The Impact of Cloud Computing

“Cloud Computing” is the new way of getting more with less for each IT dollar.

In the past, distributed compute IT operations experienced runaway operational costs associated with under-utilized compute capacities, excessive power, air conditioning, network connectivity and hardware maintenance and software support costs.  To address these, and other issues, the there has been to shift away from the distributed compute model to a network connected centralized compute, or data center model, where the data center provides much higher service levels at much lower operating costs.  In addition, there has been an explosion of intelligent devices with Internet access that is changing the ways end-users access online applications.

The graphic of what Cloud Computing model includes has been provided by Sam Johnson.

CloudComputing

Given the migration to the Cloud Computing model is undertaken in incremental steps, we believe that it should be viewed as a journey for organizations with different interim and end destinations.

“Cloud Computing”, in its current form, represents new approaches and ways of thinking about IT based operational improvements; some of the changes are reflected in the following areas:

Shift Away from Distributed Compute (i.e. servers in cross functional organizations individual operations) on-line applications to either:

  • Move Servers to a Centralized Modern Data Center or Infrastructure as a Service (IaaS) with customer owned computer equipment housed and connected to data center infrastructure (i.e. either customer “on-premise” or “Private” data center, or a “Public” outsourced data center, or a “Hybrid” equipment deployment partially in Private and partially in Public data center. Co-Located (Co-Lo) means to relocate a distributed server and operations to a centralized data center.  Typically Co-Lo customers provide hardware maintenance and software support services with their equipment.
  • Software Development & Deployment Platforms or Platform as a Service (Paas) – Migration of online application to a shared server (i.e. Virtualized Machine [VM]) in a centralized data center (i.e. either Private or Public) where the public data center charges only for resources actually consumed.  PaaS customers can easily avail themselves of dynamic allocation of additional computer power, storage, network bandwidth on an as needed basis.  Also includes database extensibility across Private, Public and Hybrid data centers, Content Management Systems (CMS) support, device level security and compliance services.
  • Software Subscriptions or Software as a Service (SaaS) – Migration of online application running on a customer owned and operated system, or running on a shared data center owned and operated system, to a completely outsourced online application service under a rented use or software subscription basis.  Also includes outsourced services to support PaaS environments with Disaster Recovery (DRaaS), Email (EMAILasaService), and Content Management

Shift in IT Responsibilities and Costs from individual organization’s operations (i.e. Planning, Engineering, Manufacturing, Distribution, Marketing, Sales, Service, Administration etc.) to one of the following:

  • Customer IT owned and operated equipment now being migrated to Private, Public or Hybrid data center
  • Public Data Center or Internet Services Provider, or Internet Managed Services Provider (ISMP) outsourced provider of data center services (i.e. space, power, A/C, network connection, software infrastructure, content management, security, compliance, maintenance and support, and managed services)
  • Software Subscription Solution Provider online application totally outsourced IT Operations (application branded i.e. Microsoft Office 365, SalesForce.com, Promantek etc.)

Impact on End-Users

  • Intelligent Devices – end-users can continue to access online applications as they have done in the past.  Intelligent Devices have World Wide Web Internet Browser resident software and can display information graphically for better communication and ease of use.  Please note however that simultaneously with the migration of servers to Cloud Computing, users have been slowing down in the use of Internet Desktop and Laptop computers as their primary method of accessing online applications and are rapidly migrating to Internet connected Pads & Smart Phones.  Use of these new Intelligent Devices allows end-users to more easily access and update information remotely from any location, at any time.  When working for an organization and using your own personal Pad or Smart Phone, this is referred to as Bring Your Own Device (BYOD).  The challenge has been to provide online applications with a variety of device formats (i.e. iPad, iPhone, Android etc.) to take advantage of the available screen sizes and shapes), as well as how to ensure customer information and intellectual property is secure. The demand for Pad and Smart Phone access to online applications has become a major Cloud Computing requirement.  Software Developers are specializing in Pad and Smart Phone application development to address this emerging requirement.
  • “Dumb” Terminals – end users can continue to access online applications as they have done in the past.  Dumb Terminals provide basic text only data inquiry and/or entry to an online application where graphical information is unimportant (e.g. retail store where sales attendants look up available inventory at a given store or other stores in the area)
  • Virtual Desktop Infrastructure (VDI) – is the support of low cost devices that can display graphical information, but where the support to draw the image is provided by the application server.  The VDI device has limited intelligence and is a step above the Dumb Terminal mentioned above.  The application server is burdened with the responsibility to draw the graphical image for the VDI device.  The VDI devices are lower cost and still provide much of the end-user experience associated with the Intelligent Devices mentioned above.

