What Cloud Computing Can Do for Your Enterprise Lessons from the Second Generation of Cloud Adopters

What cloud computing can do for your enterprise Lessons from the second generation of cloud adopters

Written by Phil Wainewright Commissioned by Appirio What cloud computing can do for your enterprise : Lessons from the second generation of cloud adopters

Contents

Stair steps to the cloud...... 4

Why take to the cloud?...... 5

What the cloud changes ...... 7

Expected changes...... 7

Unanticipated change...... 8 IT managers...... 8 Developers...... 9 Business managers...... 10 For users...... 10

A blueprint for cloud success...... 11 Lead from the top...... 11 Get the requirements right...... 11 Don’t underestimate the business impact...... 11 Invest in change management...... 11 Plan for support ...... 11

Cloud-enabled enterprise...... 12

About the Author Phil Wainewright is one of the world’s foremost authorities on emerging trends in business automation. He is a prolific writer with a ZDNet blog on Software as a Service, the Loosely Coupled website on enterprise adoption of services architecture, and a series of influential analyst reports to his name. He serves as CEO of Procullux Ventures, a London-based strategic consultancy to leading business automation vendors and their customers.

Daily software as services weblog: http://blogs.zdnet.com/SaaS/ Procullux Ventures: www.pcxvs.com Detailed biography: www.philwainewright.com

Readers of this paper are likely curious about the contribution cloud computing can make to both cost savings and business agility . That curiosity may be especially strong in today’s tough economic environment, where business managers and IT functions alike are being asked to excel even while they control and cut their costs .

Cloud computing is seen by many organizations as a less costly, more agile alternative to installing, running and maintaining their own servers and software . But it often feels like a huge leap of faith for those that have traditionally operated computing on their own premises . Fortunately, the reports Cloud pioneer: coming back from pioneers who have made that early journey Kevin Weiss, into the unknown is encouraging . They have mostly found CEO, Author the benefits to be even greater than they imagined, while the Solutions barriers have proven less daunting than many feared . Author Solutions The findings presented in this white paper are based on research used the and interviews with a cross-section of customers of Appirio, a Force.com leading on-demand products and professional services company . platform to These customers, some large, some smaller, have all begun develop a making the transition to cloud services . They include examples complete custom ERP system for its from manufacturing, health services, publishing and technology . publishing business, as a replacement And while some have moved all their computing to the cloud, for three separate legacy systems others use just one or two cloud applications . that result from three separate business acquisitions. The system was This paper explores some of the common themes emerging from developed from scratch in four months, their stories and outlines the benefits and the challenges, both deployed in a few weeks and delivered expected and unforeseen, that enterprises have encountered improved business performance within on this journey . They have found that the transition to cloud the first month of operation. computing not only yields reduced implementation time, risk and cost . It enables them to align application development with business outcomes in a way that transforms their overall business .

This is a blueprint for how it’s done .

Stair steps to the cloud

Most organizations adopt cloud computing one step at a time . For those used to running computing in their own IT facility, that first step is often hesitant . But confidence grows with each subsequent step along the typical journey to cloud computing .

There are several routes into the cloud, which are covered below . Not included here is the option of simply relocating applications from an on-premise facility to a third-party hosting center or even to a cloud-hosted virtual server . No matter which route one takes, it’s important to remember SaaS is more than simply a deployment choice . Conventional packaged software can’t deliver many of the most transformational benefits of moving to the cloud because it’s not designed to make the best of the cloud environment . Software designed from the outset to live in the cloud uses technologies such as multi-tenancy, metadata-driven business logic and service-oriented architectures that, taken together, deliver a step-change in the business results you can achieve .

Organizations embracing this new model of computing typically take one or more of the following steps:

• Cloud applications – the most common first step into cloud computing is when an enterprise adopts a single or multiple software-as-a-service (SaaS) applications or business services . For example salesforce automation and customer relationship management from salesforce com,. or email and documents from Google Apps .

