms of enterprise cloud computing is the dearth of publicly referenceable implementation case studies.

Thankfully, this is starting to change. Indicators such as speaking at industry events and talking to reporters about what works and what doesn’t in cloud migration suggest that enterprises are starting to open up and share.

There are several possible explanations for this (technology maturation, commoditization of implementation models, C-suite recognition that cloud is not about cost compression), but the net benefit accrues to the entire industry: the more we share, the faster that standards and best practices will emerge.

It is with this trend as a backdrop that Cloud Connect and Everest Group are co-producing an awards program designed to recognize enterprises that have demonstrated innovation through the adoption of cloud solutions.

Called the Innovation through Cloud in Enterprise (ICE) Awards, the program will recognize companies that have shown success in leveraging cloud computing to transform business processes and unlocked new value by successfully implementing cloud strategies.

Qualifying organizations must have at least 2,500 employees with operations in North America or Europe that are consumers of cloud services. The cloud solution should have resulted in one or more of the following:

  • Striking business impact in terms of revenue, costs, pricing, reduced time to market
  • Notable technology transformation leading to process simplification, new feature functionality, flexibility, business agility
  • Significant positive effects on stakeholders, improved customer satisfaction, improved collaboration, reduced resource consumption footprint
  • Achievement of organizational transformation

Companies meeting the criteria should complete the online application. There is no fee to apply. The deadline for submission is 9 p.m. EST, July 26, 2013. Finalists will be announced on August 16, and winners will be invited to share their stories at Cloud Connect Chicago on October 21 via video and selected main-stage presentations.

The ICE Awards Judges Panel will select winners across a variety of industry sectors, including consumer goods & retail, financial services, healthcare, media & entertainment, and others. Additionally, a crowdsourcing process conducted via social media will select a winner for the “Viewers’ Choice” award.

Submission close on July 26. And remember that vendors can apply for their customers. Service providers and vendors can apply on behalf of their clients and customers. Awards programs like these can help the entire industry by expanding the library of publicly referenceable case studies. Start the application process here.

Love Thy Enemy to Float in the Cloud | Gaining Altitude in the Cloud

Many nations celebrate Friendship Day on the first Sunday in August, with citizens spending time together, exchanging gifts, cards, and wristbands to proclaim their friendship to each other. And when Oracle, an organization that trashed cloud earlier, partners with bête noire Microsoft, Salesforce.com, and NetSuite, and when Microsoft extends olive branch to its rival Engine Yard, and adds its platform to Windows Azure marketplace, it’s a clear sign that technology company “frenemies” have inaugurated their own variant of Friendship Day a little in advance of the official date.

These newfound friendships are testimony to the fact that the market for cloud services is driving these companies to bury their hatchets and think about computing in a totally different way. While money, (e.g., Oracle’s poor performance in selling new software licenses, Microsoft’s issues in traditional software sales,) is one of the key drivers, these technology providers now also realize the disruption in the competitive landscape, and appreciate, accept, and are evolving along with the changes in the market dynamics and requirements.

As an example, consider that Salesforce.com always ran on an Oracle database. Although it investigated competing open source technologies, (e.g., NoSQL,) it is now committed to Oracle’s hardware and middleware, perhaps moving away from commodity infrastructure. Similarly, Oracle is partnering with NetSuite to target the mid-market and ensure that its Fusion human capital management (HCM) works with NetSuite’s ERP. If they enter into a distribution agreement, Salesforce.com and NetSuite may get access to Oracle’s direct sales channel, resulting in interesting competitive dynamics.

Further, as cloud adoption grows more pervasive and complex, partnerships are emerging to provide buyers with the requisite ecosystem to enable enterprise computing with cloud DNA. For example, Microsoft is partnering with Engine Yard in an acknowledgement that developers need more capabilities and require application and infrastructure abstraction to work across multiple clouds. While many may view these strange bedfellow affiliations as an indication of large technology companies’ inability to compete with nimbler players, Everest Group believes this is a positive development that enables enterprise buyers to leverage the best of the cloud delivery models.

Yet, when competitors become partners and it becomes fashionable to be frenemies, should buyers worry about collusion? To guard against possible challenges, every buyer needs to ask itself and its technology providers:

  1. How does a partnership with an erstwhile competitor change the product lifecycle, commitment, and roadmap?
  2. Should I be wary of a “tacit understanding” between these newfound partners that impacts my ability to buy the best business solution?
  3. Does this affiliation give technology providers a perverse incentive to unofficially agree not to rock the boat of enterprise computing?
  4. Does this partnership dent technology providers’ capability to innovate to stay ahead of the competition? If yes, then how does this lack of innovation affect my technology landscape?

