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How Hybrid IT helps companies balance performance, cost, and control

AN INOVIS REPORT, COMMISSIONED BY HEWLETT PACKARD ENTERPRISE

Master the Cloud Cliff

TABLE OF CONTENTS

SECTION

01Why it’s a Hybrid IT world Learnings from IT execs on their experiences with the public cloud

4 Introduction

6 Hybrid IT: the balancing act

7

Cloud cliffs, challenges, and concerns

8 Performance

11 Cost

14 Control

18 Lessons learned

21 Optimal IT solutions

SECTION

02Case studiesLessons from companies that mastered the cloud cliff with Hybrid IT

24 Healthcare Public cloud and a major acquisition

26 Social media case 1 When it hurts to be on the bleeding edge

28 Social media case 2 The day the public cloud died

30 Public sector Outgrowing the public cloud

32 Retail Paying the price for a hasty decision

34 Financial services Finding the right Hybrid IT mix

Why it’s a Hybrid IT world

Learnings from IT execs on their experiences with the public cloud

RETURN TO TABLE OF CONTENTS«

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4 Master the Cloud Cliff | How Hybrid IT helps companies balance performance, cost, and control

When public cloud services began to catch on rapidly in 2009, many executives saw the potential for saving money on licensing, support, hardware, and management.

Others saw opportunities for innovation without the burden of on-premises infrastructure. Attracted by promises of IT power, flexibility, scalability, and simplicity, many companies considered or committed to going all-in on the cloud. With this rush to the cloud has come tremendous market growth: According to Gartner, the Infrastructure as a Service (IaaS) market grew from about $4 billion in 2011 to about $22 billion in 2016.*

Many enterprise-level companies are choosing Hybrid IT solutions—when an organization provides and manages some IT resources in-house but uses cloud-based services for others. Hybrid IT has become the new normal, with on-site IaaS growing significantly in recent years. In fact, Synergy Research Group estimated that private and hybrid cloud infrastructure services spending rose 45 percent in 2015.†

Introduction

Executives say a “cloud cliff” sometimes creates barriers for success and causes enterprises to change strategic IT direction.

* http://www.gartner.com/newsroom/id/3188817

† https://www.forbes.com/sites/louiscolumbus/2016/03/13/roundup-of-cloud-computing-forecasts-and-market-estimates-2016/#7634d48a2187

http://www.gartner.com/newsroom/id/3188817

https://www.forbes.com/sites/louiscolumbus/2016/03/13/roundup-of-cloud-computing-forecasts-and-market-estimates-2016/#7634d48a2187

https://www.forbes.com/sites/louiscolumbus/2016/03/13/roundup-of-cloud-computing-forecasts-and-market-estimates-2016/#7634d48a2187


The challenge is finding the right blend of IT environments to meet workload needs. Consider Dropbox: To lower business costs, the company recently completed one of the largest reverse cloud migrations ever undertaken, moving about 600 petabytes of data from the public cloud to its own data centers. Although Dropbox still uses Amazon Web Services to provide new services in Europe, the company hit a “cloud cliff”— performance, cost, or control problems that occur because because of over-reliance on the public cloud.‡ It’s a scenario that HPE has seen play out repeatedly for nearly a decade.

More and more companies are finding that the on-prem IT experience has dramatically improved in recent years, with significant advances in functionality, performance, cost, and control. There’s an increasing sense that although managed and public commodity clouds have their place in IT infrastructures, there will always be applications that work better in a physical environment, especially applications with data-intensive and/or latency-sensitive requirements. As a result, Hybrid IT is expected to be a key IT strategy for years to come.

The Infrastructure as a Service (IaaS) market grew from about $4 billion in 2011 to about $22 billion in 2016.

- Gartner Research

$

2011 2016

$22B$4B

‡ https://www.wired.com/2016/03/epic-story-dropboxs-exodus-amazon-cloud-empire/

Methodology

Inovis conducted a blind study in March/April 2017. The study, which was sponsored by HPE, consisted of in-depth interviews with corporate IT leaders from 20 different companies, lasting between 45 minutes and two hours each. The subjects agreed to be interviewed on condition that their names and company affiliations not appear in the report. Inovis conducted 20 interviews with IT leaders in various industry verticals. These included six retail companies, five social media companies, three healthcare companies, four financial services/banking companies, and two public sector organizations. Interviewees were IT decision makers at predominantly large companies (1,000+ employees) and involved in cloud strategy regarding moving their companies’ workloads from the cloud to on-premises hosting (“declouding”), or in some cases, electing to keep certain workloads on-premises instead of moving them to public cloud.

https://www.wired.com/2016/03/epic-story-dropboxs-exodus-amazon-cloud-empire/

To better understand how companies are finding the unique, hybrid cloud architectures that best meet their needs, we interviewed executives at companies that had reduced or changed their use of managed or cloud IaaS or that chose to avoid the public cloud in the first place.

These companies include retail, social media, healthcare, financial services, and public sector companies. Some of these companies were born in the cloud while others transitioned from traditional IT infrastructures. Company sizes ranged from 300 employees to more than 300,000.

We found that while many of the companies surveyed were using managed or cloud successfully for workloads such as collaboration, legacy storage, cloud bursting, cloud-native apps, and application development and testing, there are times when certain applications, configurations, or workloads run better on a private or hybrid system. In fact, all of the executives interviewed said their companies rely on a combination of on-prem and public cloud solutions. Most saw hybrid IT as being a key IT strategy for the foreseeable future.

