Continuing my survey of the cloud computing surveys, I’ve been staring at the results from the June 2009 CIO Magazine cloud computing survey, wondering what I’m missing. The responses that have me scratching my head are related to cloud computing drivers, budget spend and budget reductions. Snapshots of the three questions follow.
[Click on pictures to enlarge].
As you can see, the first question shows reduce hardware and staffing costs as the primary drivers of cloud computing. The second question attempts to quantify this savings (% budget reduction) over time. Take note of the Average (Mean) line. The expected reductions are 5.6%, 7.6% and 9.3% over 1, 3 and 5 years respectively. As a former Senior IT leader with budget responsibility, I recognize that 5.6-9.3% budget savings aren’t easy to come by, and certainly add up as savings, or provide an alternative source for strategic investments.
So, all good. Until you review the Average (Mean) line of the projected spend question. That line shows on-demand service expenditure as 5.6%, 8.0% and 10.2% of budget over 1, 3 and 5 years respectively. Comparing the spend against savings, you’ll see the spend is equal to, or greater than, the projected savings.
Ok. Initial years IT spend outpacing projected savings isn’t exactly a newsflash. IT is a long-term investment, and return isn’t immediate. Certainly, if respondents are building on-premise cloud computing environments, you would expect a longer time period to savings, with a more sustainable savings stream.
However, this survey focused on “on-demand services”, as in ‘from away’:
“The way most CIOs define cloud computing today is as a Software-as-a-Service-like arrangement where your company does not own the software, hardware or any specific equipment run by the provider. Access to the cloud vendor’s systems takes place over the Internet in some secured way and for that access, customers pay a subscription fee that rises or falls with the level of use. Cloud computing offerings are often referred to as “on-demand services”, “cloud services”, “Software-as-a-Service (SaaS)”, etc.”
Translation: a subscription (rental) economic model. If that’s the case, then this survey shows that on average, organizations are paying more in rent than they expect to recoup as savings. Obviously, no CIO is consciously making that call, spend $1.00 to save 90 cents, indefinitely. Something is missing, and I don’t think it’s me.
Rather, there are business value benefits the survey didn’t consider, such as shortening time to value, increased focus on core capabilities, extending a value chain, or even the creation of short-term business innovation spaces.
So, this is a long-winded way of saying, do benchmark analysis, but then do your own math. In doing that math, don’t limit your sights to the IT side of the equation.
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business drivers,
CIO Magazine,
enterprise considerations
Posted by brenda michelson at 5:21 pm in 100-days, Cloud Watch, adoption, economics | Permalink
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After a short break for some client work, I’m back to my cloud computing survey list. This afternoon, I’ve reviewed the Google Communications Intelligence Report, October 2009, Rackspace’s No More Servers, November 2009 and F5 Networks’ Cloud Computing Survey, June- July 2009. The Google and Rackspace surveys were interesting, but small and midsize business oriented and therefore not relevant for my enterprise considerations project.
The F5 Networks survey presented findings in 5 areas:
- Confusion about the definition of cloud computing
- Cloud computing has gained critical mass
- Cloud computing is more than SaaS
- Core technologies for building the cloud
- Influencers go beyond IT
The section I found most interesting was the last, which covered the business drivers for public and private cloud computing adoption, as well as the organizational areas leading the adoption charge.
Business Drivers:
“77 percent of respondents reported that efficiency is a driver for public clouds. Additionally, respondents claim that reducing capital costs (68 percent) and easing staffing issues (61 percent) are key drivers behind public clouds.
For private cloud computing, respondents listed reducing capital cost (63 percent), agility (50 percent) and easing staffing issues (50 percent) as drivers.”
In a supporting chart, the remaining drivers of public cloud computing: agility (58%), make it easier to add/remove services (57%), avoid over provisioning (55%), infinite scalability (53%), reduce operating expense (51%), Green (51%), better choice (47%), and reliability (45%).
