Cloud Services – the Business perspective

Cloud Services have rushed into the markets relatively rapidly. It’s only been a little more than 10 years ago when we first learnt about the cloud computing.

Cloud computing – where do we stand today?

Last year
(2016) the Cloud computing revenues jumped 25%, and the year 2016 was the first in which cloud computing started to dominate many IT market segments according to GeekWire’s article. In addition to that, Operator and vendor revenue for six segments of cloud computing reached $148 billion during that period, so it’s safe to say Cloud computing is totally mainstream today.

Operator and vendor revenue for six segments of cloud computing reached $148 billion

We all know the recent history of data centers emerging and customers buying monthly-basis fixed priced data computing volume, in volumes. Some customers even ended up building their own data centers instead of using the IT providers’ data centers.

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 Cloud computing vs. Data Centers

Today there’s an ongoing battle between the Cloud computing vs. Data Centers. I’ve seen many articles addressing the issue, for example Atlantech’s blog has a pretty good, albeit short, comparison between the Private Cloud and Data Center, written by Tom Collins (any relationships between him and the famous cocktail drink are unknown to me! 🙂 )

Cloud Services – the Business perspective

Having said that, I just can’t get over it, that in my opinion most of the above mentioned comparisons seem to lack something. Yes sir/ma’am, you’ve got a number of rows of text explaining the difference between the choices, and features are been unwrapped in tiniest details. But often these comparisons lack the true Business perspective of Cloud computing! Instead of listing the features and differences, one should try to see the world through the customers’, the business’ point of view. And that’s where I’m putting my 20 cents now.

these comparisons lack the true Business perspective of Cloud computing

The business is just so easy: buy low, sell high. Or, produce something (goods, services, whatever) people desperately want or need. The key question is: How can Cloud computing help make me more successful in my business operations?

Business wants answers to the right questions

What the business really needs is for example:

  • Cost efficiency: Business is willing to pay, but only for the time period the business requires, and only the required amount (+ perhaps a little bit more than that, just in case) of services, like computing power, storage, network connections etc.
  • Just in time: Business needs the services right on time! Not two months ahead and most certainly not two weeks, let alone months, too late.
  • Easy buying: transparent pricing, klick-to-buy (limited amount of ready-made choices or _very_ user-friendly configurator tool).
  • Scalability: during the night-time there is might be less usage than during the daytime, and when getting a number of new users to the system, it should be possible scale the platform up very easily.
  • Continual improvement and development: there should be tools available to support the r&d of the system, when necessary.

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These are only a few key factors that the business is looking after when thinking about Cloud computing. Of course there are other factors as well, like user accessibility, security issues, multi-site data replication and so on.

Oh yes, the recommendations!

Now, I never do this, I have never done that before – but I’m about to do it. Do what? Give recommendation! And guess what? I’m going to recommend the Cloud services of my employer, Fujitsu Ltd! This probably ruins my credibility, but as of today, 2nd of February 2017, I’m confident that Fujitsu’s Enterprise Cloud Service K5 is the best Cloud based solution available in the world! Simple as that.

Hyping up the K5 – seriously

No, I’m not getting paid for advertising my employer’s stuff. I just stand behind my opinion, that the Fujitsu K5 meets all the Business requirements I listed above: thoroughly transparent, hour-based pricing, getting the Cloud computing up’n’ running in a few minutes*, ready-made computing packages that are easy to configure, very good scalability options, supports OpenStack and offers an application execution environment service based on the open source Cloud Foundry.

* Means that if you want to run the K5 Cloud in parallel or as part of your own data center’s internal network, then of course it takes more time than a few minutes, but it’s also up to other actors than the K5 itself.

Imagine what you can do, if you are developing software on open source tools, use PostgreSQL, and would like to pay for only the amount of computing power and storage you really need, for only the time-period you need. In K5 you can find support for your sw development and DevOps, yet there’s support for OpenStack, VMWare and Bare Metal. So it’s fare to say you really got options.

Imagine what you can do

Of course it’s not always possible to do that, as quite many enterprises are using Oracle of Microsoft databases and end up paying for millions of €uros to these bloodsuckers I mean distinguished IT companies yearly. Sometimes it might make sense to start thinking of converting the databases towards more cost efficient db solutions.

It’s about a time to change. Why not?

Personally I have, from time to time, given a thought to why do so many enterprises really pay carriages of money to these distinguished IT companies. I’ve only figured out two reasons:

  • “We have always done that” -> that is of course the most rock solid explanation. Why change anything, ever?
  • “No one has ever got fired for recommending IBM” -> this was the key guideline to all the investment bankers during the ‘70s and ‘80s, and is still occasionally a good emergency fake.

To the end I’d say: take a chance! If not anything else, you might find yourself saving loads of money in terms of licence costs.

Pictures are from Pixabay.

7 ways to improve your Cost Optimization

Why do organizations find Cost Optimization so important right now?