Executives at these companies emphasized the importance of finding the best hybrid mix to control costs and maximize performance using the best of what on-prem solutions and public clouds have to offer. In the words of a financial services executive, “It became clear the cloud was better for more traditional business operations—mainly SaaS, CRM, database, backup, and the like—not mission-critical functions that affected business flow.” Another executive said, “We chose a hybrid environment because [while] some of our workloads—web infrastructure, for instance—work well for us in the public cloud, not all do. We have a high-capacity, highly reliable network, [but public cloud] networking has more variable latency. We’ve had to be much more structured about interactions, even as we’ve transitioned to a more highly distributed architecture. It’s a balancing act.”

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Hybrid IT: the balancing act

“We’ve had to be much more structured about interactions, even as we’ve transitioned to a more highly distributed architecture. It’s a balancing act.”

- Financial services executive

Master the Cloud Cliff | How Hybrid IT helps companies balance performance, cost, and control

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Cloud cliffs, challenges, and concernsDespite the advantages of public cloud, most of the executives surveyed said their companies reached a “cloud cliff,” where public cloud IaaS no longer made sense for them. In some cases, the public cloud even impeded their ability to achieve their IT and business goals. These cloud cliffs—which generally fit under the headings of performance, cost, and control—are described in the following section.

0 2 4 6 8 10 12 14 16 18

Performance

Cost/billing issues

Flexibility

Security/compliance

Emerging technology

Customer service

Lower infrastructure costs

DRIVERS FOR HYBRID (number of mentions)

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Not all workloads are created equal. Through limitations such as developing technologies and bandwidth restrictions, performance shortcomings can plague even the most efficient and well-designed cloud environments.

The executives we interviewed described several performance-related issues, including lower-than-expected speed, scalability, functionality, customer service, and stability. In the words of one executive, “We enjoy some of our workloads and IT in the cloud, but others needed to be pulled back out due to lack of reliability and lower performance.”

Following are several examples of how a Hybrid IT approach helped companies to overcome these challenges.

Speed, scalability, and functionality: maximizing IT resources When it comes to performance and scalability, certain IT processes and systems are more likely to create a cloud cliff. This is often the case for mission-critical and customized data, applications, and workloads. The results can be unexpected. In one case, a retail IT executive said, “We moved some workloads back on-prem because the ease of cloud spin-ups and scaling weren’t as fast as what we initially had been able to do internally.”

Many executives reported that certain workloads run more efficiently in a private cloud. A healthcare executive said, “It would take days in a public cloud to complete some of the [analytics] computations we do in less than an hour in our private cloud. We also value the ability to seamlessly move between public and private cloud. This saves us time and money since we can choose the most effective environment for each workload.” Another observed, “Scaling is better on-prem for some things, as our IT guys can make that happen through virtualization.”

“We value the ability to seamlessly move between public and private cloud.”

- Healthcare IT director


Performance

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While the past five years have brought about rapid changes in cloud technology, there have also been performance advances inside IT departments. In fact, customers armed with new, more affordable technologies, open source tools, more efficient server utilization, and increased skillsets are overcoming the cloud cliff with Hybrid IT.

Several executives agreed that recent advances in virtualization and hyperconvergence have helped improve on-site and hybrid performance. (One executive cited Stratoscale software, which allows enterprises to create AWS-compatible environments inside their data centers.) As an IT director at a global financial services firm said, “I think one of the big game-changers has been hyperconvergence. That has allowed us to have virtualized and non-virtualized stacks on-prem. This is because there are simply some apps and data uses that work better in virtualized environments.”

Along with lower server and storage costs, he said, hyperconvergence has enabled “on-prem environments to be truly built to the point where our own cloud or data center is just as robust and scalable as any cloud vendor out there. Plus, we can add in the security we need for our industry without having to go by what the cloud vendor deems acceptable.” Another executive said, “When we initially hosted these workloads on public cloud it made sense. But then better solution stacks for on-prem clouds became available, along with better and faster servers and lower-cost storage.”

Going forward, we can expect that public and private cloud technologies will continue to improve. Public and private cloud will push each other to create better experiences and outcomes, yielding more choices, increased flexibility, and new opportunities. As a healthcare executive said, “We leveraged all-new technology to improve application performance, security, dynamic scaling, and disaster recovery.We transformed IT into a strategic business asset.”

Customer service: regaining reliability In some cases, customer service issues were among the reasons that companies reduced or limited their off-prem cloud use to select applications and for cloud bursting. A financial services executive explained: “The billing and customer service really were lacking. You can call and try to get billing or service help, but it was subpar at best. We routinely had to contact our integrator for help, which costs money. That additional cost plus the growing cost of public cloud hosting based on spikes, peaks, and general usage that grew with our own growth as a company just started making the on-prem and hybrid option more feasible. We knew with hybrid hosting, we could burst out to the public cloud if and when needed, but also retain workloads on-prem for the majority of the time.”


Outages and accessibility: returning to stability Even the fear of an outage is enough for some companies to steer clear of off-prem cloud solutions. As a healthcare executive explained, “Data, images, and graphics need to be readily accessible and always available. A public cloud could have an outage. In healthcare that is considered unacceptable for patient-facing applications and solutions, for obvious reasons.”

Financial services executives echoed this concern, with one saying, “Imagine a scenario in which a public cloud provider deletes a customer’s data or takes down a customer’s application for days or weeks for breach of contract, such as non-payment. It would create many problems for a bank. Cloud outages further compound the fear of non-availability.”

