Monday, September 23, 2013

Trusting Cloud Lords

Everything is moving to the cloud if not today it definitely will in the near future, so say almost all the learned consultants and everyone who has an opinion on IT. Every large IT vendor has invested in creating their own cloud offering and acquired many start-ups who loved the dotcom like phenomenal valuations with their offerings. Private Equity, Venture funds and Angel investors have bet big on this new found paradigm that once again threatens to change the world (the last time was with dotcoms a long time back).

Different models have emerged with software, platform, infrastructure, storage, what have you, being available as a service with enterprises being pushed towards perceived agility and budget shifts from capital investments to operating expenses; pay as you go, variable cost, scalability, numerous benefits being touted with all kinds of engagements and service models. They have indeed been beneficial in many cases, disruptive in some cases with licensed software model being challenged.

Retaliatory steps from big packaged software vendors did not deter the cloud providers which continued to get funding and mushroomed all over. Unable to beat them at the game, all of them have now joined the bandwagon with their own offerings in an attempt to retain the customer. Their agility has remained a challenge competing with the nimbler start-ups. They do have the big budgets and deep pockets to squeeze out their smaller competitors and if that does not work, acquire them.

When I recently came across news that one of the prominent niche cloud players was going bust, it had my undivided attention. The provider had many partners big and small selling their solution and many major enterprises using it. The service offering was good, the price attractive and their growth meteoric. They had good funding available through the rounds. And then suddenly they announced that they had run out of cash will be winding up in two weeks’ time asking customers to find alternatives.

Not too long ago another cloud platform provider had shut shop with 30 day notice to their customers. Their largest customer had pulled the plug; that implied more than 50% of their revenue disappeared. They were smaller and not highly visible, and thus their demise did not create many flutters. The business impact to many of their customers was severe as they were left scurrying to protect their business and revenue; in a few cases survival. There have been other insignificant ones who did not really take off, becoming an epitaph in history books.

Can and should enterprises and business bet on offerings from cloud providers ? Is there a way to safeguard the adverse impact if the company went kaput or even got acquired ? Should companies put their operations or for that matter IT and information assets at risk with cloud lords ? Legal contracts and SLAs rarely offer a solution despite the lawyers debating every clause and punctuation. The impact whenever it happens even with an outage or a security compromise is real and threatens reputation beyond the revenue or profitability.

I do not believe that anyone can ignore the clouds and continue to work with the conventional models of yesterday while preparing for tomorrow. Reality is that clouds will continue to be disruptive, their value propositions worth evaluating and experimenting with; the pragmatism required is to ensure that the advantage it creates to either business or IT is taken into consideration along with the risks and potential impact should there be a need to migrate across public clouds or transition back to private cloud.

It is evident that there is no ubiquitous solution that can be applied to all cases. The CIO with end accountability along with business stakeholders should highlight the benefits along with the risks of the step towards clouds. The mitigation plan should be tested like all Business Continuity Plans (BCP) and Disaster Recovery (DR) are executed periodically. This is a necessary inclusion now for every cloud service that an enterprise subscribes to. Costs related to such a plan should be factored into the initial budgets when calculating the benefit of the cloud solution.

Go for it, you have nothing to lose and everything to lose depending on how you approach it; if you don’t, the business will always find a way to get it leaving you to manage the mess when things go wrong.


  1. I think as one of the leaders in Cloud space says enterprises need to identify the right candidate applications to be migrated preferably those Edge applications which are less on business impact but more on cost savings. Applications that bring competitive advantage and differentiation can wait..

  2. Anonymous1:43 AM

    Clouds are not new. They existed from large vendors like Oracle and SAP in the mid 90's. The vendors, companies, consultants rebranded and figured out a way to commercialize it even more, hats-off to companies like Amazon, Salesforce, etc. What companies should look at is own their own destiny by running their core operations with in-house systems versus clouds. Many companies leverage cloud offerings for HR, and Sales operations due to the maturity of these cloud offerings and the cloud vendors themselves.

    Using Cloud for mid-size companies is tempting when they see the savings in software licensing, however it inherently adds more complexity when integrating with everything else the company has. So they may save dollars in SW licenses but end of spending the same or more money in integration. Suddenly the budget you think that you have saved in capital expenses consistently is diverted towards operational expenses.

    Clouds are there to stay in the areas of HR, procurement, Sales, etc. While the Business Continuity Plans and DR issues are real, however what these offerings do is take complexity out of the application development teams and move it to integration teams on the "what", the "how" and the "how much"