Tag Archives: ROI

The Open Group Cloud Computing Work Group Web Jam on CIO Priorities

By E.G. Nadhan, HP

Recently, I shared my experience leading the first Web Jam within The Open Group Cloud Work Group. We are now gearing up to have another one of these sessions – this time around, the topic being CIO priorities as driven by Cloud Computing. Even though the Web Jam is an internal session held within The Open Group Cloud Work Group, we want to factor in other opinions as well – hence this blog where I share my perspective on how Cloud Computing is defining the priorities for the CIO. I am basing this perspective on the findings from a survey conducted by IDG Research as published in this white paper on IT priorities where I was one of the persons interviewed.

I would categorize the CIO priorities across five drivers: customers, business, innovation, finance and governance.

1. Customers. CIOs must listen to their customers (especially shareholders). Cloud Computing is breeding a new generation of customer-focused CIOs.  Shareholders are driving IT to the Cloud. At the same time, enterprises need to be at least as social as their customers so that they can process the brontobytes of data generated through these channels.

2. Business. CIOs must shift their attention from technical matters to business issues. This is not surprising. As I outlined in an earlier blog post, the right way to transform to Cloud Computing has always been driven by the business needs of the enterprise. When addressing technical requests, CIOs need to first determine the underlying, business-driven root cause of the request.

3. Innovation. CIOs must make innovation part of the IT blood stream. CIOs need to take steps today to innovate the planet for 2020.  For example, the Cloud facilitates the storage of brontobytes of data that can be informationalized through data analysis techniques by those who have the sexiest job of the 21st Century – Data Scientist.

4. Finance. CIOs must have the right mechanisms in place to track the ROI of Cloud Computing.  As fellow blogger from The Open Group Chris Harding states, CIOs must not fly in the Cloud by the seat of their pants.  Note that tracking the ROI is not a one-time activity. CIOs must be ready to answer the ROI question on the Cloud.

5. Governance. CIOs must ensure that there is a robust Cloud governance model across the enterprise. In the past, I’ve explained how we can build upon SOA Governance to realize Cloud governance.  As a co-chair for the Cloud Governance project within The Open Group, I have a lot of interest in this space and would like to hear your thoughts.

So, there you have it. Those are the top 5 priorities for the CIO driven by key Cloud Computing forces. How about you? Are there other CIO priorities that you can share? I would be interested to know and quite happy to engage in a discussion as well.

Once the web jam has taken place, I am planning on sharing the discussions in this blog so that we can continue our discussion.

NadhanHP Distinguished Technologist, E.G.Nadhan has over 25 years of experience in the IT industry across the complete spectrum of selling, delivering and managing enterprise level solutions for HP customers. He is the founding co-chair for The Open Group SOCCI project and is also the founding co-chair for the Open Group Cloud Computing Governance project. Twitter handle @NadhanAtHP.

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Flying in the Cloud by the Seat of Our Pants

By Chris Harding, The Open Group

In the early days of aviation, when instruments were unreliable or non-existent, pilots often had to make judgments by instinct. This was known as “flying by the seat of your pants.” It was exciting, but error prone, and accidents were frequent. Today, enterprises are in that position with Cloud Computing.

Staying On Course

Flight navigation does not end with programming the flight plan. The navigator must check throughout the flight that the plane is on course.  Successful use of Cloud requires, not only an understanding of what it can do for the business, but also continuous monitoring that it is delivering value as expected. A change of service-level, for example, can have as much effect on a user enterprise as a change of wind speed on an aircraft.

The Open Group conducted a Cloud Return on Investment (ROI) survey in 2011. Then, 55 percent of those surveyed felt that Cloud ROI would be easy to evaluate and justify, although only 35 percent had mechanisms in place to do it. When we repeated the survey in 2012, we found that the proportion that thought it would be easy had gone down to 44 percent, and only 20 percent had mechanisms in place. This shows, arguably, more realism, but it certainly doesn’t show any increased tendency to monitor the value delivered by Cloud. In fact, it shows the reverse. The enterprise pilots are flying by the seats of their pants. (The full survey results are available at http://www.opengroup.org/sites/default/files/contentimages/Documents/cloud_roi_formal_report_12_19_12-1.pdf)

They Have No Instruments

It is hard to blame the pilots for this, because they really do not have the instruments. The Open Group published a book in 2011, Cloud Computing for Business, that explains how to evaluate and monitor Cloud risk and ROI, with spreadsheet examples. The spreadsheet is pretty much the state-of-the-art in Cloud ROI instrumentation.  Like a compass, it is robust and functional at a basic level, but it does not have the sophistication and accuracy of a satellite navigation system. If we want better navigation, we must have better systems.

There is scope for Enterprise Architecture tool vendors to fill this need. As the inclusion of Cloud in Enterprise Architectures becomes commonplace, and Cloud Computing metrics and their relation to ROI become better understood, it should be possible to develop the financial components of Enterprise Architecture modeling tools so that the business impact of the Cloud systems can be seen more clearly.