Recent outages, such as the AWS S3 service disruption of February 28, 2017, have brought these fears closer to the surface, especially when a customer company has gone through its own public cloud outage. One executive explained, “The recent AWS outage drove home recent issues we had relative to … outdated instances and file size restrictions that affected our own workloads.”

In search of reliability, many public cloud customers are running workloads in hybrid environments that can overflow onto public cloud when needed. In the words of a financial services CFO, “Hosting on-prem allows us to better watch usage and need. We can burst to the cloud if needed. That also means we can move and be more agile. The cloud can be used to shore up portions of our on-prem as an added precautionary move for security and be there for additional compute or handle VM sprawl if that time comes.”

“The recent AWS outage drove home recent issues we had relative to...outdated instances and file size restrictions.”

- Social media IT executive

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Some of the most colorful executive feedback about cloud services related to higher-than-expected costs, especially when the customer had expected rock-bottom pricing from unmanaged, commodity cloud offerings.

For a retail company that was an early adopter, public cloud seemed like a good idea at the time. “I like to think we jumped to be one of the first and one of the fastest using all means of technology to our benefit,” said one executive. “But we didn’t realize the economies of scale and how, when a company our size uses cloud and compares the costs to maintaining all or the majority of operations on-prem, there’s no distinct or noticeable difference. In fact, for us, costs increased.”

Economic cloud cliffs include expensive use cases, inconsistent or confusing billing, and a lack of expected IT personnel reductions. Here are several examples of how companies used Hybrid IT approaches to mitigate these problems.

Expensive use cases: aligning workloads and platforms For some executives, higher cost came as data loads increased, often exponentially. The solution for many companies was increased reliance on Hybrid IT. “There came a point,” one executive said, “where, for cost savings, we pulled a lot back off the public cloud and brought it back where it originated so we could contain our internal costs and our external IT costs. To run a lean business, you have to make those decisions.” Another executive cited costs related to input/output operations per second (IOPS).

Cost


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He explained, “The true tipping point was when our integrator started going through IOPS numbers and things became very clear that the solution was not prime for us for the things we had moved to the cloud. This high cost and other issues led the decision to move back on-site where costs could be better monitored for containment.”

At the same time that these companies were experiencing higher costs, Moore’s Law was at work in on-prem infrastructure: Expenses fell while efficiencies rose. New technologies and approaches were refined, including hyperconvergence, flash storage, and server monitoring and utilization. More flexible financial and consumption models have emerged that provide pay-as-you-use experiences on-prem. The CTO of an energy company said that “one of the biggest misconceptions was back when everyone thought, ‘Oh, hosting 2,000 servers in the cloud would be much cheaper than on-site. We’ll save on power, cooling, staff, and everything else.’ But over time, as servers grew in terms of capacity and cost less, plus hypervisor technology became the norm and everyone was paying for that anyway, it started to flip back a little. It’s almost at a break-even point now.” He went on to say, “The lower cost of storage, servers, and even better servers that require fewer hypervisor licenses made it less costly than it once was to scale out a data center or private cloud on-site. We could then monitor our usage and use the broadband network access we had.”

Likewise, a healthcare IT executive cited advances in storage, servers, and virtualization. “Flash array storage has truly come down in price, and it’s reliable, scalable, and fast,” he said. “Servers are faster and can be virtualized quickly on-site. IT staff is accustomed to handling virtualized IT environments that grow and shrink in areas as needed. The cost of buying and running on prem is not as high, compared to cloud, as once thought.”


“With on-prem solutions you know what you buy, how much is being depreciated, and the cost for labor to run it all.”

- Public sector executive

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Billing inconsistency: restoring predictability Billing inconsistency is another negative aspect of public cloud that surfaced repeatedly in our interviews. One retail executive said the bills caused “utter confusion,” while a healthcare executive whose company worked with Google Cloud Platform observed, “The charges are never the same, ever—month by month. There really seems to be no rhyme or reason at times.” A financial services executive agreed, saying, “Cloud [pricing] operates off of random discounts, credits, bursts of capacity usage, average usage billing which is not very accurate, and a host of other things.”

Cloud costs can also vary widely, leading one executive to use the term “surprise OpEx.” Another respondent explained, “For me, to say that the bills were confusing and hard to understand is truly an understatement. We had to actually go out and hire an accountant to work within our IT department simply to decipher bills. His whole job consists of reading the manuscript-sized bills we get and questioning every charge and line item on there. He’s saved us hundreds of thousands of dollars this past year, but it really makes one think: What kind of lopsided billing model do they use, and what about everyone else not scrubbing and reviewing their bills with a microscope?”

In comparison, these executives found that on-site solutions are much more predictable, while hosted private cloud can provide OpEx advantages. A public-sector executive whose company now relies more on virtualized solutions spelled this out: “With on-prem solutions, you know what to buy, how much is being depreciated, and the cost for labor to run it all. There are no longer almost ‘guesstimate’ bills from the public cloud provider.”

Personnel costs: understanding staffing needs One common misconception related to public cloud use is that it will help reduce costs through IT staff reductions. While this may be the case for certain small and medium-sized businesses, many executives at large enterprises found it to be untrue. A financial services executive said, “Everyone thought public cloud would help reduce costly IT staff headcount. It never did, because you needed the same amount of staff to manage the hybrid environment—the on-prem and the public cloud.”

“To say that the bills were confusing and hard to understand is truly an understatement.”

- Healthcare IT executive


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While cost and performance get much of the attention when it comes to public cloud evaluations, a loss of control is sometimes the elephant in the room that no one wants to acknowledge. These control-based issues include flexibility, customization, security, and compliance limitations, as well as cloud sprawl and vendor lock-in. Following are examples of how companies have dealt with these challenges.