• Cloud platforms – another step is to use a provider’s cloud infrastructure as a platform for building and running custom-developed applications . These platforms may provide raw computing services, such as Amazon com’s. EC2 processing and S3 storage services, or they may be more tailored application development platforms such as Google AppEngine, or Force com. by salesforce com. .

• Integrated cloud services – as enterprises extend their use of cloud resources, they begin to ‘mashup’ applications and services . This combines the strengths of each provider’s platform, taking advantage of service-oriented interfaces that are easier to use and more flexible than the brittle, proprietary integration that’s typical of on-premise applications . The result is more productive, end-to-end business automation .

• Serverless enterprise – some organizations take the ultimate step and migrate all of their computing to the cloud . Going ‘serverless’ works well for smaller enterprises, especially those starting out with little or no existing infrastructure .

The majority of enterprises today are not yet ready to go completely ‘serverless’ – and for some it will never be wholly appropriate . Many enterprises may choose to continue operating their own infrastructure in order to provide services to customers . For example, large multinational banks providing on-demand transaction services, and of course, cloud providers themselves such as salesforce com,. Google and Amazon com. . But for many of their other operations, these same organizations will choose cloud services .

“I was looking to use technologies and platforms that are infinitely more scalable than anything we could do here,” said Author Solutions’ Kevin Weiss.

Why take to the cloud?

Organizations make their first move into cloud computing for a different set of reasons from those that later influence them to expand their use of the cloud . There are a well-known set of perceived benefits that any organization anticipates as it embarks on its first significant cloud computing project:

• Lower upfront costs – Instead of buying everything you need in advance, you pay as you go for what you consume . This is a huge benefit for projects or processes that may start small but need the ability to scale quickly . With the infrastructure in place, developers can focus on delivering business results instead of getting the technology working, which reduces implementation costs .

• Shorter time to go-live – The provider’s cloud infrastructure is already up and running, providing a range of off-the-peg services such as access management, security, scalability and reporting . Unlike on-premise software that requires these baseline functions to be built to order over and over again, developers and users can just get on with application design and delivery .

• Reduced ongoing overhead – Support and maintenance Cloud benefits checklist costs are lower because staff and resources aren’t tied up keeping Implementation: basic infrastructure in place and running . Unobtrusive upgrades o Lower cost are a regular part of cloud services instead of being infrequent o Shorter timescale and disruptive re-engineering exercises . o Reduced risk

• Scales without effort – The cloud provider’s infrastructure Infrastructure: already supports hundreds or thousands of other customers (and o Always on often millions of other users), so it’ll easily sustain whatever is o Reliable thrown at it . o Always up to date o Highly scalable up or down More powerful, however, are the unexpected benefits that only become apparent once an organization has deployed cloud resources . Although Integration: less well known, these secondary effects have a far more transformative o Always online impact on the organization’s approach to business automation: o Real-time updating

• Infrastructure freedom – It’s only when you no longer Development: have to keep the technology infrastructure up-to-date that o Rapid prototyping you realize just how many resources you’ve been spending on o Business alignment applying patches, upgrading security, performance tuning, o Process not technology business continuity and all the other ingredients that are now o Configuration not code the cloud provider’s concerns . You also realize how often you’ve held back from upgrading or scaling up because of the Overhead: one-time cost . Navin Ganeshan, senior director of enterprise o Reduced ongoing costs data services at web hosting and marketing service provider o Built-in upgrades Network Solutions, cited his experience of deploying Salesforce o Built-in innovation CRM to two call centers in just over six weeks: “From our o Built-in continuity perspective that’s just phenomenal agility and speed ”. A

less talked about benefit of this freedom is it enables you, if necessary, to just as easily scale those implementations all the way back down without having to write off any infrastructure costs .

“IT and management’s mindset is changed because there are so many possibilities,” says Howard Brown of CRC Health. “Change is not as expensive and challenging as it once was.”