From the same chart, other drivers of private cloud computing: ease staffing issues (50%), infinite scalability (46%), efficiency (45%), reduce operating expense (45%), better choice (44%), make it easier to add/remove services (43%), avoid over provisioning (38%), reliability (37%), and Green (35%).
Although respondents might be confused about the definition of cloud computing, they clearly understand the benefits, and in particular how the benefits change between public and private cloud computing. In a private cloud computing environment, assuming on-premise ownership and management, the benefits for staffing, over provisioning avoidance, reliability and green still exist, but in smaller amounts.
Business Influencers:
“According to respondents, the top influencers for public clouds include IT (45 percent), application development (41 percent) and LOB business stakeholders (41 percent).
On a similar note, respondents claimed the top three influencers in the implementation process for private clouds are IT (45 percent), LOB business unit stakeholders (36 percent) and application development teams (24 percent).”
The accompanying chart describes the 41 and 36% business influence bars as “Drive the Initiative”. While the report doesn’t specify the types of initiatives, it’s not far fetched to imagine many of those public cloud computing adoption scenarios are business involvement only. In other words, the next wave (tsunami) of end-user development. Are you prepared?
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business drivers,
citizen development,
end user development,
enterprise considerations,
F5
Posted by brenda michelson at 6:15 pm in 100-days, Cloud Watch, adoption, economics | Permalink
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Each time I think I have my cloud computing survey list set, another is released. The latest is from Enterprise Management Associates, in a report entitled The Responsible Cloud. The report price is outside of my price range, but Data Center Knowledge provides a good summary.
The survey sample:
“Enterprise Management Associates (EMA) interviewed 159 enterprises with active, or immediately planned cloud deployments, and reports that 75 percent said private cloud is the preferred model. Fifty two percent are implementing both on-premises and off-premises clouds…”
The key findings, according to Data Center Knowledge:
“Of the enterprises already running cloud computing, lowered IT capital costs (hardware, facilities, licenses, etc.) was cited by 61% of respondents. One quarter of all respondents reported that they had reduced both capital expenditure and operational expenditures such as staff, power, rent and maintenance costs.”
“Other benefits include freeing up strategic resources (49%), enabling disaster recovery/business continuity planning (46%), and increased flexibility and agility (46%). Overall, 89% of customers reported multiple outcomes, with just under half of all enterprises (46%) reporting five or more significant outcomes.
The report also found that the single most common level of OpEx reduction (from a sample of 79 respondents) was in the range of 21-30 percent. However, across all these respondents, cloud computing returned an average 22 percent OpEx saving.
Of the 76% of cloud customers that also reported real, measurable cost savings, the single most common level of CapEx reduction was between 11-20%. The CapEx return across all these respondents was 26%.”
Given the mix of public and private cloud and early adoption stage, it’s not surprising the CapEx reduction is in the 11-20% range. As more use cases (workloads) shift to a cloud computing environment, you’d expect the CapEx reduction to increase. Those CapEx reductions will further increase as use cases shift to a public cloud. However, some of those savings will be offset by OpEx increases, as pay-as-you-go is a new OpEx item, and in-house personnel are still required to manage cloud computing deployments and business service levels.
Suffice to say, ROI calculators will become an important tool for cloud computing adopters and prospects.
Tagged as:
business drivers,
capex,
Data Center Knowledge,
enterprise considerations,
Enterprise Management Associates,
metrics,
opex
Posted by brenda michelson at 12:19 pm in 100-days, Cloud Watch, adoption, economics | Permalink
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Forgoing the hyperbole of cloud computing predictions – sensational outages to a cloud-in-every-pocket – I want to start 2010 discussing the enduring aspects of cloud computing on enterprise business-technology. Regardless of the final manifestation of cloud computing, and the tally of deployments, successes and failures, I believe cloud computing will influence the expectations and practice of enterprise business-technology throughout the decade.