Impact on IT Operations:

  • Eliminate CAPEX – organizational operating units eliminate Capital Expenditures (CAPEX) because they no longer have to purchase systems and software licenses
  • Standby or As Needed Scalability – Dynamic access to compute, storage and network resources on an as needed basis rather than allocating resources for the worst case scenario
  • Improved Online Application Availability & Performance – The improvement of customer satisfaction by having data centers provide greater online application availability and performance
  • Lower Operating Expenses (OPEX) – Data Center economies of scale
  • IT Operations Utility Billing – Outsourcing of data center operations with a Pay-As-You-Go or Utility based highly managed monthly billing.
  • User Based Software Subscriptions – Outsourcing the online application operations completely and buying services as needed, on a monthly Software Subscription or application use basis.

Impact on Management 

  • Operational Units Still Need to Provide Necessary Services – where in the past each operational unit (i.e. planning, engineering, manufacturing, distribution, marketing, sales and administration) might have been able to make a decision to procure and implement an online application solution for their staff/customers, they now need to either bring in the CIO and IT Operations to provide system managed services (i.e. implementation, maintenance and support services, security, compliance etc.), or outsource the entire IT Operations to a SaaS provider… bypassing IT altogether (i.e. SalesForce.com) and becoming responsible for managing vendor relations with SaaS Provider for  (i.e. implementation, maintenance services, support services, tuning, security, compliance, and adoption management)
  • CIO and IT Operations – where they have struggled to gain control of distributed compute operations, now they are expected to provide IT Data Center class IT Operations where they may not have sufficient data center capabilities, and the shift to a Public Data Center to fulfill centralization of servers Infrastructure as a Service (IaaS), or migrate applications to shared Platform as a Service (PaaS) or Virtual Machine outsourced, or outsource the entire IT Operations to a Software as a Service (SaaS) operation… and, be responsible or share responsibility with the organization’s operation units as noted above.  CIO and IT Operations are experiencing a disruption in their business model.  Each organization must determine if the CIO is still responsible for guiding the use of IT to improve operations.   Also, the Operational Units must determine if they are going to own the responsibility to manage vendors to provide the necessary Managed Services.  What about Intelligent Device access to proprietary information, is the Operational Unit or the CIO and IT responsible for driving the easy access support of the BYOD devices and/or the security of customer private information and the organization’s intellectual property?

Impact on Commercially Off The Shelf (COTS) Solution Provider and Local VARs

  • COTS VAR Old Business Model is Unsustainable – Application Resellers or Value Added Resellers (VARs) – represent the COTS Software Providers locally.  VARs traditionally provide application system selling, supporting, service and training services.  The VAR business model (revenues and margins) assumed that they would sell complete systems along with each application software licenses.
  • COTS VAR Add Software Subscription Capabilities – Application VARs still provide application selling and training, but must now shift from equipment selling, maintenance and support to the Software Subscription model and this dramatically changes their revenues and margins.  Where before VARs were rewarded with significant initial sale equipment and software license margins, they now must rely on a commission on either the monthly PaaS utility billing and/or the SaaS monthly software subscription recurring revenue streams.  The market still needs VARs to provide operational improvement solutions so the value-add in selling, configuring, tuning and training services become the entire business model focus.