The Enterprise Flight Crew

But this is not just down to the architects. The architecture is translated into systems by developers, and the systems are operated by operations staff. All of these people must be involved in the procurement and configuration of Cloud services and their monitoring through the Cloud buyers’ life cycle.

Cloud is already bringing development and operations closer together. The concept of DevOps, a paradigm that stresses communication, collaboration and integration between software developers and IT operations professionals, is increasingly being adopted by enterprises that use Cloud Computing. This communication, collaboration and integration must involve – indeed must start with – enterprise architects, and it must include the establishment and monitoring of Cloud ROI models. All of these professionals must co-operate to ensure that the Cloud-enabled enterprise keeps to its financial course.

The Architect as Pilot

The TOGAF® architecture development method includes a phase (Phase G) in which the architects participate in implementation governance. The following Phase H is currently devoted to architecture change management, with the objectives of ensuring that the architecture lifecycle is maintained, the architecture governance framework is executed, and the Enterprise Architecture capability meets current requirements. Perhaps Cloud architects should also think about ensuring that the system meets its business requirements, and continues to do so throughout its operation. They can then revisit earlier phases of the architecture development cycle (always a possibility in TOGAF) if it does not.

Flying the Cloud

Cloud Computing compresses the development lifecycle, cutting the time to market of new products and the time to operation of new enterprise systems. This is a huge benefit. It implies closer integration of architecture, development and operations. But this must be supported by proper instrumentation of the financial parameters of Cloud services, so that the architecture, development and operations professionals can keep the enterprise on course.

Flying by the seat of the pants must have been a great experience for the magnificent men in the flying machines of days gone by, but no one would think of taking that risk with the lives of 500 passengers on a modern aircraft. The business managers of a modern enterprise should not have to take that risk either. We must develop standard Cloud metrics and ROI models, so that they can have instruments to measure success.

Dr. Chris Harding is Director for Interoperability and SOA at The Open Group. He has been with The Open Group for more than ten years, and is currently responsible for managing and supporting its work on interoperability, including SOA and interoperability aspects of Cloud Computing. He is a member of the BCS, the IEEE and the AEA, and is a certified TOGAF practitioner.

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Counting the Cost of Cloud

By Chris Harding, The Open Group

IT costs were always a worry, but only an occasional one. Cloud computing has changed that.

Here’s how it used to be. The New System was proposed. Costs were estimated, more or less accurately, for computing resources, staff increases, maintenance contracts, consultants and outsourcing. The battle was fought, the New System was approved, the checks were signed, and everyone could forget about costs for a while and concentrate on other issues, such as making the New System actually work.

One of the essential characteristics of cloud computing is “measured service.” Resource usage is measured by the byte transmitted, the byte stored, and the millisecond of processing time. Charges are broken down by the hour, and billed by the month. This can change the way people take decisions.

“The New System is really popular. It’s being used much more than expected.”

“Hey, that’s great!”

Then, you might then have heard,

“But this means we are running out of capacity. Performance is degrading. Users are starting to complain.” 

“There’s no budget for an upgrade. The users will have to lump it.”

Now the conversation goes down a slightly different path.

“Our monthly compute costs are twice what we budgeted.”

“We can’t afford that. You must do something!”

And something will be done, either to tune the running of the system, or to pass the costs on to the users. Cloud computing is making professional day-to-day cost control of IT resource use both possible and necessary.

This starts at the planning stage. For a new cloud system, estimates should include models of how costs and revenue relate to usage. Approval is then based on an understanding of the returns on investment in likely usage scenarios. And the models form the basis of day-to-day cost control during the system’s life.

Last year’s Open Group “State of the Industry” cloud survey found that 55% of respondents thought that cloud ROI addressing business requirements in their organizations would be easy to evaluate and justify, but only 35% of respondents’ organizations had mechanisms in place to do this. Clearly, the need for cost control based on an understanding of the return was not widely appreciated in the industry at that time.

We are repeating the survey this year. It will be very interesting to see whether the picture has changed.

Participation in the survey is open until August 15. To add your experience and help improve industry understanding of the use of cloud computing, visit: http://www.surveymonkey.com/s/TheOpenGroup_2012CloudROI

Dr. Chris Harding is Director for Interoperability and SOA at The Open Group. He has been with The Open Group for more than ten years, and is currently responsible for managing and supporting its work on interoperability, including SOA and interoperability aspects of Cloud Computing. He is a member of the BCS, the IEEE and the AEA, and is a certified TOGAF practitioner.