On the surface, everything may look great as vendors pitch broader solutions citing partnerships. But enterprise buyers need to have laser precision vision – and more than a sprinkling of clairvoyance – on their business objectives in segregating the high pitch, (and sometimes false,) marketing spiel of the provider community.

Enterprise CIO: “The Reports of My Death Are Not Greatly Exaggerated” | Gaining Altitude in the Cloud

As a humorist, American author Mark Twain would undoubtedly have been amused by this variant of his famous quote. But the demise of enterprise CIOs’ traditional role is real, (unlike the misreports of Twain’s passing), and to understand this phenomenon, we need to understand the evolving market dynamics.

Three key trends are significantly altering the shape, structure, and operations of today’s CIO office:

  1. Cloud services: Unlike infrastructure, IT governance, and IT security teams, which are generally shared throughout an enterprise, large numbers of applications developers are normally aligned to specific businesses. Due to the complex labyrinth of multiple teams and decision centers, applications developers face substantial difficulties in fulfilling their business-based project sponsors’/budget holders’ demand for quick time to market.

    To overcome these challenges, applications developers are increasingly adopting cloud-based infrastructure/platform-as-a-service (PaaS). This allows them to bypass the other IT teams, (e.g., security and infrastructure). By leveraging cloud services, applications developers no longer solely rely on enterprise IT’s infrastructure and operations to develop and test their applications. They can develop, test, and even host their applications on a cloud-based platform. This is causing challenges for the CIO’s office in terms of reduced involvement with businesses, security issues, and audit risks.

  2. Software-as-a-Service (SaaS): Although it is part of the cloud ecosystem and has been in the marketplace for more than a decade, SaaS is treated as a different segment. The challenges with deploying enterprise software in the traditional manner, (e.g., ownership of licenses, hardware, support, upgrades, etc.), coupled with the significant time to deploy and the high rate of failure, are driving business to push the CIO’s office toward a “cloud first policy.” For simpler applications that do not require organizational support, (e.g., infrastructure, data, integration), businesses are more than willing to leverage the SaaS model. And to avoid getting embroiled into the complex labyrinth of organizational IT, businesses are also hiring contractors to perform specific IT-related tasks. Additionally, as businesses’ appetite to wait for months, even years, without knowing the possible outcomes of an enterprise software deployment is depleting fast, they are increasingly viewing SaaS as the solution.

  3. Digitization and business-IT budgets: Although cloud services and SaaS are disrupting enterprise IT, the biggest challenge facing CIOs is the shift of technology budgets to the business. This typically includes initiatives such as big data analytics, multi-channel customer engagement, social media, CRM, and enterprise mobility. While the CIO’s office plays a role in these initiatives, it is fast losing decision-making powers. CEOs and CFOs are now inclined to spend technology dollars on business initiatives that generate growth, e.g., digitization. Therefore, in a boardroom battle for technology budgets, CIOs are increasingly losing against the businesses (e.g., chief marketing officers and chief digitization officers). The growing perception that digitization is for growth and IT is for efficient operations also works against the CIO’s office.

Despite the fact that a CIO’s office will always exist, there will be an increasing debate around its utility in its existing form. While the misalignment of business and IT has been an age-old debate, the cloud age has finally provided businesses with the ammunition required to change the game. Cloud services, next generation technologies, techno-savvy business users, and the pivotal role of technology in an organization’s growth are creating pressure on enterprise CIOs. They need to act fast to prove that Mark Twain was indeed right and stem reports of their death.

If you are a CIO or an IT manager interested in sharing your story, please reach out to me at [email protected], or directly add a comment below.

Call Centers in the Cloud: Offering Savings and New Operating Models | Gaining Altitude in the Cloud

Migration to a cloud-based contact center model offers the potential to drive hard total cost of ownership (TCO) reduction and the flexibility to rework existing business models. And both cost savings and business agility are very timely for the contact center space, as more businesses continue to shift from a protectionist, recession-minded framework to actively looking to invest in customer relationships and growth strategies.