ICT industry is changing rapidly and especially new, small and agile companies are emerging on the market, challenging traditional IT-companies with their new P&S ideas and enthusiasm. Traditional companies have of course been making their own actions but it takes time, for example IBM:

“”The results imply that IBM’s transformation from legacy IT to next-generation, higher-value services is likely to take longer than what consensus has expected,” BI’s Rana wrote in a note.”

That has led to the current situation where traditional IT giants are constantly examining their (ITIL® defined) Service Catalogues for the current offerings but even more their Service Portfolio for new Services and maybe even some Services that have been once already buried.

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Focusing from Cost Cutting to Cost Optimization

While I fully support the idea of going through the Service Catalogue and Service Portfolio, there is always a (moderately big) risk of drowning the child with the bathwater while washing the little toddler so to say. – Meaning that by hunting down the low-value Services one might not be able to spot the pearls and thus part of the future revenue might be gone with the wind for good.

So be careful when doing cost cutting cost optimization.

– Meaning that by hunting down the low-value Services one might not be able to spot the pearls and thus part of the future revenue might be gone with the wind for good.

Like I stated in the beginning, competition on the IT market has tightened a lot in the last, say, 5-7 years. Companies have been cutting their r&d budgets and turning their backs on science. Even though it’s understandable that the costs have to go down if your business goes down, I still want to encourage companies to make cost optimization instead of just single-mindedly cutting costs down. Of course it’s much more easier to instruct departments to cut down costs, say, 20% by the end of the next fiscal year, but by doing this the companies are jeopardizing their future prospects.

I still want to encourage companies to make cost optimization instead of just single-mindedly cutting costs down. 

I know that’s much more easily said than done. So how to approach the issue?

7 ways to improve your Cost Optimization:

  1. Go through your Service Catalogue in-depth to make sure you have a rock solid understanding and information about your current, up-to-date Service Offering.
  1. Go through your Service Portfolio in-depth to make sure you have a rock solid understanding and information about your new Services development.
    • After intense work on examining through the Service Catalogue and Service Portfolio you can take a step forward and carry out the necessary operations with cost optimization: termination of certain (less-than-break even value etc.) Services whenever possible.
    • Bear in mind: while some Services might appear poor on the first sight they might turn out to be essential in order to enable some other Services to run.
  1. Ask new offers from your 3rd party Service Providers and Vendors whenever possible to see if there is something you can save money with.
  1. Pay attention to your fixed costs and seek for saving targets there in the first place.
  1. If you really need to lay off your workforce, do it by all means respectively.
    • Remember that laying off people hurts your reputation as an employer.

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(Don’t do it like this!)

 

  1. Note that it’s the big numbers that count!
    • Don’t use too much energy with chasing costs caused by the pastries your employees have eaten, but focus on stopping the wasting of your raw material. There’s a hilarious story behind this, I’ll write it down here one day.
  1. Even if it was your worst financial situation ever, keep on investing into the future (remember Service Strategy and Service Design) and keep on marketing. Don’t starve yourself to death.
    • If you stop innovating and developing, and stop marketing your Services and Products, you will for sure run your business into bankruptcy. There needs to be certain courage and faith into the future, otherwise you can stop all your activities at once.

But you are actually cutting costs down!?

It’s obvious that also by utilizing the cost optimization approach you may end up lowering your costs – even greatly. But the biggest difference between cost cutting and cost optimization is, that in cost optimization there’s always a reason involved.

I also like to think that when doing cost optimization, you really, truly, optimize your costs. It doesn’t mean you go buy services or products with lowest prices available, but you buy whatever fits best into your business!

the biggest difference between cost cutting and cost optimization is, that in cost optimization there’s always a reason involved.

Watch out for possible pitfalls with the cheapest price

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“Special price! Only for you my Friend!” The sentence might be familiar from Bazaars in the Middle East. There you could be making stellar deals by ending up paying only for 2-3 times as much as the local people do for something very useful.. ..But in general I would be careful when buying Service with the lowest prices – especially if the lowest price is significantly lower than the average price; the Service Provider could be struggling in keeping their head over the SLA-threshold and failing in doing that, so you could get your Service for free – because of the sanctions they pay you. But did you ever really get the Service? Wasn’t there a 48hrs unplanned Service Outage during the weekend two weeks ago?

did you ever really get the Service?

In the worst case you might be out of the business because of your Service Provider’s lower-than-the-low performance. At that point it doesn’t help much to know that you didn’t pay too much for the Service..

My message is: Cost optimization is the word of the day. Make use of it thoroughly. When buying, compare prices carefully and be positive you understand what you are buying and what is included in the fixed price and be wary of falling into possible pitfalls with the cheapest prices. When optimizing costs.. Start with reading the chapter “7 things to improve your Cost Optimization” I wrote for you.

Pictures are from Pixabay.

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