• Development freedom – The rapid prototyping that’s possible with cloud platforms helps show executives what’s possible and delivers business value faster than would have been possible with on-premise solutions . It also empowers business users to request or make changes to an extent that is difficult to imagine until you’ve experienced it . Author Solutions has calculated the IT development time required to modify a business process or add a new product to be 50 to 75% lower using its cloud implementation: “It’s a new paradigm for building applications,” says CEO Kevin Weiss .

• Business freedom – All the organizations we spoke to said that using cloud services made it feasible to do things that would never have been considered using conventional on-premise software, such as automating short but time-consuming manual processes, or implementing simple workflow integrations . “The speed and agility has really helped us automate more and more processes within our enterprise,” said Navin Ganeshan .

These effects allow cloud-enabled enterprises to adapt much more readily to changes in their business and the markets where they operate . Indeed many of the customers interviewed for this Cloud pioneer: paper have used cloud computing to give them the flexibility to Howard Brown, change their business models or adapt to new market conditions . CRC Health Group • Author Solutions built a new core publishing CRC Health system to consolidate the operations of three Group deployed separate businesses at the same time improving salesforce.com revenue visibility; to connect a • Dolby Labs created an automated support 300-strong field sales team into a call application that enabled the company’s move into center handling online enquiries to this digital theater system sales, an important part of specialist healthcare provider. They its evolving business; later added a custom application to gain real-time visibility into patient occupancy • CRC Health built a patient intake system that not and bookings at almost 100 facilities. only improved patient care but enhanced business Howard Brown eventually went on to visibility to achieve higher sales targets . deploy salesforce.com integrated with Google Apps at a second company. To realize these benefits, an organization must successfully negotiate the changes that cloud adoption brings to a business .

What the cloud changes

In the same way that many of the benefits of moving to the cloud are not visible until they have been experienced, so much of the change is equally unexpected . Of course everyone realizes that the experience of using cloud resources will be different from what they are used to on their own home-grown IT infrastructure . But many of the perceived risks are overestimated, while the scale of change that cloud services bring to their organizations is often unexpected .

Expected changes Moving to the cloud is a leap into the unknown for those used to computing delivered from their own IT facility . The risks are all too easy both to imagine and to exaggerate . The same questions are frequently repeated .

• Is it enterprise ready? The cloud appeals to enterprises and individual hobbyists alike, while SaaS has often been Cloud vendor checklist associated in the media with serving small businesses . Not every o Multi-tenant Web-hosted service is enterprise ready . But providers such as infrastructure salesforce com. and Google Enterprise have made clear their o Service-oriented enterprise-class credentials and commitment by successfully architecture serving some of the largest organizations on the planet such as o Service-level agreement Genentech, Japan Post and Citibank . It’s up to customers to do due diligence to ensure vendors come up to the mark . o Service metrics dashboard • What about reliability? The root cause of this concern is o Performance visibility the unfamiliarity of dependence on a third party provider and reporting rather than the ‘devil you know’ of the corporate data center . o Helpdesk Reputable cloud providers can be shown to have far better o SAS-70 certification reliability and less downtime than most enterprise data centers . These concerns are allayed by demonstrating the provider’s o Security certification track record of reliability, and ensuring that customers receive o Privacy compliance adequate information about service performance and back-up processes .

• Is my data secure? The provider’s infrastructure almost certainly offers more robust security than a typical enterprise’s in-house infrastructure . It’s the provider’s mission to secure its customers’ data; any breach would undermine its core business reputation .

• Will I be able to connect? Accessing applications and data over broadband connections rather than an internal LAN may seem more fragile, especially for mobile users or those in remote locations, but often the Internet infrastructure is more robust than a proprietary WAN, which can cost far more . Off-line access is still an issue for those times when the Web connection is down or unavailable – in flight for example – but such moments are becoming increasingly rare .