Flexibility and customization: maximizing mission-critical applications One of the main drawbacks of running mission-critical applications on commodity public cloud is a lack of customization, especially for proprietary and legacy applications. According to a financial services IT executive, “We found with the public cloud, you’re just thrown into a bucket, and all solutions are there for anyone. There’s not much true customization based on business needs.”

On the other hand, he said, “there’s an inherent flexibility with on-prem, because your own IT guys monitor all the time and know the business operations. This allows them the visibility to make those changes be more flexible. Sometimes in the cloud you get VM sprawl and other taxations on total usage that, when the bill comes, makes figuring out those areas that need enhancement hard to decipher.”


Control

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Executives found that private clouds often allow for a much higher degree of customization. According to one executive in the healthcare industry, “Health professionals and other innovators can leverage [private] healthcare clouds to create and host their applications. We have a toolkit that supports deployment of internal and external applications and provides templates for creating a master patient index and other resources that support population health management.”

Security and compliance: addressing risk and legal accountability While public cloud security standards continue to improve, many executives have come to realize that certain workloads are more secure on-site. Likewise, legal requirements in certain industries and data sovereignty issues in certain countries can make it difficult, if not impossible, to utilize public cloud solutions. Federal HIPAA and FERPA requirements were cited by several executives, as were private agencies such as the Health Information Trust Alliance (HITRUST), which has established a security framework for sensitive or regulated data. Executives said government regulations and industry protocols add additional layers of complexity to public cloud workload management. And while vendors work hard to comply with these requirements, many enterprises face higher levels of accountability and risk when they use public cloud solutions.

This applies especially to regulated industries such as financial services and healthcare. One healthcare executive said regulatory compliance is easier to monitor on-site. “We have to comply with HIPAA, HITRUST, FERPA, etc.,” he said. “We would never put data governed by these in the public cloud. I know [public cloud vendors] have made advances, but why risk it when you can host on-prem and be sure?”

“For organizations like ours that deploy IoT solutions, security is not optional; it’s essential.”


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While financial services and healthcare companies are especially sensitive about security, any company that depends on e-commerce or maintains proprietary business data faces security concerns that can be heightened by public cloud use. As a social media company executive observed, “If a company needs to comply with government regulations or requires stringent levels of security to protect customer data … then private clouds also make a lot of sense.” The same sentiment was heard for application development. A healthcare executive said, “App dev for niche apps was considered not as secure and not as robust as what could be done on-prem.”

In comparison, these executives said, an on-site solution can provide more security-related control and awareness. A financial services executive explained, “We can add in the security we need for our industry with additional security layers on the backend on-prem as well, so we are completely protected.” He went on to say, “Our private cloud solution offers advanced intrusion monitoring and protection, data encryption in motion and at rest, SSL or VPN for secure cloud recovery, and multi-factor authentication, all of which are key to healthcare. This is a key reason we use a private environment for many of our most sensitive workloads and data.”

Security and compliance must also be considered for developing technologies such as analytics, big data, Internet of Things (IoT), and machine learning. As much as these technologies present opportunities, they also involve challenges.

A healthcare executive described IoT technology adoption as a “complex and ongoing, iterative process.” He went on to say, “IoT has the potential to not only keep patients safe and healthy, but to improve how physicians deliver care as well. IoT can improve patient engagement and satisfaction by allowing patients to spend more

time interacting with their doctors. But IoT can also result in new vulnerabilities. Nowhere are these security concerns more critical than in healthcare. Maintaining the privacy of patient records and data is paramount to healthcare. To that end, for organizations like ours that deploy IoT solutions, either internally at the operational level or at the edge of remote patient monitoring, IoT security is not optional; it’s essential.”

As analytics capabilities improve and companies turn data into competitive insights, many companies are turning to Hybrid IT solutions. As a financial services executive said, “We can manage risk and analytics calculations effectively in the private cloud or in our data center. These rely on many different types and sources of data, including relational, semi-structured XML, dimensional, and the new big

“App dev for niche apps was considered not as secure and not as robust as what could be done on-prem.”



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data types. Leveraging large volumes of data from such sources makes query performance a critical capability. A public cloud couldn’t meet the demands we place on our analytics.”

Overall, many executives agreed that a hybrid solution can help meet security and compliance requirements. A financial services executive pointed out, “You can tackle the challenges of security and data privacy by creating a hybrid cloud where sensitive and client data can reside on a private cloud and computing power can be available on a public cloud. These private and public clouds can be combined in a virtual private network to create a single, scalable, hybrid cloud.”

Cloud sprawl and rogue subscriptions For better or worse, public cloud is easy to set up. In many cases, access to a credit card seems like the only requirement for getting started. This makes public cloud use difficult to control, leading to what two executives called “rogue” public cloud subscriptions, as well as increased likelihood of cloud sprawl—the uncontrolled proliferation of cloud instances, services, or providers that are used by an enterprise. One executive explained, “You have department heads with access to a credit card who will actually go into the cloud portal, swipe that credit card, and spin up some VMs they think they need. This shows on the bill, but it’s hard to find because cloud billings are so confusing. This adds cost. And when this behavior gets replicated by multiple departments and you get charged for that usage, it causes issues.”

Vendor lock-In: keeping your options open In economics, the term “vendor lock-in” is defined as a situation where a customer is unable to change vendors without incurring substantial switching costs.

