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Cloud adoption — Do Enterprises have a choice?

Before we address the bigger question of why Cloud, let us first understand a few basics of Cloud computing:


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3 years ago | 7 min read

Before we address the bigger question of why Cloud, let us first understand a few basics of Cloud computing:

What is Cloud Computing?

In simple terms, Cloud computing refers to using on-demand IT resources, made available via the internet, using a pay-as-you-go pricing model. The key difference compared to the traditional model of buying infrastructure is that instead of buying your own hardware, a provider (say Google, Amazon, Microsoft, IBM, Alibaba or any other provider) is maintaining the same for you.

Cloud providers offer core IT infrastructure services (e.g. computing, storage, network, databases) as well as solutions on top of core infrastructure (Big data and analytics, IOT, SaaS applications etc.).

Is Cloud adoption a choice or a necessity for Enterprises?

Before we answer this, let’s see what the benefits of Cloud adoption are over buying and maintaining traditional IT infrastructure

  1. Revenue uplift oriented benefits

a) Manage growing customer base with agility and speed: With growth in your business, you need more IT infrastructure to manage the growing customer needs (e.g. more computing power, more data storage, faster response times). How do you manage that?

  • Choice 1 (Traditional): Buy more hardware every time the existing hardware can’t manage the workload. This is more like a step function where either you buy just enough for the new workload (and keep buying as demand increases) or buy sufficient to meet the peak demand over coming few months/years (implying a lot of wasted capacity). If you don’t manage this right, there will be revenue implications (e.g. dissatisfied customers due to low response time, website not loading etc.)
  • Choice 2 (Cloud based): With the power of Cloud, you don’t need to buy/sell physical hardware ever time demand changes —scale-up / scale-down can happen dynamically and automatically

b) Effectively use data for customer acquisition / retention / cross-sell / up-sell: With the massive amount of data available from different sources around you (Enterprise applications, Social Media, transaction data, IOT data etc.), you have 2 choices as an organization:

  • Choice 1 (Traditional): Use a fixed capacity IT infrastructure and process only the amount of data which your infrastructure allows
  • Choice 2 (Cloud based): Tap all the data available to you, use cloud elastic capacity to store (or consciously discard) them in cloud based data lakes / data warehouses and create a real 360-degree customer view to drive customer growth related analytics use cases

c) Respond to changes in an agile manner: With so many competitors in the market and such changing landscape of your customers, you need to keep evolving to stay relevant. The environment demands new product / feature launches and pushing the limits on customer/employee experiences like never before. How do you address that?

  • Choice 1 (Traditional): Work within the constraints of existing hardware and software solutions to develop and deploy new products (or wait for a long time to purchase and integrate any new external solution).
  • Choice 2 (Cloud native): Leverage the plethora of solutions available on Cloud to rapidly develop/deploy new products/features; leverage data and analytics platforms without building one for scratch; use existing customer servicing solutions (e.g. AI enabled Chatbots)

d) Support geographic growth: You need to expand to a new geography, what do you do?

  • Choice 1 (Traditional): Setup the entire technology infrastructure in the new geography and deploy your applications there
  • Choice 2 (Cloud based): Immediately configure the infrastructure for the new geography in Cloud, deploy your applications in the new geography and go-live!

2. Cost reduction oriented benefits

a) Move Capex to Opex and reduce operating costs per unit (pay per use; no need to pay for the part not being used, which is in the case of fixed capacity in traditional model).

b) Avoid cost: Eliminate costs of hardware refresh, maintenance, upgrade etc.

c) Improve productivity: Reduce cost of outage management; drive higher productivity using automation solutions available on Cloud

d) Improve resilience: Reduce time of outage and downtime due to hardware failures

Given the multitude of ways in which Cloud impacts the core business and the key KPIs (business topline and margins), it will be unwise to say that Cloud adoption is just one of the many IT choices available. If done properly, it can bring some real core business benefits for an Enteprise.

An interesting case example of this is Netflix and how it used Cloud to drive its core business. Details can be found on the AWS website:

https://aws.amazon.com/solutions/case-studies/netflix-case-study/

What are the different Cloud migration strategies?

