Cloud Businesses: Strategic

ConsiderationsTathagat Varma

http://thoughtleadership.in

Docker's Registry Hub, Trello, Travis CI, GitHub and GitLab, Quora, Medium, Signal, Slack, Imgur, Twitch.tv, Razer, Adobe's cloud, Zendesk, Heroku, Coursera, Bitbucket, Autodesk's cloud, Twilio, Mailchimp, Citrix, Expedia, Flipboard, Yahoo! Mail …

What’s Common Among…

Typical IT Infrastructure

Real Estate

Utilities (Power, AC, Fire, Security,…)

Networking Infrastructure

Hardware (Servers, Storage, N/W,…)

Virtualization Layer

App-Specific S/W (Database, …)

Application Data

Middleware

System Software (OS,…)

Application Software

Your “Costs”

Acquisition

Rentals

Usage

Licenses

Storage

Backup

Idle

FixedManpower

Performance

Recovery

Delays

Lead TimeExpertise UpgradesEOL

Stagnation

Limited Opportunities

Revenue Erosion

Forget Cloud For Now, Let’s Talk Something

Else…

Traditional

• Cultivation: • Fixed Location (River)• Fixed Time (Monsoon)

• Consumption:• Immediate (Perishable)• Sameplace (Limited)• Self (Farmer family)

Farming

Modern

• Cultivation: • Any Location (Canals)• Multiple Times (Dams)

• Consumption:• Anytime (Processing)• Anywhere (Transport)• Anyone (Trade)

19th Century

• Power• Private Gensets• Costly• Capex• Opex• Manpower

• Pollution• Proximity

Factories

20th Century

• Power • Utility Company

Supply• Anytime• Anywhere• Reliable• Metered• Cheaper

• Production: Automobile, Manufacturing• Utilities: Power, Water, Gas, Heating• Entertainment: Concerts, Streaming• Professional Services: Legal,

Accounting, PR, HR, IT/ITES,…• Information: Research, WWW,…• Services: Transport, Leasing,

Restaurants, Rental Housing,

And Many More…

Common Pattern?Creation Consumption

Creation Consumption

AnyTimeAnyWhere

AnyOneAnyTimeAnyWhere

AnyOne

SameOne. SameTime. SameWhere

Disaggregation. Unbundling

What Can We Do Here?

Acquisition

Rentals

Usage

Licenses

Storage

Backup

Idle

FixedManpower

Performance

Recovery

Delays

Lead TimeExpertise UpgradesEOL

Stagnation

Limited Opportunities

Revenue Erosion

Pizza As A Service!

Outsource Infra

Real Estate

Utilities (Power, AC, Fire, Security,…)

Networking Infrastructure

Hardware (Servers, Storage, N/W,…)

Virtualization Layer

App-Specific S/W (Database, …)

Application Data

Middleware

System Software (OS,…)

Application Software

Outsource Platform

Real Estate

Utilities (Power, AC, Fire, Security,…)

Networking Infrastructure

Hardware (Servers, Storage, N/W,…)

Virtualization Layer

App-Specific S/W (Database, …)

Application Data

Middleware

System Software (OS,…)

Application Software

Outsource Service

Real Estate

Utilities (Power, AC, Fire, Security,…)

Networking Infrastructure

Hardware (Servers, Storage, N/W,…)

Virtualization Layer

App-Specific S/W (Database, …)

Application Data

Middleware

System Software (OS,…)

Application Software

What’s Happening Here…?

Cloud computing, often referred to as simply “the cloud,” is the delivery of on-demand computing resources—everything from applications to data centers—over the internet on a pay-for-use basis.

• Elastic resources—Scale up or down quickly and easily to meet demand

• Metered service—so you only pay for what you use

• Self service—All the IT resources you need with self-service access

The Cloud

https://www.ibm.com/cloud-computing/learn-more/what-is-cloud-computing/

• Traditional IT Infrastructure is• Capex-Heavy• Time-Intensive• Resource-Intensive• Inefficient• Stagnant / dated• Not Agile Enough

Why Cloud?