Today, the major public cloud platforms fit this description. One healthcare executive whose company used AWS Elastic File System (EFS) had this experience: “You need long-term data retention for compliance … but then you migrate that data in there and you realize very quickly they actually don’t have long-term backups for that data available. When you start to decloud, that leads you to spending more for migration tools and some help from integrators. Even then, the data comes out unusable. ...This is where you start really getting hit with those high costs to get out of the ‘ransom fee,’ as everyone calls it.” He went on to say, “There’s a reason EFS and AWS have the nickname ‘Hotel California’—you can get in but never get out.”

A retail executive had a similar comment: “Lock-in is a given with [public] cloud. This is why we never did much more in terms of app test and dev in the cloud, short of letting some developers play a bit. But even then, once they reached a certain point, we had them stop and finish on our own cloud.”



Our sources gained valuable insights through the process of evaluating Hybrid IT services. Here are a few.

Find the best Hybrid IT mix While most executives in this study said public cloud has its place, they agreed that a key directive —now and going forward—is determining the proper Hybrid IT mix. Every enterprise is different, and every enterprise cloud strategy should be treated differently as well.

As a retail executive observed, ”We noticed throughout our usage growth that we needed to make adjustments and create a better blend of our own private, on-prem cloud and the public cloud—which is why we use the public cloud as required...but handle the rest on our own. The costs simply were not sustainable and were not even logical at times.”

Emphasize IT as a core competency Having gone through the cloud evaluation process, these executives realized the importance of IT expertise. All of the executives contacted, regardless of company size, indicated that a skilled, in-house IT group is critical to having the robust, flexible, reliable, and high-performing IT environments needed for their businesses to succeed.

Lessons learned

“We needed to make adjustments and create a better blend of our own private, on-prem cloud and the public cloud.”

- Retail executive

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A healthcare executive explained, “We place high priority on IT as a core competency because we’re ultimately responsible. We know our business better than anyone. For us, the main driver is security. When it comes to medical devices and personal healthcare information, security can be a matter of life and death. We have to answer for this.”

A financial services executive agreed, saying, “One thing we learned through the process is that public cloud done right needs to be designed from the server up. You need to know your workloads and apps and what’s cloud-friendly and what’s not.”

Consider data uses and growth expectations Sometimes companies simply outgrow the public cloud. Data growth can exceed expectations. Usage patterns can change over time. By considering these factors up front, companies can plan long-term hybrid strategies and prevent costly mistakes.

In the words of a retail executive, “Bulk encryption, anti-malware scanning, and data discovery tools have a harder time dealing with very large amounts of data. Existing tools should be evaluated to determine how they’ll be impacted as data volumes increase, and it’s important to consider new tools when you determine that operations would be impacted severely if there’s a loss of control. In our minds, all of this was a far easier task with the cloud under our roof and our control.”

To address these concerns, many companies came up with a different way of forecasting IT expenses. A social media company executive explained, “The true question is not which option costs more per measurement unit, but rather which option is least expensive over the total usage of all the resources used to operate the application. This calculation is much trickier than a unit-to-unit comparison. First, it requires forecasting total use over some period of time, typically a month or even longer. In other words, how many hours will this application run per month? How much storage will it use? How much network traffic will be associated with it? These all impact this decision.”

“When it comes to medical devices and personal healthcare information, security can be a matter of life and death.”

- Healthcare executive


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Hire the right experts Taking workloads off the public cloud can seem like unraveling a gigantic, tangled ball of the world’s longest AC power cable. But the executives whose companies went through this process insisted that there’s a working outlet at the end of the cable. A social media company executive whose company declouded because of cost and performance issues said, “The exit is the hardest thing someone in IT can possibly undergo. I can say that pulling out of the cloud at times for me was worse than any forklift upgrade within our data center I’ve ever encountered.” He went on to say, “It’s a minimum of one year to get back out of the cloud. But, when done right and with the right consultants and staff, it can be done.”

To help with navigating new cloud, virtualization, and hyperconverged technologies, many companies look to systems integrators or cloud services partners with experience and expertise in cloud migration. Many of the executives interviewed for this report found this out the hard way.

A retail executive may have expressed it best when he said, “The best thing to do in order to bring home and decloud some things is to use a trusted partner like the integrator who helped with your on-prem and cloud usage model. Plus do things in stages to save money. It’s all about not impeding workflow or productivity.”

Executives said this kind of relationship is important not just for companies migrating on or off the public cloud, but also for those still in the evaluation stage or trying to decipher a public cloud bill.


“Pulling out of the cloud at times was worse than any forklift upgrade I’ve ever encountered.”

- Social media IT executive


Optimal IT solutionsThe public cloud has delivered proven benefits for certain workloads and use cases. Startups, app test and dev environments, and websites with highly variable web traffic can all benefit from the public cloud.

But, just as e-reader devices haven’t signaled the death of paper books, the reality is that there are trade-offs. And while finding a one-size-fits-all solution is practically impossible, Hybrid IT has helped many companies match specific workloads with particular solutions.

Reading between the lines of these interviews, it’s clear that companies are becoming increasingly sophisticated in their understanding of Hybrid IT services. For some companies, this means taking a closer look at costs and a fresh look at the benefits of handling some workloads in-house. As familiarity with cloud architectures increases, so does the awareness that Hybrid IT is an optimal solution for many IT functions, particularly when it comes to high-volume, low-latency applications such as big data and rich media processing. And by using a hybrid approach, companies are less likely to hit cloud cliff problems related to performance, cost, and control.