I have identified five enduring aspects from a practitioner perspective. Certainly, there are enduring aspects on the provider side as well, such as advances from Infrastructure 2.0 and disruptions created by new economic and pricing models. However, I will leave that list for provider-side specialists.
The first three enduring aspects focus on the expectations from business-technology organizations.
1. Resource Optimization – Cloud computing has raised Executive awareness to the disproportion of installed versus utilized computing capacity, along with the requisite expenses of space, power, software licenses and support personnel.
If they have not already, Executives will mandate infrastructure ecology initiatives, starting with the consolidation and pooling of compute and data resources, and progressing to software execution efficiency.
more >>
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2010 hypothesis,
brenda michelson,
capability delivery,
popular post
Posted by brenda michelson at 5:59 pm in Blog, economics, elasticity & scale, fundamentals, infrastructure 2.0, performance & reliability, platform, pundit positions, software architecture | Permalink
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Via Joe McKendrick, I came across Charlie Bess’ post listing some metric suggestions for cloud computing adopters. Bess’ list:
- Provisioning time (down, leading)
- Service reuse (up, lagging)
- Utilization (hardware, storage…) (up, lagging)
- Uptime/hour (down, lagging)
- In house personnel dedicated to operations support (down, lagging)
- Business value generated per effort hour (up, lagging)
- Business value generated per watt consumed (up, lagging)
- % of IT budget dedicated to fixed costs and maintenance (down, lagging)
In reading the list, note the “items in parenthesis are first "the good trend" and if it was a leading or lagging indicator.”
This will be an important topic in 2010, and Bess’ list is a great starting point. I especially like the business value focus, and the recognition that cloud computing does incur in-house personnel costs. As Bess mentions, there needs to be more leading indicators, otherwise organizations might be inclined to stay with known costs, rather than introduce unknown expense, and of course, risks.
This is definitely a stream I’ll be following over 2010, the real-costs, value and risks. And how the value proposition changes with the element of time.
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Charlie Bess,
HP,
metrics
Posted by brenda michelson at 11:26 am in Cloud Watch, adoption, economics | Permalink
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The good folks at SOASTA have secured $10 million in Series C Funding:
“SOASTA, the leader in cloud testing, today announced the successful close of $10 million in Series C funding as it prepares its global expansion. The round was led by UV Partners, and included participation from all existing investors: Canaan Partners, Formative Ventures and The Entrepreneurs’ Fund. The company’s growth plan includes the opening of offices in Europe, broadening of the reseller channel and increasing its technology roadmap with product enhancements to address the growing demand for SOASTA’s cloud-based testing service.
Today’s announcement follows other significant company milestones. SOASTA recently announced a new partnership with Computer Sciences Corporation (NYSE: CSC), a leading managed services provider, who has integrated CloudTest into its Trusted Cloud Services offering and its testing and development methodology. The company completed large web-scale tests with Best Buy, Hallmark, Leapfrog, M-Dot Networks, MySpace, Schlumberger, SAP and Zappos.com, and also announced open source support by offering JMeter users the ability to run their scripts in the SOASTA Global Test Cloud.”
About CloudTest
“SOASTA CloudTest On-Demand is a full-service offering. Customers simply describe the web user business process, such as logging into an account, executing a transaction, or browsing content. SOASTA’s team of experienced performance engineers build the tests, provision the complete cloud environment, execute the tests, and work with customers to analyze, fix and tune a site’s performance. SOASTA CloudTest’s unique, real-time metrics and analytics of massive test results data gives customers the performance intelligence they need to pinpoint and fix issues as tests are being run — ensuring greater confidence in website reliability and performance.”
[Disclosure: SOASTA has done business with my firm, Elemental Links, in the past.]
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CloudTest,
SOASTA
Posted by brenda michelson at 2:14 pm in Cloud Watch, PaaS, cloud offering, economics | Permalink
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