Cloud Businesses: Strategic Considerations
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Cloud Businesses: Strategic
ConsiderationsTathagat Varma
http://thoughtleadership.in
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Docker's Registry Hub, Trello, Travis CI, GitHub and GitLab, Quora, Medium, Signal, Slack, Imgur, Twitch.tv, Razer, Adobe's cloud, Zendesk, Heroku, Coursera, Bitbucket, Autodesk's cloud, Twilio, Mailchimp, Citrix, Expedia, Flipboard, Yahoo! Mail …
What’s Common Among…
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Typical IT Infrastructure
Real Estate
Utilities (Power, AC, Fire, Security,…)
Networking Infrastructure
Hardware (Servers, Storage, N/W,…)
Virtualization Layer
App-Specific S/W (Database, …)
Application Data
Middleware
System Software (OS,…)
Application Software
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Your “Costs”
Acquisition
Rentals
Usage
Licenses
Storage
Backup
Idle
FixedManpower
Performance
Recovery
Delays
Lead TimeExpertise UpgradesEOL
Stagnation
Limited Opportunities
Revenue Erosion
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Forget Cloud For Now, Let’s Talk Something
Else…
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Traditional
• Cultivation: • Fixed Location (River)• Fixed Time (Monsoon)
• Consumption:• Immediate (Perishable)• Sameplace (Limited)• Self (Farmer family)
Farming
Modern
• Cultivation: • Any Location (Canals)• Multiple Times (Dams)
• Consumption:• Anytime (Processing)• Anywhere (Transport)• Anyone (Trade)
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19th Century
• Power• Private Gensets• Costly• Capex• Opex• Manpower
• Pollution• Proximity
Factories
20th Century
• Power • Utility Company
Supply• Anytime• Anywhere• Reliable• Metered• Cheaper
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• Production: Automobile, Manufacturing• Utilities: Power, Water, Gas, Heating• Entertainment: Concerts, Streaming• Professional Services: Legal,
Accounting, PR, HR, IT/ITES,…• Information: Research, WWW,…• Services: Transport, Leasing,
Restaurants, Rental Housing,
And Many More…
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Common Pattern?Creation Consumption
Creation Consumption
AnyTimeAnyWhere
AnyOneAnyTimeAnyWhere
AnyOne
SameOne. SameTime. SameWhere
Disaggregation. Unbundling
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What Can We Do Here?
Acquisition
Rentals
Usage
Licenses
Storage
Backup
Idle
FixedManpower
Performance
Recovery
Delays
Lead TimeExpertise UpgradesEOL
Stagnation
Limited Opportunities
Revenue Erosion
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Pizza As A Service!
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Outsource Infra
Real Estate
Utilities (Power, AC, Fire, Security,…)
Networking Infrastructure
Hardware (Servers, Storage, N/W,…)
Virtualization Layer
App-Specific S/W (Database, …)
Application Data
Middleware
System Software (OS,…)
Application Software
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Outsource Platform
Real Estate
Utilities (Power, AC, Fire, Security,…)
Networking Infrastructure
Hardware (Servers, Storage, N/W,…)
Virtualization Layer
App-Specific S/W (Database, …)
Application Data
Middleware
System Software (OS,…)
Application Software
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Outsource Service
Real Estate
Utilities (Power, AC, Fire, Security,…)
Networking Infrastructure
Hardware (Servers, Storage, N/W,…)
Virtualization Layer
App-Specific S/W (Database, …)
Application Data
Middleware
System Software (OS,…)
Application Software
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What’s Happening Here…?
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Cloud computing, often referred to as simply “the cloud,” is the delivery of on-demand computing resources—everything from applications to data centers—over the internet on a pay-for-use basis.
• Elastic resources—Scale up or down quickly and easily to meet demand
• Metered service—so you only pay for what you use
• Self service—All the IT resources you need with self-service access
The Cloud
https://www.ibm.com/cloud-computing/learn-more/what-is-cloud-computing/
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• Traditional IT Infrastructure is• Capex-Heavy• Time-Intensive• Resource-Intensive• Inefficient• Stagnant / dated• Not Agile Enough
Why Cloud?