“We knew that the right mix is key, as there are very few if any businesses that are 100 percent in the cloud,” said one financial services executive. “We needed to use the right IaaS and PaaS architecture to match and integrate with what we have on-site and on-prem. The end result involved moving to a more hybrid solution.”

0% 10% 20% 30% 40% 50% 60%

Overall average

Social media

Retail

Public sector

Healthcare

Financial

AVERAGE ESTIMATED INCREASE IN ONSITE WORKLOAD PERCENTAGE AFTER CHANGE IN CLOUD STRATEGY

22 FOUNDATIONS OF HYBRID IT | SECTION 01: The role of hybrid IT and why it matters

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Lessons for leaders

N O W T O N E X T 01

Performance-related problems can be toxic to even the

best IT teams.

A loss of control can cause long-term and often permanent

setbacks.

Costs from public cloud investments often fail to meet

expectations.

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Lessons from companies that mastered the cloud cliff with Hybrid IT

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02Case Studies


HealthcarePublic cloud and a major acquisition

Industry-specific cloud concerns: Constant availability, security, speed, scalability, and security.

“Healthcare is an industry that embraced technology fast and early. An all-the-time operational business and the technology advancements in patient care and treatment plus research drive our industry. Healthcare also is highly dependent on technology for patient care, staff operations, and even provider education. In healthcare, speed needs to be reliable, cloud access needs to be scalable and accessible, and downtime is not an option for some apps and software. Security must be the highest quality. Risk management, ethical issues, HIPAA, and being able to access patient treatment apps and software and records is crucial.“

Reason for moving to the public cloud: Collaboration, app dev and test, streaming data, and file backup.

“We use some SaaS-based cloud in addition to IaaS and PaaS because in healthcare, some cloud-native apps are better used in the cloud versus on-prem. However, when the apps are cloud-native, they work far better [on-site].”

Main reason for change in public cloud strategy: Overlap due to merger.

“There had to be hard looks into what both parties owned, leased, or were paying for and that started [the process of] having everything reviewed because of the obvious overlap. The migrations off the cloud to on-prem were for cost savings and control, and also to help better understand how to merge the two environments better without third-party cloud tools showing various numbers, usage rates, and analytics.”

50%PRIVATE CLOUD

50%PUBLIC CLOUD

Current estimated public/private workloads mix:

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Secondary reasons for change in public cloud strategy: Cost and control.

“Public cloud billing statements are tough to understand. You have a lot of line item charges and line item credits and discounts. The best thing that could happen would be easier-to-understand bills, because the way it is now makes it a challenge to determine what’s cost-effective for the cloud in true terms of IT spend. The charges are never the same, ever—month by month—this makes understanding the OpEx-versus-CapEx choice hard to determine.”

Current on-site or hybrid workloads: Business and technical apps.

“These heavily relied-upon, critical apps tend to remain on-site due to HIPAA and the need for no lag time. The data, images, and graphics need to be readily accessible and always available.”

Current public cloud workloads: App dev and test, backup files and data for record-keeping and compliance, and productivity tools for collaboration.

“On-prem has the easily accessed data on patients and the cloud keeps the backup copies. This will most likely not change; it’s an accepted way to maintain two sets to satisfy BURA and DR requirements found within HIPAA.”

Lesson learned: Find the right systems integrator partner.

“The key for cloud is the right integrator to walk you through the processes—to look at what you have, how to make it work better, how to expand as needed, and everything else that a proper on-prem data center or private/hybrid cloud needs to be robust to handle business functions.”

“The migrations off the cloud to on-prem were for cost savings and control, and also to help better understand how to merge the two environments better.”



Social media case 1When it hurts to be on the bleeding edge

Industry-specific cloud concerns: High availability and performance.

Reason for moving to the public cloud: Perceived OpEx accounting advantages.

“We opted to be bleeding-edge and move to cloud when storage and hypervisor license costs were on the climb. It seemed to be a better way to keep costs in an OpEx mode and know what they were. That worked slightly at first.”

Main reason for change in public cloud strategy: Higher-than-expected costs.

“We used a lot of IaaS and SaaS within AWS. As we grew, the usage did too … and the bills grew far faster. We honestly reached a tipping point when billing started to approach $100,000 per month. That’s plenty to bring your on-prem up to speed and make it far better than it ever was, hire the right staff, hire a consultant to help with the change back, get some OpenStack engineers in your IT department to help a little more with virtualized workloads and even flow some money back in-house to get better DR—and hell, even hire a compliance officer for data sovereignty. It boiled down to the same cost, and we [got] far more control. People think cloud is ‘hands-off and fire the IT guys!’ It simply isn’t.”

Secondary reasons for change in public cloud strategy: Data sovereignty, privacy, security, and accessibility.

“Data sovereignty, privacy, security, and accessibility can be better controlled on-site unless we are back to talking about legacy data that needs to be held onto for compliance. The secondary copies are fine for the cloud as long as primary, usable ones can be on-prem and accessed right away and all the time. We prefer being able to handle our security needs and try new solutions or features with our trusted vendors if we so choose.”

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Current on-site or hybrid workloads: Just about everything.

“On-prem is where just about everything resides now for the infrastructure, which is basically servers, hypervisor, security layers, storage, and other layers of management tools. The lower cost of storage and higher-powered servers, allowing us to spin up more servers per VMware hypervisor license, has proven to be a good thing. We had good financial outcomes moving on-prem with a hybrid solution so we can access cloud when we choose. We now have two times the horsepower on-prem for half the cost. We also have seen a 4x improvement in our compute and storage costs and efficiency versus what we were seeing being in AWS.”