Recent Everest Group client work has demonstrated that TCO savings enabled by migration to next generation contact centers can be in the 20-30 percent range for some organizations. These cost savings are realized through several structures. Approaching a contact center as software-as-a-service (SaaS) provides optimal call center capacity in a pay-as-you-drink model wherein there is a dynamic and continuous balance of capacity and utilization. Converting the physical capacity of call centers and server space to a paid service in the cloud allows enterprises to shift expense from capital to operational. The digital nature of cloud contact centers can also reduce telecommunications costs, transforming expensive long-distance routing into the more cost effective Voice over Internet Protocol (VoIP) solution. Additionally, cloud contact centers shift the weight of software maintenance and feature development to the vendor.

Call centers have long taken the spotlight for their cost savings potential. The last decade has seen the popularization of outsourcing call centers to lower-cost geographies that offer savings in wages and capital expenditures. More recently, the technology landscape has sufficiently evolved for the next iteration of call centers – the contact center – to emerge. The contact center is driven by next generation technology that, through data enablement, allows for the retention and improvement of traditional voice service while embracing popular emerging communications such as email, chat, and text. While companies such as Liveops, Echopass, and inContact are on the forefront of the technology change, a wide range of legacy players such as Genesys, AT&T, and Avaya are also offering mixed solutions that embrace the move to cloud.

Data enablement provides a platform for several of the key features that define next generation contact centers. The data-enabled platform offers managers new levels of transparency of their contact centers, from high-level aggregations down to real-time, item-by-item granularity. The enabling tools include recording, quality monitoring, workforce management, talent management, surveys, and analytics. For example, a recent Everest Group provider client used cloud-based tools to more accurately forecast call volume and better manage utilization rates for its customers, and consequently improved its SLAs.

The benefits to the contact center workforce are no less substantial: increased automation, workflow scripting, security, and compliance management all contribute to a reduction in errors, reduction in cost, and, ultimately, an increase in customer satisfaction. No small part of next generation contact centers is the enhanced integration of today’s multi-channel communication environment. The fragmentation of communication through voice, text, chat, emails, etc., are all captured by cloud-based contact centers and refocused into simple, manageable, and transparent modes of communication for the workforce. For example, a buy-side Everest Group client was highly incentivized to move to a next generation IT platform for its call centers because the new technology in a digital environment allowed for future development of several services previously unattainable.

Many of the cost savings associated with next generation contact centers are rooted in virtualization and the ascension to the cloud. Converting physical call centers into virtual enterprises allows for decentralization of the workforce, which in turn provides access to pools of employees previously unavailable. The same phenomenon even allows for workforce sourcing to swing back domestically while maintaining cost savings. A key benefit of the cloud model is scalability; erratic call volumes, seasonal spikes, and disaster recovery can all be handled dynamically without down-time or volume-ceilings, and the pay-per-use element allows costs to reflect actual usage.

There are, however, several caveats that should be taken into account before certain cost savings can be realized. The cost of data-enabling a workforce must be balanced against the cost savings of closing physical locations, as well as against the increased revenue realized only through data enablement. For example, Everest Group recently conducted research for an enterprise in which the cost of maintaining call centers in other countries was less expensive than data-enabling the entire workforce. As a result, the firm recommend a phased approach wherein select call center workers were data-enabled, allowing them full use of the company’s new cloud platform to capture a new revenue source.

So, how can you tell which enterprises should shift to a cloud contact center model? Those that meet the following general criteria may be able to reap substantial savings:

  • Possess numerous or expensive physical call centers
  • Seek potential revenue from digital-based services
  • Have a highly centralized workforce
  • Desire to convert capital expenses to operational expenses

Video: Scott Bils Chats with Randy Bias of Cloudscaling on Dysfunctions and Value Creation in the Cloud | Gaining Altitude in the Cloud

It’s not all roses and sunshine in the cloud. There’s cloudwashing. Vendors don’t always deliver what the customer thought they were promised. Deployment fail. People get fired. Randy Bias, cloud iconoclast and Co-Founder & CTO of Cloudscaling, moderated the True Stories from the Cloud session at Cloud Connect Silicon Valley in April 2013. Neal Sample, CIO, Enterprise Growth at American Express, and Thomas Barton, Global Enterprise Architect at Novartis Pharmaceuticals shared with the audience their experiences with moving their organizations toward transformation through cloud technologies. In this video, Randy talks to Everest Group’s Scott Bils about challenges and value creation in the cloud.

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