2011 07 cloud service contracts get stormy final
DESCRIPTION
In the rush to the cloud, many business leaders are heading for trouble. Companies that don’t follow a roadmap or set up a safety net are driving off a cliff, encountering service failures that threaten viability. First businesses need to assess services for cost, value and risk to develop the roadmap that considers short- and long-term costs and savings. Second, businesses must build the safety net in terms of a service contract that outlines expectations for quality, performance, responsiveness, support, disruption and end of contract. This session will discuss the strategy for developing a service roadmap, contract and how to measure and govern the service provider, ensuring perception is reality.TRANSCRIPT
Announcements:Sunday, September 11•Don’t miss the Opening Reception this evening from 5:00–7:00pm in room Grand 8. The Data Center World Opening Party will provide you with ample opportunity to relax and network with your peers.
Monday, September 12•The Peer Connection Luncheon will take place from 12:15–1:30pm in room Grand 7.•The Data Center World Expo and Cocktail Reception will be located in Cypress Hall 1 and will take place from 4:15–6:45pm.
Tuesday, September 13•The exhibit hall will open today at 11:30am and lunch will be provided in the expo hall. The Data Center World raffle ticket collection will begin today. Deposit your raffle tickets in sponsoring exhibitor’s booths during the expo hours of 11:30am–1:45pm. The raffle will take place from 2:15 to 2:30pm in the expo hall in Lounge A. You must be present to win! Only one prize per person will be collected.
Wednesday, September 14•The closing session will take place today. Be sure to attend “When Disaster Strikes–Will You Be Prepared?” presented by AFCOM’s Data Center Institute Panel from 10:30–11:30am in room Grand 1.
Michele HudnallSolution Product Marketing
“How the Cloud Looks from the Top: Achieving Competitive Advantage in the Age of Cloud Computing” – A Harvard Business Review Analytic Service Report, June 2011
“How the Cloud Looks from the Top: Achieving Competitive Advantage in the Age of Cloud Computing” – A Harvard Business Review Analytic Service Report, June 2011
Conservative efficiency gain in an $1B organization
1-12% of revenue is IT spend 5% is $50M in IT spend
Conservative efficiency gain in an $1B organization
$ 35M is operations70% of IT spend is operations
1-12% of revenue is IT spend 5% is $50M in IT spend
Conservative efficiency gain in an $1B organization
5% is $50M in IT spend
$ 35M is operations
$ 17.5M spent on people
70% of IT spend is operations
50% is spent on human capital
Conservative efficiency gain in an $1B organization
1-12% of revenue is IT spend
5% is $50M in IT spend
$ 35M is operations
$ 14.875M keeping lights on!
1.5% of revenue
$ 17.5M spent on people
70% of IT spend is operations
85% of time is reacting and
maintaining
50% is spent on human capital
ProactiveProactive
15%15%
ReactiveReactive
50%50%
MaintenanceMaintenance
35%35%$14.875M
$14.875M
Conservative efficiency gain in an $1B organization
1-12% of revenue is IT spend
• Conservative 15% improvement
• Reduce reacting and maintaining
from 85% to 70% – $14.875M to
$12.250M
A $2.625M shift to drive growth!
ReactiveReactive
40%40%ProactiveProactive
30%30%
MaintenanceMaintenance
30%30%
Conservative efficiency gain in an $1B organization
5% is $50M in IT spend
$ 35M is operations
$ 14.875M keeping lights on!
1.5% of revenue
$ 17.5M spent on people
70% of IT spend is operations
85% of time is reacting and
maintaining
50% is spent on human capital
1-12% of revenue is IT spend
Services to the Cloud
Quality in the Cloud
Success in the Cloud
Classifying ServicesStrategyNew Role of IT
Commodity versus custom◦ Well defined, atomic
Volatile demand versus capacity◦ Infrastructure on demand
Agile development◦ Infrastructure and platforms on
demand
New/changing services Keep it simple!
Workloads
Workloads
Workloads
How are my services
How are my services
perform
ing?
perform
ing?
Orchestrator◦ Build, deploy, run (Old) ◦ Buy, deploy, manage (New)
Service managers
Service analyzers
Vendor managers
Service ProvidersManagementService Levels and Penalties
Define the service◦ Performance, availability◦ Data, security◦ Responsiveness
How service is delivered◦ Processes◦ Tools◦ Reporting
Viability◦ Time in business◦ Customer base◦ Customer references
Service accountability◦ What do they provide◦ Perception versus reality
Aggregation of data Service performance◦ Tune the services◦ Drive growth
Balance ◦ Operating efficiency◦ Growing effectiveness
Reasonableness◦ Standards◦ Balance risk
Service◦ Performance◦ Responsiveness◦ Security◦ Data
Penalties◦ Balance risk and value
Change, Change, ChangeService AccountabilityEnd of Contract
Operations roles are changing Discussion is changing◦ Service performance◦ Cost versus value
Deployment is changing Acquisition versus operating Service provider catalyst Reasons to right source◦ Create change and standards◦ Not for cost
IT owns the service Selling to the business Know your services◦ Cost, value, risk
Service enable Measure services Back-up plans Vendor management◦ 3-7% of the contract value◦ Changing operational roles
Plan for the end Data◦ Who owns it?◦ How will it be turned over?◦ Transition period
Define the terms What is your back-up plan?
Begin with the end in mind
Amazon, Intuit . . . ◦ Innovators, change how business
is transacted
There are and will be outages Risk takers and naysayers◦ Leaders and followers
Mitigate risk Service enable Backup, redundancy?
Service strategy
Change, change, change
Service accountability
Vendor evaluation
Service levels and penalties
Vendor management
End of contract
How are my
services performing?
Michele HudnallSolution Product [email protected]
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