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• Infrastructure As A Service (IaaS) • Computing, Networking, Storage
• Platform As A Service (PaaS) • Development Environment
• Software As A Service (SaaS) • Business Applications
Delivery Models
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• Depending on who you are and what you do, there could be several migration scenarios
• While technology is important, even more important to understand business context
• Let’s see some examples…
Cloud Migration
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• Drivers:• Stagnant Business with Perpetual Licensing• Raising Prices Was’t Sustainable Approach• 18-25month Release Cycles• Low Recurring Revenue 19% (2011)
• Approach:• 2012: Started Offering Both • 2013: Only Add Features to Subscription• Agile Model Of Development• Changes in Sales Process, Compensation, etc.• Communication Internally, Wall St• Move from ARPU to ARR• Once Downloaded, Cloud is only for Update and Storage, But No
Processing• Business Impact:
• Stock Price 3x• Double-Digit Revenue Growth, More Predictable Revenue Stream• Recurring Revenue up to 70%
Adobe
http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/reborn-in-the-cloud
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• Drivers: • Problems with on-prem infra• Tough to keep pace with digital demands /
innovate• Approach• Start small, quick wins, demonstrate benefits• 2015: From zero cloud usage to BAU in just
8months• Results• 3,500 GBP / 3mon => 66 GBP a month / 1wk• Cost of hosting a page 13p/month
TESCO Bank
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• Drivers:• Big enough to have own
infra!• Perhaps move from SaaS
to PaaS???• 2016: Moved 90% of files
from Amazon to own cloud
Dropbox
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• Drivers:• Old, outdated systems
• Approach:• 2014: Moved 65 apps and NASA.gov to
AWS cloud in 22wks with no downtime• Results:• Web update from 20min => 2min• CPU utilisation only 1% even at peak
levels, resulting in 25-30% cost savings• Able to avoid data silos
NASA
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• Why: The Purpose• What: The Goal• How: The Plan
Migration Strategy
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• Why are you undertaking migration to cloud?• Cost Reduction?• New Markets?• Faster Innovation?• …
• Build a Business Case
Why: The Purpose
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• Security 93%• Performance 85%• Scalability 74%• Support 65%
Top Considerations
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• What would the success look like?• Capex DOWN 60%• Headcount DOWN 40%• Release UP 1000%• …
• Establish Success Criteria
What: The Goal
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• How would the migration be performed?• Public / Private / Hybrid Cloud?• IaaS / Paas/ Saas?• Cloud Provider / Own DC?• Rearchitecture apps?• …
• Plan migration strategy and execute
How: The Plan
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http://ecsnamagazine.arrow.com/how-to-stay-calm-when-migrating-software-apps-to-cloud/
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https://www.slideshare.net/newrelic/cloud-migration-cookbook-webinar
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https://www.slideshare.net/newrelic/cloud-migration-cookbook-webinar
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• Consumption Based• Subscription Based• Advertising Based• Market-Based• Value-based• …
Pricing Models
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• Pay What You Consume, And As You Go• Ex: Disk, CPU, Network
Traffic• Common for IaaS
Consumption Based
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• Pay for Time, Irrespective of Usage
• Common For SaaS
Subscription Based
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• Free or Low-Priced But Must Accept Ads
Advertising Based
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• Fluctuates Based on Demand / Supply
• You can Buy on Current Price and Use Rightaway, Or
• Bid for Lower Price and If Market Reaches That Price, You Get It
Market Based
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• Cloud is Business: It’s not just about IT infrastructure but the TCO of Business!
• Identify the key drivers: why are you migrating to cloud?
• Establish the success criteria: what will success look like?
• Evaluate your migration strategy: your context is unique to you!
Recap
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• IaaS vs. PaaS vs. SaaS, https://youtu.be/KgL3BfAc9Cs
• The Present And Future Of Cloud Pricing Models, https://www.ibm.com/
blogs/cloud-computing/2013/06/present-future-cloud-pricing-models/
• Cloud Computing Pricing Models: A Survey, http://www.sersc.org/
journals/IJGDC/vol6_no5/9.pdf
• https://www.engadget.com/2013/05/09/adobe-creative-or-cloudy/
• http://nvlpubs.nist.gov/nistpubs/Legacy/SP/
nistspecialpublication800-145.pdf
• http://www.computerworlduk.com/cloud-computing/how-tesco-bank-has-
adopted-aws-cloud-as-business-as-usual-in-eight-months-3629767/
• https://www.wired.com/2016/03/epic-story-dropboxs-exodus-amazon-
cloud-empire/
• https://www.g2techgroup.com/nasa-migrates-to-aws-cloud/
• https://aws.amazon.com/solutions/case-studies/all/
References