Current public cloud workloads: Storage and VMs for cloudbursting.

“We tend to burst out to the cloud when we have some larger-scale test and dev going on. That’s why we maintain an AWS contract to an extent, even though the majority of what we had been doing in AWS was pulled back in-house. There are just times when developers need a temporary burst of additional storage or compute or some extra servers to play with app development or app tweaking.”

Lesson learned: Improve server utilization.

“The standard utilization on-prem tends to be around 12 percent, which isn’t even near capacity, so that’s wasted server space and basically even wasted hypervisor licenses. This is why many thought, ‘Oh, cloud will perform better and even be cheaper because we keep buying more and more servers and VMware licenses.’ This is because nothing was being monitored and managed properly. If—and only if—you have the right infrastructure and software, [you’ll] get better utilization out of servers, which is what should be happening anyway. Once you hit roughly 50 percent, it’s far more cost-effective to control your own premises.”

“We now have two times the horsepower on–prem for half the cost.”



Social media case 2The day the public cloud died

Industry-specific cloud concerns: High availability and performance.

Reason for moving from the public cloud: A poorly communicated capacity limitation led to an outage that lasted for more than a day.

Main reason for change in public cloud strategy: Reliability.

“We’re moving some of our web infrastructure workloads back to our own data center. Performance was the big issue. Lack of communication from our public cloud provider led to a customer-facing outage we could not have prevented. Before the outage that affected us, we were all-in with public cloud. Now we’re seriously rethinking our entire cloud strategy and are moving more workloads back on-prem.”

Secondary reasons for change in public cloud strategy: Cost and flexibility.

“An early estimate is that moving these workloads off the cloud will save about 30 percent in our OpEx IT spend. From a performance perspective, we’ve increased speed, customized capabilities, and improved scalability. We don’t have the danger of the outage issue.”

“Flexibility is important. With a private cloud, we get the control and flexibility of a dedicated environment that’s tailor-made to address our specific IT needs. For fast-growing companies like ours with constantly changing requirements, a private cloud offers more flexibility to adapt and evolve as the company changes.”

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Current on-site or hybrid workloads: Most applications (cloud mix change currently in process).

“For us, analytics and customized applications have better performance in a data center or private cloud. The improved performance outweighs any cost savings we might have had in the public cloud.”

Current public cloud workloads: Application dev and test, and some collaboration application workloads.

“We’re moving some back to the data center, with the possibility of moving more. We’re moving applications with a great deal of customization back. We can also see spikes in activity and better manage them in our data center and better manage utilization.”

Lesson learned: Plan ahead.

“Plan for every situation that you can anticipate. Consider thoroughly which environment is best for each workload. Hire talented IT staff and retain them.”

“Due to the nature of our business, planning for IoT is very important to our future. Performance and customization capabilities are greater in our own environment. We can control workloads in a better, more efficient manner. These are crucial for IoT. We’ll utilize a hybrid environment for our management of these forward-looking trends.”


“Lack of communication from our public cloud provider led to a customer-facing outage we could not have prevented.”


Public sectorOutgrowing the public cloud

Industry-specific cloud concerns: Data accessibility.

Reason for moving to the public cloud:

“We wanted to be almost an all-cloud operation to support our whole model of being remote and online-based. At the time we weren’t ready to build our own infrastructure on-site.”

Main reason for change in public cloud strategy: Cost and control issues.

“The data we hosted on AWS was growing exponentially, as all data does, and that increased costs. Public cloud hosting served its purpose when we entered the all-cloud (for the most part) approach, but then you hit this point where it doesn’t make financial or operational sense any longer, when the same thing can be accomplished on-prem for less money and less hassle. Having the workloads back on-site gave us better control over usage, and we could better see spikes in activity.”

Secondary reasons for change in public cloud strategy: Billing confusion.

“As the costs for public cloud hosting grew, they didn’t always make sense to us as we vetted and really dug deep into the billings. We knew up front…that scaling up and out would mean more workloads and usage, but the way it translated to billing was not clear.”

Current on-site or hybrid workloads: Nearly everything.

“We had the IT staff and the base infrastructure we needed, so we enhanced, expanded, and declouded. It has gone very well for us.”

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Current public cloud workloads: Cloud-native apps.

“We’re slowly making some strides to tap the public cloud for some [apps that] are relatively self-sustaining and are cloud-native, which is the key. We’re doing this to free up some IT staff time and to give the other declouded aspects room, so to speak, within our private/hybrid cloud.”

Lesson learned: Find the right systems integrator partner.

“Public cloud providers are not going to help you delve into thoughts about declouding, so you need an almost-neutral third party to walk you through the process and help you determine the reasons behind the initial cloud use and the reasons behind why it’s not the best option any longer.”


“You hit this point where it doesn’t make financial or operational sense any longer, when the same thing can be accomplished on-prem for less money and less hassle.”


RetailPaying the price for a hasty decision

Industry-specific cloud concerns: Security and cost.

Reason for moving to the public cloud: Cloud bursting.

“Our original thought about using cloud … was to burst out for additional compute as required during spike times, which are pretty common in retail.”

Main reason for change in public cloud strategy: Performance, cost, and billing.

“One of the biggest issues driving declouding for us is that, to be honest, the initial move to the public cloud was done willy-nilly. We moved the workloads and then we moved the apps to run off those workloads. But we didn’t really think about how to stage properly, how to control usage costs, and how to design an exit strategy. We quickly learned that cloud costs were far higher than we expected. Had we waited and fleshed everything out more we might have not had such a negative cloud experience.”