• Infrastructure As A Service (IaaS) • Computing, Networking, Storage

• Platform As A Service (PaaS) • Development Environment

• Software As A Service (SaaS) • Business Applications

Delivery Models

• Depending on who you are and what you do, there could be several migration scenarios

• While technology is important, even more important to understand business context

• Let’s see some examples…

Cloud Migration

• Drivers:• Stagnant Business with Perpetual Licensing• Raising Prices Was’t Sustainable Approach• 18-25month Release Cycles• Low Recurring Revenue 19% (2011)

• Approach:• 2012: Started Offering Both • 2013: Only Add Features to Subscription• Agile Model Of Development• Changes in Sales Process, Compensation, etc.• Communication Internally, Wall St• Move from ARPU to ARR• Once Downloaded, Cloud is only for Update and Storage, But No

Processing• Business Impact:

• Stock Price 3x• Double-Digit Revenue Growth, More Predictable Revenue Stream• Recurring Revenue up to 70%

Adobe

http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/reborn-in-the-cloud

• Drivers: • Problems with on-prem infra• Tough to keep pace with digital demands /

innovate• Approach• Start small, quick wins, demonstrate benefits• 2015: From zero cloud usage to BAU in just

8months• Results• 3,500 GBP / 3mon => 66 GBP a month / 1wk• Cost of hosting a page 13p/month

TESCO Bank

• Drivers:• Big enough to have own

infra!• Perhaps move from SaaS

to PaaS???• 2016: Moved 90% of files

from Amazon to own cloud

Dropbox

• Drivers:• Old, outdated systems

• Approach:• 2014: Moved 65 apps and NASA.gov to

AWS cloud in 22wks with no downtime• Results:• Web update from 20min => 2min• CPU utilisation only 1% even at peak

levels, resulting in 25-30% cost savings• Able to avoid data silos

NASA

• Why: The Purpose• What: The Goal• How: The Plan

Migration Strategy

• Why are you undertaking migration to cloud?• Cost Reduction?• New Markets?• Faster Innovation?• …

• Build a Business Case

Why: The Purpose

• Security 93%• Performance 85%• Scalability 74%• Support 65%

Top Considerations

• What would the success look like?• Capex DOWN 60%• Headcount DOWN 40%• Release UP 1000%• …

• Establish Success Criteria

What: The Goal

• How would the migration be performed?• Public / Private / Hybrid Cloud?• IaaS / Paas/ Saas?• Cloud Provider / Own DC?• Rearchitecture apps?• …

• Plan migration strategy and execute

How: The Plan

http://ecsnamagazine.arrow.com/how-to-stay-calm-when-migrating-software-apps-to-cloud/

https://www.slideshare.net/newrelic/cloud-migration-cookbook-webinar

https://www.slideshare.net/newrelic/cloud-migration-cookbook-webinar

• Consumption Based• Subscription Based• Advertising Based• Market-Based• Value-based• …

Pricing Models

• Pay What You Consume, And As You Go• Ex: Disk, CPU, Network

Traffic• Common for IaaS

Consumption Based

• Pay for Time, Irrespective of Usage

• Common For SaaS

Subscription Based

• Free or Low-Priced But Must Accept Ads

Advertising Based

• Fluctuates Based on Demand / Supply

• You can Buy on Current Price and Use Rightaway, Or

• Bid for Lower Price and If Market Reaches That Price, You Get It

Market Based

• Cloud is Business: It’s not just about IT infrastructure but the TCO of Business!

• Identify the key drivers: why are you migrating to cloud?

• Establish the success criteria: what will success look like?

• Evaluate your migration strategy: your context is unique to you!

Recap

• IaaS vs. PaaS vs. SaaS, https://youtu.be/KgL3BfAc9Cs

• The Present And Future Of Cloud Pricing Models, https://www.ibm.com/

blogs/cloud-computing/2013/06/present-future-cloud-pricing-models/

• Cloud Computing Pricing Models: A Survey, http://www.sersc.org/

journals/IJGDC/vol6_no5/9.pdf

• https://www.engadget.com/2013/05/09/adobe-creative-or-cloudy/

• http://nvlpubs.nist.gov/nistpubs/Legacy/SP/

nistspecialpublication800-145.pdf

• http://www.computerworlduk.com/cloud-computing/how-tesco-bank-has-

adopted-aws-cloud-as-business-as-usual-in-eight-months-3629767/

• https://www.wired.com/2016/03/epic-story-dropboxs-exodus-amazon-

cloud-empire/

• https://www.g2techgroup.com/nasa-migrates-to-aws-cloud/

• https://aws.amazon.com/solutions/case-studies/all/

References