Air Combat, Communism,Coal, and CloudsUnderstanding Business Agility andIT Spending in the Age of Cloud

Dave RobertsSr. Director, Solutions Marketingdavid_roberts@bmc.com@sandhillstrat

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What are the benefits of cloud computing?

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1. Improved business agility.

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2. Decreased IT spending.

1. Improved business agility.

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How?

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Most people don’t have a good answer.

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The ones who do will win.

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History doesn’t repeat itself, but it does rhyme.

-- Mark Twain

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What is agility?

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What is agility?

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USAF Fighter Weapons School, Nellis AFB14Tuesday, October 8, 13

John Boyd, USAF

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Student

Boyd

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Student

Boyd

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40 Seconds

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“40 Second Boyd”

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Boyd never lost the bet.

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Why?

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OODALoop

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OODA

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OODA

bserverientecidect

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Predictability is bad.

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Worst&

Slightly&Be/er&

Best&

Fast Transients

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Lesson:Whoever can handle the quickest rate of radical

change survives the fight.

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How can we engineerthis outcome?

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1. Small loops (small teams)

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1. Small loops (small teams)2. Communicate high-level

intent

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Central(Authority(

OODA(

High3Level(Objec9ves(

High3Level(Objec9ves(

OODA( OODA( OODA(

OODA(

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“... by the time the surge comes along, what [Gen. David] Petraeus did, which was brilliant, was to decentralize our own OODA loop, if you will, by delegating the responding authorities down to brigade and, in some cases, battalion level...”

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“The enemy was still stuck with a classical Maoist-type of decision-making apparatus while the coalition had a much more streamlined decision-making apparatus that allowed them to react very quickly on the street.”

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Central(Authority(

OODA(

High3Level(Objec9ves(

High3Level(Objec9ves(

OODA( OODA( OODA(

OODA(

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Self-service access shrinks the loops

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Cloud enables smallgroups to create“fast transients.”

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How can we best ensure the right IT resources get to the right people at the right time?

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Fundamentally, that’s an economic question.

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Top$Down(Command(and(Control(Socialist(

Bo5om$Up(Decentralized(Free(Market(

Spectrum of Economic Models

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Central Planning53Tuesday, October 8, 13

Central PlanningGiven enough inputs and smart people, you can

efficiently plan almost anything.

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Source:(h*p://kcmeesha.com/2010/02/20/behind9the9iron9curtainshortages/Source:(h*p://kcmeesha.com/2010/02/20/behind9the9iron9curtainshortages/

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Source:(h*p://kcmeesha.com/2010/02/20/behind9the9iron9curtainshortages/Source:(h*p://kcmeesha.com/2010/02/20/behind9the9iron9curtainshortages/

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Ludwig von Mises58Tuesday, October 8, 13

Ludwig von Mises Friedrich Hayek59Tuesday, October 8, 13

Why?

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The Economic Calculation Problem

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The Economic Calculation Problem

1. You can never know everything.

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The Economic Calculation Problem

1. You can never know everything.

2. Things change all the time.

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Shortage / Make MoreShortage / Make More

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Glut / Make LessGlut / Make Less

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Conclusion:Central planning loses for

nation-states67Tuesday, October 8, 13

What about smaller organizations?

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ThesisIndividual firms that allocate IT resources using free-market principles will do better

than firms that favor central planning.

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Free$Market$

Business$Unit$

Firms$

Products$sold$at$market$price$

Raw$materials$&$labor$purchased$at$market$price$

IT$Dept.$ Raw$materials$&$labor$purchased$at$market$price$

“Monopoly$pricing$&$monopoly$money”$

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Shadow ITRogue IT

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Free Markets:Multiple suppliers

CompetitionFreedom of choiceCompetitive failure

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Cloud delivers the machineryfor accurate, granularaccounting andbilling.

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Free$Market$

Business$Unit$

Firms$

Products$sold$at$market$price$

Raw$materials$&$labor$purchased$at$market$price$

Market$compe;;ve$offerings$and$pricing$

IT$Dept.$ Raw$materials$&$labor$purchased$at$market$price$

Allow$BUs$to$purchase$from$mul;ple$suppliers$

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Free$Market$

Business$Unit$

Firms$

Products$sold$at$market$price$

Raw$materials$&$labor$purchased$at$market$price$

Market$compe;;ve$offerings$and$pricing$

IT$Dept.$ Raw$materials$&$labor$purchased$at$market$price$

Allow$BUs$to$purchase$from$mul;ple$suppliers$

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What sort of IT cost reduction should we expect from cloud computing?

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1865

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William Stanley Jevons85Tuesday, October 8, 13

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When would Britain exhaust its coal mines?

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Greater Efficiency ➡ More Consumption

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The Jevons’ Paradox

Greater Efficiency ➡ More Consumption

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Why?

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The Jevons’ Paradox

Greater Efficiency ➡ More Consumption

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The Jevons’ Paradox

Greater Efficiency ➡

More Consumption

New Applications

New Applications ➡

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Cloud may make individual workloads less expensive.

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Cloud may make individual workloads less expensive.

But you’ll use more, and thus costs will increase in

aggregate.

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But you won’t care if each of those uses is

profitable.

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Caveat:IT intensity matters

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@sandhillstrat

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@BMCcloud@sandhillstrat

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Thank You

Dave%Roberts%Sr.%Director,%Solu3ons%Marke3ng%

Email:% % %david_roberts@bmc.com%Twi@er: % %@sandhillstrat%Google+: % %h@p://gplus.to/sandhillstrat%

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