“I’ve never spoken to another person using the cloud who has had a completely positive billing and cost-per-performance situation. The costs for usage have some strange ways of being averaged, and this never seems to show where the spikes in usage actually occur. It becomes too challenging to contain costs when you don’t know these things because they’re not very transparent to customers like us. This really makes budget planning a challenge, because no two monthly bills are ever the same, even when it appears to us that usage is in line with the prior month.”

Secondary reasons for change in public cloud strategy: Control and performance.

“You have department heads who … spun up their own VMs without getting permission from IT or even bothering to tell them. They just didn’t know how it would impact our on-prem hybrid

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cloud that communicated with the public cloud. It was a nightmare at times, because there were performance lags and data sovereignty issues.”

“Hosting workloads on-prem lets our IT staff tweak and make adjustments as required. We have a cyclical spike in business at times and we can adjust for that.”

Current on-site or hybrid workloads: Proprietary business apps.

“Certain data is on-prem for HR and staff apps that we use daily for operations.”

Current public cloud workloads: Collaboration and app dev and test.

“We maintain usage of collaboration tools and solutions in the cloud. This is becoming the norm for most companies, not just us. These tools in the cloud can be used when needed, and to be honest they are not much different than the collaboration tools used outside of a specific cloud, so they are a good option for us.”

“Dev test and app development was in and still runs in the cloud. This is for cloud-native apps primarily; we house the ones that are not cloud-native on-prem.”

Lesson learned: Be selective about cloud workloads and understand your usage trends.

“We’ll continue to expand out for temporary needs and maintain legacy data in the public cloud. However, we’ll be picky with what we keep and use the public cloud for in comparison to our own cloud. The hybrid option gives us the security and control we want. Honestly, our on-prem environment was just about there. We expanded, built, and tweaked some stuff and have good performance now, so we don’t need those bursts to the cloud as we’ve needed them in the past. The lower cost for hardware and software on-prem helps make this a reality as well.”

“Something we really took the time to learn was how to predict our spike periods of business. This allowed us to move towards a very hybrid cloud and pull more workloads back on-prem than what we originally intended to.”

“One of the biggest issues driving declouding for us is that, to be honest, the initial move to the public cloud was done willy-nilly.”



Financial services Finding the right Hybrid IT mix Industry-specific cloud concerns: Accessibility, security, and reliability.

“Financial firms seem to be the ones on the bleeding edge of technology, as we are an industry that is constantly in operation. There can be no security flaws or performance lags or downtimes.”

“Our business creates data around the clock and every day, so capacity for data storage was always a factor, which is why cloud seemed to be a good option.”

Reason for moving to the public cloud: Performance, OpEx vs. CapEx.

“We initially moved workloads and apps off to the public cloud for better performance. When we realized that things didn’t change as expected, especially for the cost, we started the tedious process of bringing those things back on-prem.”

“The public cloud, mainly AWS, truly made the move to more of an OpEx model sound promising at the time for us. You have to remember that this is before hyperconvergence, white box servers, and commodity storage took over and started becoming accepted forms of gear for the data center.”

Main reason for change in public cloud strategy: Performance.

“We’re bringing back apps that we had put on the public cloud and didn’t go as planned because of reduced performance when compared to … when they were on-prem. That said, there are other apps we feel are truly more cloud-ready, and we’re trying those out in the cloud so we can have what we deem to be a truly hybrid solution.”

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Secondary reasons for change in public cloud strategy: Flexibility.

“Moving back on-prem of course brings better flexibility. The basis of the on-prem clouds is virtualization. We are far enough along in that journey that the guys on-prem know quite well how to manage and manipulate those environments for maximum capacity and performance.”

Current on-site or hybrid workloads: Proprietary apps, and app dev and test.

“We’ve scaled back app dev and testing in cloud. We do still do some, but those are initial thought-stage app tweaks and customization. We only go so far in the public cloud because if you create and test out an app too far in the public cloud, you’ll have an issue retrieving it and bringing it back out for usage. We call it the [public cloud] ransom.”

Current public cloud workloads: Collaboration, DevOps, and disaster recovery

“We’ll continue to use some public cloud-based collaboration tools because those are best run in the cloud and they are designed with remote access in mind, which is a part of our business.”

“DevOps and DR moved first out to the public cloud, and they stayed there. But the other apps we tried that seemed to be cloud-ready didn’t work in the public cloud, and they were declouded. We had the same experience with workloads for various things and storage of data as well.”

Lesson learned: Get hybrid IT right the first time.

“The biggest thing others need to keep in mind is the ease of getting in the cloud is vastly different compared to trying to get back out.”

“If you create and test out an app too far in the public cloud, you’ll have an issue retrieving it and bringing it back out for usage. We call it the [public cloud] ransom.”


36 FOUNDATIONS OF HYBRID IT | SECTION 01: The role of hybrid IT and why it matters

FPOINFOGRAPHIC

How can Hewlett Packard Enterprise help?

N O W T O N E X T 02

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We help you define your unique, right mix of Hybrid IT across

all of your environments.

We optimize your right mix with flexible delivery and

consumption models.

Through the deployment of software-defined infrastructure,

we power your right mix.

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More information on working with HPE to find the optimal Hybrid IT mix can be found at

hpe.com/solutions/hybridIT

http://hpe.com/us/en/solutions/transform-hybrid.html

© Copyright 2017 Hewlett Packard Enterprise Development LP. The information contained herein is subject to change without notice. The only warranties for HPE products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. HPE shall not be liable for technical or editorial errors or omissions contained herein.

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