• Can I integrate my data? Connecting to other data sources and applications, especially existing in-house systems, is perceived as a barrier . In fact, the APIs and metadata- driven service-oriented architectures of cloud providers often facilitate better integration capabilities than their on-premise rivals . There is also a growing ecosystem of enterprise- class integration solutions available, both on-premise and in the cloud .

• Will it cost more in the long run? The pay-as-you-go model of cloud services sometimes looks more expensive over many years compared to conventional IT solutions that are amortized over a three-year lifetime . But when weighing the calculations it’s important not to overlook the hidden costs of maintaining and upgrading conventional software . While the longer term costs are still being evaluated as the model evolves, one must also not forget to take into account the less expected benefits of cloud solutions .

Companies looking to move to the cloud should adequately raise these concerns and ask tough questions of vendors before committing . Teams should also communicate the facts and weigh the many benefits of adopting cloud services in advance of implementation . But it’s becoming clear that once an organization begins using cloud services, questions like these rapidly fall away as the users quickly gain confidence in the new regime . At the same time, more fundamental differences begin to be felt .

Unanticipated change We alluded earlier to the freedoms that emerge as an organization engages with cloud services, with huge effects on the capabilities and roles of IT management, developers, business managers and users . Moving to the cloud opens up new opportunities and demands new skills in each of those roles, which in turn creates new risks and challenges .

IT managers There’s often a perception that cloud applications are adopted by business managers as a way of thwarting or sidestepping IT, but that’s rarely the case in practice – it’s IT that ends up supporting and managing cloud services, whether in place of or alongside all the organization’s existing IT resources .

Even when relying on outside infrastructure, IT remains accountable and has a vital governance role to fulfill . IT becomes more of a coordinator, orchestrating and monitoring cloud services to ensure the enterprise is achieving its objectives while complying with its undertakings to stakeholders . In particular, IT must establish governance over three critical aspects of cloud provider relationships:

• Compliance – IT must ensure that the provider operates processes that comply with the enterprise’s own standards for security and privacy .

• Visibility and reporting – One of the most difficult adjustments for new cloud adopters is to accept their ongoing dependence on cloud providers . IT can help by ensuring sound processes for monitoring and reporting on performance, availability, customer service response times and so on, and by ensuring proper communication of impending functional upgrades and price changes .

• Budget – IT has an important role monitoring the ongoing costs and competitiveness of the organization’s chosen cloud providers .

With conventional IT infrastructure, too much effort is spent on routine maintenance tasks . SaaS frees up IT to work with the business to use technology as a means to an end instead of an end in itself .

“We can now focus where we truly add value,” says Network Solutions’ Navin Ganeshan. “With in-house systems we spend a lot of time tuning and getting the system running.”

Developers Application developers have a big adjustment to make . The traditional ‘waterfall’ approach of long development cycles ending in one-time delivery of a finished project is rarely appropriate in a cloud environment . Cloud projects both enable and demand a more iterative, agile project management style, in which development takes place in short, incremental cycles lasting typically two to three weeks .

The on-demand architecture of cloud solutions means that the prototyping process can be very different than with conventional software . No time has to be spent building up or dismantling the software – it’s already up and running, and all the development happens at the business logic layer . This means it really is possible to deliver something useful in a two week cycle . It also removes many of the obstacles to experimentation . If something doesn’t work, you can just throw away everything you did yesterday and start over . The multi-tenant architecture means that every developer has their own copy of the environment, so if it’s useful you can have two developers each build something different in parallel and then choose between them .

Working with external developers is more immediate too because the application can be shared via a web meeting rather than requiring a site visit .

“The ability to rev very quickly, iterate many times, and evolve as you iterate has been very powerful for us,” said Paul Johnson, director of IT at Plantronics. “You can go very quickly, show different options and get a lot done more quickly.”

Business managers Iterative development and rapid prototyping means business managers can have much more immediate involvement in application development, allowing them to drive projects more successfully to deliver the business results they need . But it also demands deeper engagement with the disciplines of application development .