Impact on Custom Software Developers

  • Custom Software Developer (CSD) Business Model May Not be Sustainable – CSDs have relied on their ability to assess requirements, design solutions, implement solutions, provide training and provide ongoing maintenance and support.  The CSD business model typically would include hardware, software infrastructure, extended warranty maintenance and support services purchases (revenues and margins)  all of which may be reduced and/or eliminated by moving to a Cloud Computing environment and if so, would necessitate a dramatic change in business models.
  • Custom Software Developer (CSD) Add Data Center Platform as a Service (PaaS) Capabilities – CSDs still provide assessment of requirements, solution design, implementation/migration/tuning services and application use training services, but must now shift from equipment selling, maintenance and support to the Platform as a Service (PaaS)  model.  This dramatically changes their revenues and margins.  Where before CSDs might have been rewarded with significant initial sale equipment and software license margins, they now must rely on a commission on the monthly PaaS Utility recurring revenue streams.  The market still needs CSDs to provide to assess requirements, solution design, implementation, migration and/or tuning services and application use training services as their entire business model focus.  In addition, there needs to be a tighter integration of Agile software development and IT operations deployment to ensure high end-user customer usability, performance and availability.

You might consider these other Prism services related to Cloud Computing that aid in the journey and destinations:

  • Enterprise Architecture is the process of translating business vision and      strategy into effective enterprise change by creating, communicating and      improving the key requirements, principles and models that describe the      enterprise’s future state and enable its evolution EnterpriseArch@prismbusdev.com
  • Information Technology (IT) is the application of computers and telecommunications equipment to store, retrieve, transmit and manipulate data,often in the context of a business or other enterprise ITArch@prism-its.com
  • Change Management is an approach to transitioning individuals, teams, and organizations to a desired future      state.   In some project management contexts,      change management refers to a project management process wherein changes      to a project are formally introduced and approved ChangeManagement@prismbusdev.com
  • Initiative Program Management is the process of managing several related projects, often with the intention of improving an organization’s overall performance. In practice and in its aims it is often closely related to systems engineering and industrial engineering.  The Program Manager has oversight of the purpose and status of all projects in a Program and can use this oversight to support project-level activity to ensure the overall program goals are likely to be met, possibly by providing a decision-making capacity that cannot be achieved at project level or by providing the Project Manager with a program perspective when required, or as a sounding board for ideas and approaches to solving project issues that have program impacts. ProgramMgmt@prismbusdev.com
  • Strategic Relationship Optimization– Prism is strategic partner with Silver Tree Solutions.  Silver Tree Solutions through its patent pending solution solves this problem by enabling organizations to build a core competency in Strategic Relationship Optimization (SRO). By successfully implementing SRO, organizations significantly increase the ROI from their relationships while reducing risk of failure.  SRO@prismbusdev.com

Please comment, make additions, corrections and send to CloudComputing@Prism-ITS.com or for immediate attention call us (720) 352-3407.

 

 

Hardcopy Version

One thought on “The Impact of Cloud Computing

  1. Tom Pintacsi

    Errol,

    You have published a very thorough description and captured the essence of cloud computing. The information you present is very relevant to the impact on the end users and the IT department. The obvious and immediate benefits of cloud computing are the reduction in costs however the challenge in many cases is the Change Management that goes along with a cloud deployment. Today’s enterprises are having to deal more and more with BYOD and the demands on mobility by the user community. Cloud enables the mobility and the BYOD. Security concerns will always be part of any type of compute platform whether on premise or in the cloud. Those concerns have given rise to many new companies that are addressing security issues on any device or platform.

    Clearly cloud computing is changing the way we work with data the same way that the client/server environment did when Novell Netware changed how PC’s would be interconnected. With all of the benefits of cloud computing, enterprises should give it serious consideration in order to stay competitive.

    To the cloud…and beyond!

    Reply

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