Written by: Jonathan Sharp
Beyond all the hype about the cloud, some companies are achieving great savings, and some aren’t. So what’s the difference? What’s the key to using the cloud to your advantage rather than following the crowds to an overpriced, poor investment?
In a new eBook entitled “How to Take Advantage of the Cloud: Your Guide to Achieving Value and Performance,” HP and Latisys address that question. In a series of 3 blog posts, we’ll summarize the major lessons of the book. Our goal is to help you make smarter choices about IT resource provisioning - whatever those choices may be. In this first article we’ll start and covercloud basics.
The smartest companies incorporate the cloud into an IT strategy that addresses the unique challenges facing their industry and position. They identify the primary concerns - such as cost control, agility, or scalability - that will drive the future improvement they need. Then they study their existing workloads and capacity to identify gaps the cloud can productively fill. Then, with specific objectives in mind, they’re able to establish a long-term partnership with a smart, responsive cloud service provider.
When we talk about an IT strategy, we mean that your business probably has (certainly should have) an idea of how to meet increasing demand for IT resources (complex, mission-critical applications that achieve high performance in secure and scalable environments with ever-increasing storage and network capacity - at reasonable cost). So where do you to get the new resources that business users need? Some users push for the cloud. Yet many IT leaders resist, citing concerns with security, vendor lock-in, performance, availability, and integration. Both parties are “right”: the cloud presents both opportunities and risks, both of which vary by industry and firm. Your IT strategy has always been your conscious effort to make the best choices to maximize opportunities while minimizing the associated threats. Thus the first step in taking advantage of the cloud, is understanding your strategy and your plan, so you know the directions you need to take on your journey.
Your IT strategy will identify one or more business challenges that will define the coming years. Let’s look at three potential examples.
1. Cost Control: As compute and storage requirements explode, how are you going to avoid huge future capital outlays to purchase new processors or storage devices? Taking advantage of somebody else’s under-utilization is one of the great promises of the cloud. You can shift capital expenses (CapEx) to operating expenses (OpEx) - buying less hardware, managing fewer licenses and eliminating the need to replace legacy equipment or depreciate assets, all while freeing up precious capital to invest in your core business and making your bottom line more predictable. And you can increase asset utilization rates of both hardware and people. As long as you can guarantee quality of service, consider outsourcing certain functions to partners who specialize in them, and can take advantage of scale without making a big investment.
Scale, utilization, and CapEx-to-OpEx can drive significant savings for those functions. Plenty of caveats certainly apply, and the effect on your budget will probably not be as large as some might hope. But when you think about containing potential future cost increases, the cloud can often be a valuable tool.
2. Speed and agility: The pace of business today is faster than ever, and some businesses are held back by long, bureaucratic processes associated with IT resources. Take provisioning of software tools to information workers as an example. Many cloud service providers are now offering software-as-a-service (SaaS) applications to perform such functions, and although they have many drawbacks, including limitations in security and flexibility, a huge advantage is the fact that they can be available in hours.
Less hyped, less transformative, but often boasting a bigger cost/benefit ratio is reforming the process of provisioning hardware. Provisioning in the cloud, a new server can be ready in hours for software development testing or other such temporary demands. Even for permanent demands, rather than purchase new hardware, in the cloud, you can provision CapEx-free resources instantaneously. Thus the cloud may help you improve time-to-revenue and agility in expanding into new customer segments, quickly taking advantage of multiple site deployment, or experimenting with expansions of latency-sensitive applications.
3. Elasticity: If there’s any variation in demand for your IT resources, you can:
a) suffer from underutilization,
b) crash regularly during spikes,
c) take advantage of cloud resources that can expand and contract with your needs.
There are plenty of examples of bursting demand: when your monthly financial reports are due, after your product is featured on TV, when your oil well is “hot” and needs to transmit massive amounts of seismic data, or when your daily web traffic peaks.
Scaling to react to customer needs is generally of huge benefit to your business users. They can plan more confidently without capacity restraints. They can easily expand to new geographies or markets, execute promotional blitzes, or otherwise quickly respond to market changes.
How much will you save? The good news: We know of HP customers that have realized a Total Cost of Ownership (TCO) savings of up to 56 percent. The bad news: We’ve heard of other companies that actually lost money. The problem with these other companies was that they didn’t have a firm grasp of their workloads. It’s like when you got your first cell phone: if you didn’t know how many minutes you used per month, and you chose a plan with too few minutes, the overages could kill you. Which gets back to the original point: the cloud is part of your IT strategy. You understand your strategy and what you need to do to accomplish it. You know your workloads and your current infrastructure. We can tell you how and how much you can put in the cloud, but at the end of the day it’s your strategy that will determine your savings.
For our expanded thoughts on these and other topics, please see the eBook here. Look out of the next post which looks at cloud essentials, including disaster recovery, storage, security, and compliance.
Keep an eye out for the next two installments, coming soon.
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