There’s a need to share and exchange skills between IT and business – IT can learn from business people to help build better applications that deliver the desired business results, and business people need to learn about those good application development practices that are so essential to success . Giving business people more freedom to innovate has no value if you don’t equip them with the skills to manage that innovation .

For users Engaging users in application prototyping – sitting them alongside developers as they configure the application – is a complete turnaround from the disconnect they’ve often experienced with conventional development projects . However this collaborative approach is far more likely to produce an application that delivers the business results they’re after . The knock-on effect is that users are encouraged to want more from IT, because the business can much more easily grasp what can be achieved .

“We had incredible success with user adoption because we made them feel they were involved in the outcome of the product,” said Howard Brown of CRC Health.

The metadata-driven, configuration-based development ethos of cloud applications can also allow business users themselves to instigate workflow optimization or information analysis . “Watching how the automation we put in place led to more and more viral automation taking root has been great and one way that we are actively changing the way we do business,” said Navin Ganeshan of Network Solutions .

A blueprint for cloud success

Early adopters of cloud computing have realized enormous benefits, in particular from the rapid implementation timescales that are possible, combined with the ease with which the application can evolve to adapt to changing business needs . But it’s a roadmap not without risks . There are some clear lessons to be learned about how to ensure success .

Lead from the top Adopting cloud services will be disruptive . It means a change in the way the organization achieves business automation, which in turn will increase the understandable anxiety many will feel about the perceived risks of using cloud services . It’s essential to have top management committed to moving to the cloud and giving its full support to cloud project leaders .

Get the requirements right A clear vision of what the enterprise really needs is essential . Defining what the application will have to deliver is the key to selecting the right platform . Then scope out the project properly, understand all the potential needs and make plans accordingly: “Measure twice, cut once,” advises Author Solutions’ Kevin Weiss .

Successfully developing an application in the cloud may be faster, but it still requires the same development lifecycle disciplines you would use for a conventional software project . You must have proper project management and full application development lifecycle hygiene as you iterate through the development process – including requirements analysis, test plans, prototyping, methodology and change management .

Don’t underestimate the business impact Cloud projects have a much lower upfront budget and completion timescale than conventional software projects . It’s very easy, though, to underestimate the scale of the project when the cost and time parameters are so much leaner . But that doesn’t make them any less impactful . Indeed, most cloud adopters find their projects can have far more business impact, much faster than they ever imagined before .

Invest in change management The speed of delivery and rapid iteration of the cloud development cycle requires a more nimble mindset from both developers and business managers . Because change is so much more rapid and easier to achieve with cloud services, there’s a need to evolve change management disciplines that cope with that more rapid pace .

“Rolling out changes quickly is great but the ability of your organization to react to, validate, test that change is limited,” advises Network Solutions’ Ganeshan. “Technically you can roll out rapidly, but it may still take a week or so for groups to accept, validate and use it.”

Plan for support Think through who will own the solution and be responsible when fixes are needed . Work through scenarios so that you’re ready to deal with crises before they arise . Understand who will be accountable for driving through the SLA . Carefully plan roll-outs that impact workflow or people processes, and be ready to sell the solution to users to encourage uptake and minimize resistance .

Cloud-enabled enterprise

In today’s constrained business environment, cloud services can make business change more affordable and achievable . But it requires new ways of managing and operating that impact job roles across the organization .

Moving to the cloud changes the DNA of an enterprise into a truly Web-enabled business, equipping it to thrive in the Web-connected world . Many enterprises hold back from embracing the cloud because the perceived risks cast a shadow over the expected gains . The transition must be undertaken with care, but those who have taken the initial step now realize that the risks were less than they feared – while the benefits have proven far more significant .

The message from second-generation cloud adopters is clear: once an organization has tasted the cloud experience, it’s unlikely to go back . Now is the time to follow in their footsteps and seize the proven efficiency gains and business agility that cloud platforms have to offer .

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