Cloud has become the new normal
Yet, for many companies, it’s still a beast to be tamed. Here, I’ll offer some practical views on how to tame the beast.
It’s evident that cloud platforms have become a standard part of the IT delivery models for almost every organization. According to Canalys market research, (February 2020) Cloud market reached a record high in 2019; cloud infrastructure-as-a-service (IaaS) grew more than 35%, whereas the overall cloud market grew by more than 15% (Gartner, November 2019). This growth doesn’t seem to slow-down in the next few years either as analysts predict double-digit annual growth rates also during the next three years (Gartner, November 2019).
Many organizations have adopted a cloud first strategy, which usually means that cloud is considered the primary option for every new workload. At the same time organizations have realized that pure IaaS or platform-as-a-service (PaaS) don’t necessarily solve their business problems or provide immediate cost efficiencies, thus SaaS (Software as a Service) is usually explored as a first alternative.
According to analysts, main business drivers for public clouds are (McKinsey, April 2018):
Reduced time-to-market for the business
Reduced TCO (total cost of ownership)
Increased operational efficiency and flexibility
Access to new technologies
These objectives are similar to what we have discussed with our clients at Melkki, and they haven’t drastically changed during the past years. All of them are still valid and something that should be measured with proper metrics throughout the cloud adoption journey. However, the reality is that many organizations are struggling to achieve those objectives and often face a situation where costs are growing both within the existing data centers as well as with public cloud with no sign of change.
So, what does it take to succeed?
Many organizations are adopting cloud based services within their existing processes and technologies and consider public cloud only as an alternative - or an additional platform in their existing IT landscape. Simultaneously, organizations tend to ignore the root causes for the issues with their existing applications and operating models, and often see cloud as a silver-bullet that will magically solve all of their problems overnight and help them become agile and efficient just by having a cloud-first strategy in place. Obviously, this is not the case and one must carefully build a solid architecture and culture in order to succeed in the long-term.
Therefore, our recommendation is for organizations to focus on the following steps in order to smoothen their cloud journey:
Define your cloud strategy, include an analysis of your existing application portfolio
Focus on building your cloud operating model – dare to challenge the existing ways of working and rationalize your processes in cloud
Invest in your people and ensure they have the competencies (and certifications) to build and operate cloud platforms
Define your Cloud strategy
Firstly, even though a cloud strategy has been put in place, many organizations still struggle with getting aligned on a clear approach on how to go to the cloud. New development projects lands into the cloud quite naturally, but it gets more complicated when organizations start to analyze their existing application portfolios. Lift & shift -type of migration sounds tempting initially, but what are the benefits in the long-run? In fact, our observation is that lift & shift tends to increase the costs rather than reduce them. The reason for this is that your existing application landscape is most likely designed to run in traditional on-premise data center environments with proprietary software and lift & shift doesn’t allow these applications to utilize the native cloud capabilities at day one. Therefore, application roadmaps and target states must be considered as part of the cloud strategy in order to fully harvest the benefits.
Establish a Cloud operating model
Secondly, cloud services are usually brought into the organization by highly technical teams and external developers who are experienced with cloud services, and centralized organization is brought into play when questions regarding 24/7 operations and cost management arise. Centralized IT organizations are typically focused on strict, and often misunderstood, ITIL processes and this is something that you should pay attention when starting to build your cloud operating model. You must be ready to challenge your existing ways of working and improve your current processes to get the best out of cloud platforms. You probably don’t want to use your existing change management process in order to scale your applications and underlying infrastructure as platforms can provide such capabilities in an automatic manner, such as automated testing and -deployment.
Invest in People and skills
Finally, many organizations forget to invest in people and culture, and are more focused on the technological aspects of the cloud. Every cloud platform is unique and you must be able and prepared to train your staff to manage selected public cloud platforms in an efficient manner. This creates pressure for the existing IT organization as centralized IT must be able to take on new responsibilities, and in some cases, also start to develop new platform-level services to ensure efficiency and enforce standards at a code level. Initially, existing IT organization might even feel a bit reluctant to take on any new responsibilities for technologies that they aren’t familiar with, but it’s crucial to keep them aboard the journey. Otherwise, cloud might become just another organizational silo and a platform without being able to add any real business value in long-term.
Melkki is an independent management advisory company specialized with Digital Value Chain and Business Development advisory. We are happy to help you set up the necessary building blocks for successful cloud adoption, so that you’re able to start realizing the benefits of cloud solutions. At scale.