Costs, biz alignment key to chart cloud course

Companies should look holistically at costs, available internal IT resources and importance of cloud service to business strategies to determine if they should adopt private, public or hybrid cloud, say observers.
Written by Kevin Kwang, Contributor

Organizations considering their cloud deployment plans need to look closely at cost savings, availability of in-house expertise and how these services are aligned to their overall business strategy in order to more accurately chart their long-term cloud journey.

Arun Chandrasekaran, research director of data center infrastructure & operations at Gartner, said organizations have to carefully map out their cloud computing strategy, and consider many different parameters to decide which cloud model will best suit specific applications, and more importantly, their business strategy.

Social games company Zynga, for example, was one company that recently made the switch from one cloud model to another when it decided to lessen its reliance on Amazon Web Services's public cloud. According to a report by tech news site GigaOm, the company had moved much of its workload to its own Z Cloud private infrastructure.

"By end of last year, nearly 80 percent of [daily active users] were hosted in Z Cloud versus 20 percent in the beginning of the year [2011]," said Zynga COO John Schappert, during the company's fourth quarter earnings call in February.

Keeping it private to protect competitive edge
Commenting on this, Chandrasekaran said such transitions were often prompted by the need to have, and protect, competitive differentiation. It could also mean that the company was looking to adhere to regulatory compliance or adopt a more flexible service management strategy, he added.

"It may not be uncommon for companies to embark on hybrid cloud models [such as Zynga's] once they reach a critical size or when applications move from being 'unpredictable' to 'steady state'," the research director stated.

Andrew Milroy, vice president of Asia-Pacific ICT practice at Frost & Sullivan, added that larger companies that needed to optimize the performance of their mission-critical applications will want to do what Zynga did in hosting more of their workloads on private clouds.

Cost savings key for SMBs
Small and midsize businesses (SMBs), on the other hand, are more likely to focus on public cloud services as private clouds are usually too expensive for them, he added.

"SMBs need to figure out what can be delivered for them from the public cloud, what they need to keep on premise and how they should integrate on-premise IT with cloud computing," Milroy stated.

Application performance management systems developer Precise weighed in on the debate, saying there are two reasons why a company would prefer private cloud deployment over software-as-a-service (SaaS) and other public cloud services.

Zohar Gilad, executive vice president at Precise, said the first reason is that the company has unique processes that would necessitate significant amount of customization, while the second reason would be that the pricing structure for its existing SaaS product "does not scale".

He noted that for Precise, its enterprise resource planning (ERP) and customer relationship management (CRM) systems--which include sales, support and back office processes--were not unique and "not the secret sauce" for its business to the extent that it requires customization.

"If we can have a reasonable SaaS solution in terms of cost and usability, we will," Gilad said. "In other words, we are willing to change our processes to fit a more effective SaaS app. Also, our size and usage do not lend ourselves economically to consider self-hosting."

He added that there was no reason why a company cannot build its IT system on public cloud for the long term if the price was right. "It really depends on the public cloud pricing. If a cloud provider can let you scale by giving significant volume discount, then why move?"

The midsize company with more than 200 employees recently concluded its year-long migration of its IT infrastructure and applications to the public cloud, which allowed it to shave more than US$2 million, or 70 percent, from its annual IT budget, noted Gilad in a separate article in GigaOm.

Be flexible where cloud is concerned
Beyond cost considerations, other parameters companies should look into include the availability of in-house expertise and the level of governance, automation, and service management the private cloud implementation affords, noted Chandrasekaran.

For example, having enough skilled IT professionals, both for the transitioning of infrastructure and applications as well as subsequent operating and maintenance of cloud systems, will be crucial for any cloud project to succeed, he pointed out.

Additionally, for those looking to private cloud deployments, having the right governance, automation and service management tools to operate the systems are necessary to "truly realize the benefits of private cloud," the Gartner analyst said.

Ultimately, companies should be flexible about their choices made, considering the "constant change in dynamics" from both the external ecosystem, which includes service providers and IT vendors, and internal corporate ecosystem, Chandrasekaran added.

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