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Cloud Computing predictions for 2012

By The Open Group Cloud Work Group Members 

With 2012 fast approaching, Cloud Computing will remain a hot topic for IT professionals everywhere. The Open Group Cloud Work Group worked on various initiatives in 2011, including the Cloud Computing Survey, which explored the business impact and primary drivers for Cloud within organizations, and the release of Cloud Computing for Business, a guide that examines how enterprises can derive the greatest business benefits from Cloud Computing from a business process standpoint.

As this year comes to an end, here are a few predictions from various Cloud Work Group members.

Non-IT executives will increasingly use the term “Cloud” in regular business conversations

By Penelope Gordon, 1 Plug

In 2012, the number of non-IT business executives seeking ways to leverage Cloud will increase, and consequently references to Cloud Computing will increasingly appear in general business publications.

This increase in Cloud references will in part be due to the availability of consumer-oriented Cloud services such as email and photo sharing. For example, the October 2011 edition of the Christian Science Monitor included an article titled “Five things you need to know about ‘the cloud’” by Chris Gaylord that discussed Cloud services in the same vein as mobile phone capabilities. Another factor behind the increase (unintentionally) highlighted in this article is the overuse – and consequent dilution – of the term “Cloud” – Web services and applications running on Cloud infrastructure are not necessarily themselves Cloud services.

The most important factor behind the increase will be due to the relevance of Cloud – especially the SaaS, BPaaS, and cloud-enabled BPO variants – to these executives. In contrast to SOA, Cloud Computing buying decisions related to business process enablement can be very granular and incremental and can thus be made independently of the IT Department – not that I advocate bypassing IT input. Good governance ensures both macro-level optimization and interoperability.

New business models in monetizing your Information-as–a-Service

By Mark Skilton, Capgemini

Personal data is rapidly become less restricted to individual control and management as we see exponential growth in the use of digital media and social networking to exchange ideas, conduct business and enable whole markets, products and services to be accessible. This has significant ramifications not only for individuals and organizations to maintain security and protection over what is public and private; it also represents a huge opportunity to understand both small and big data and the “interstitial connecting glue” – the metadata within and at the edge of Clouds that are like digital smoke trails of online community activities and behaviors.

At the heart of this is the “value of information” to organizations that can extract and understand how to maximize this information and, in turn, monetize it. This can be as simple as profiling customers who “like” products and services to creating secure backup Cloud services to retrieve in times of need and support of emergency services. The point is that new metadata combinations are possible through the aggregation of data inside and outside of organizations to create new value.

There are many new opportunities to create new business models that recognize this new wave of Information-as- a-Service (IaaS) as the Cloud moves further into new value model territories.

Small and large enterprise experiences when it comes to Cloud

By Pam Isom, IBM

The Cloud Business Use Case (CBUC) team is in the process of developing and publishing a paper that is focused on the subject of Cloud for Small-Medium-Enterprises (SME’s). The CBUC team is the same team that contributed to the book Cloud Computing for Business with a concerted focus on Cloud business benefits, use cases, and justification. When it comes to small and large enterprise comparisons of Cloud adoption, some initial observations are that the increased agility associated with Cloud helps smaller organizations with rapid time-to-market and, as a result, attracts new customers in a timely fashion. This faster time-to-market not only helps SME’s gain new customers who otherwise would have gone to competitors, but prevents those competitors from becoming stronger – enhancing the SME’s competitive edge. Larger enterprises might be more willing to have a dedicated IT organization that is backed with support staff and they are more likely to establish full-fledged data center facilities to operate as a Cloud service provider in both a public and private capacity, whereas SME’s have lower IT budgets and tend to focus on keeping their IT footprint small, seeking out IT services from a variety of Cloud service providers.

A recent study conducted by Microsoft surveyed more than 3000 small businesses across 16 countries with the objective of understanding whether they have an appetite for adopting Cloud Computing. One of the findings was that within three years, “43 percent of workloads will become paid cloud services.” This is one of many statistics that stress the significance of Cloud on small businesses in this example and the predictions for larger enterprise as Cloud providers and consumers are just as profound.

Penelope Gordon specializes in adoption strategies for emerging technologies, and portfolio management of early stage innovation. While with IBM, she led innovation, strategy, and product development efforts for all of IBM’s product and service divisions; and helped to design, implement, and manage one of the world’s first public clouds.

Mark Skilton is Global Director for Capgemini, Strategy CTO Group, Global Infrastructure Services. His role includes strategy development, competitive technology planning including Cloud Computing and on-demand services, global delivery readiness and creation of Centers of Excellence. He is currently author of the Capgemini University Cloud Computing Course and is responsible for Group Interoperability strategy.

Pamela K. Isom is the Chief Architect for complex cloud integration and application innovation services such as serious games. She joined IBM in June 2000 and currently leads efforts that drive Smarter Planet efficiencies throughout client enterprises using, and often times enhancing, its’ Enterprise Architecture (EA). Pamela is a Distinguished Chief/Lead IT Architect with The Open Group where she leads the Cloud Business Use Cases Work Group.

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