Introducing the Cloud Computing International Standards at The Open Group
- Mark Skilton
- Nov 18, 2011
- 4 min read
Introducing The Open Group
What: exists to ensure the effective and secure use of cloud computing in enterprise architectures, based on open standards
Why: back story on development work completed over the last year related to end-user requirements for cloud computing and the vendor lock-in issue
Goals: create best practices and eliminate vendor lock-in for enterprises looking to benefit from cloud products and services
Current finding of Cloud ROI paper, fleshing out the key points, including:
The main factors affecting cloud computing ROI
Why cloud computing provides advantages over traditional approaches to IT provisioning
Why cloud computing will cause a more disruptive business transformation instead of incremental improvements
How to approach building cloud ROI models by taking advantage of the benefits cloud computing provides
How to measure this ROI in comparison to traditional approaches to IT including cloud KPIs and metrics
How the Cloud Work Group will continue to evolve these ROI standards as cloud computing matures and is more widely adopted in the marketplace
Cloud Computing today – a viewpoint -Mark Skilton Jul 9 , 2010
Focus on Total cost and the 1:M rule – how to maximize arbitrage of services from assets. See a wider angle than just utilization and availability. Too limiting view – need to consider wider aspects of the technology leverage capability. Leveraging economies of scale and long tail economics seen in the cloud. Need new metrics and approaches – 8 ways.
Focus on Innovation and growth – entrepreneurship in Cloud value realization. Saw the aspects of cost reduction profiling needed to be balanced with new business models in the cloud : co-sourcing, co-innovation, new channels, aggregator, broker models, integrator catalog façade
Above the cloud paper – University of California , Berkley RAD Feb 2009 raised many key values of Cloud but needs to be rephrased in a business language….
The myth of the iconic capacity utilization curve – iconic as Moore’s law, the Boston Growth share matrix and the Hyper cycle BUT….
The main factors affecting cloud computing ROI
Business culture, adoption – “fix on fail” to “fix before fail” because it’s a shared model, continual build run lifecycle; certification of SaaS services catalog- “choice from the menu”, shared services model, different data and platform integration issues; arbitrage.
Financial mechanism, charging methods. CIO focus on P&L, cost and revenue rates , FTE and cash-flow pipeline rates – but need to consider new metrics for driving asset and customer revenues and costs more effectively.
New business models - co-innovation, business elasticity for new capability – ability to see the “business capability picture”; one stop shop for small to medium enterprise – or a service aggregator for business units.
Selection and process variability – cloud is more for utility an burst events. But the cost model if changing and I expect the elastic environment to become a norm for vendors and industry players. Already seeing this in telecoms, and the major vendors evolving to a hybrid model
Why cloud computing provides advantages over traditional approaches to IT provisioning
Potential for huge savings : X500 time compression, 50% reduction in asset costs, 30% reduction in run costs….
Elastic availability
Pay as you go
End consumer view point
Flexibility of choice – but the risk shifts and complexity management needs to be understood
Why cloud computing will cause a more disruptive business transformation instead of incremental improvements
Changes speed of available and rate of change
Changes location of assets to a more complex situation : 3 types: Physical data, virtual server data, cloud hosted data – means need to be able to monitor and track where data is and how changes affect all three – the traditional ERP platform is not that case any more.
New and existing markets, Business and service arbitrage, Corporate risk and reward, degree of collaboration versus information security
How to approach building cloud ROI models by taking advantage of the benefits cloud computing provides
Look at a range of metrics not just traditional CIO ones of resource and Revenue margin rate – the 8 metrics models – define the business case and what needs to change in your organization – people and processes.
Cloud Security and Cloud risk are a key start point
Use a cloud service reference model to understand what services you need : broadly 4 areas: Service Operations, common services, Service ecosystem of resources and the cloud services stack
How to measure this ROI in comparison to traditional approaches to IT including cloud KPIs and metrics
8 key metrics and 7 key cloud KPI metrics
Capital and cash flow leverage
Time compression and rate of change
Procurement time compression
Modifying asset ownership profile
Modifying capacity utilization
Value creation
Margin , growth rate
Sourcing usage – marketplace long tail
Usage / compliance green cost leverage
Business skills, capabilities, cost associative workloads
New Cloud ROI Metrics
Cost of working capital – high à working opex model
New pricing mechanism – actual, subscription, value based
Fixed and variable cost over TCO lifecycle
Process latency – data and compute time cycles
ARPU
AMPU
CAR
How the Cloud Work Group will continue to evolve these ROI standards as cloud computing matures and is more widely adopted in the marketplace
Metrics score cards
New business services model – understanding how to identify and address new services
How to run and manage cloud services
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