Once you have decided that you want to start moving to Cloud, what are the different options available to you for migrating your technology landscape to Cloud? (Note that the following strategies are from an application portfolio perspective, which ultimately influences the choice for underlying infrastructure on which the applications run)

a) Retain: Some applications may be too complex to move to Cloud (esp. in short to medium term), so may be best left untouched. This is mostly true in the case of large legacy applications

b) Discard/Consolidate: Some applications may no longer be needed (e.g functionality already provided by another application). Those should be discarded from the application portfolio

c) Rehost (Lift and Shift): In a large legacy migration scenario where the organization is looking to scale its migration quickly to meet a business case, majority of applications are rehosted. Rehosting can be greatly automated with tools and delivers some great quick wins (however, does not offer a long-term advantage which Cloud native applications offer)

d) Replatform: This approach makes a few Cloud (or other) optimizations in order to achieve some tangible benefits, but you aren’t otherwise changing the core architecture of the application.

e) Rearchitect (Cloud native): This is driven by a strong business need to add features, scale, or performance that would otherwise be difficult to achieve in the application’s existing environment

f) Repurchase: This mean completely letting go of your inhouse application and moving to a SaaS model from other providers

Any cloud migration strategy does not have to be only one of these. A mix of these strategies can be adopted depending on the different needs of different applications in the portfolio.

What are the phases of a typical Cloud migration program execution?

If you decide to migrate, how do you plan your migration and what are the different phases involved?

a) Evaluate various migration strategies as described in the previous section, depending on the objectives you are trying to meet from the Cloud migration program.

b) Assess migration readiness: This involves looking at all the applications in your portfolio and assessing them for different strategies (e.g. assessment for rearchitecting involves looking at the code level details of different applications to see the dependencies withother applications, number of interfaces etc.).

c) Size the opportunity: Any migration should involve creation of a business case before doing the actual migration to identify the benefit potential (and investment required).

d) Migrate: Once the business case is established, do the actual migration as per the finalized strategy.

e) Validate: Do the post migration testing / checks to validate that the migration has been done as per plan, no user journeys are broken, desired performance levels are being met etc.

f) Optimize: It is important to ensure that the cloud costs are optimized to maximize the benefits from your migration program. Usually for the new Cloud adopters, this can be a big challenge as they focus on keeping the lights on for some time and ensuring business works normal after Cloud migration. Then they start looking at cost rationalization (e.g. evaluating number of compute instances, storage instances etc.) for the existing Cloud setup.

What are the typical challenges faced by the organizations and how can they overcome the same?

Having described all the benefits of Cloud adoption, different strategies and the phases, it is equally important to acknowledge that this is not an easy task (especially for the large Enterprises which have a lot of legacy setup being carried over years). There are some common challenges faced by the Enterprises in their Cloud adoption journey, such as

  • Right knowledge of Cloud: Understanding the nuances of Cloud is one of the biggest hurdles. Usually we try to avoid doing things that we don’t understand — that is the basic human nature. Hence there is a tendency to continue with the Business as Usual, irrespective of the strong upside potential which Cloud can offer to businesses.
  • Fear of Change: There is usually a fear of change — “What if the things stop working?”, “What if the benefits realized are not as expected?”.
  • Understanding of path to execution: Questions like “Where do I start?”, “What is the roadmap?”, “What is the timeframe?”, “In what sequence I move the applications”, “Which provider I choose from?” etc. are some of the very common ones in the minds of decision makers.

The good news is that most of these challenges can be addressed with the help of right mix of talent available in ecosystem to support the organizations in their transformation journey. The talent mix is usually a combination of

  • Internal talent: People in your organization who understand Cloud and help define the strategy for Cloud adoption.
  • Cloud providers: The likes of Amazon (AWS), Google (GCP), Microsoft (Azure).
  • IT Service Providers who bring in the much-needed unbiased view and objectivity (e.g. to choose the right Cloud provider) and help the organizations plan/execute the different phases of Cloud adoption program.

So, when should you start your Cloud adoption journey?

In the words of Mark Twain — “Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do, so throw off the bowlines, sail away from safe harbor, catch the trade winds in your sails. Explore, dream, discover.”

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I am a business person with strong consulting, sales and operations background, and high affection for technology. I also provide advice / consulting to small / startup companies on request.


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