Yes, You Really CAN Compete With the Public Cloud Provider
The prudent CIO sees the need for a quantum level improvement in the way IT delivers services and resources. To survive, IT must rapidly regain competitive strength by emulating the key strengths of external cloud suppliers. The internal IT delivery model has to change from a bureaucratic process that can take days or weeks, to one that supports self-service and makes resources immediately available.
This means IT must adopt cloud deployment strategies by offering the enterprise resource consumer an automated self-provisioning capability. For example, IT can make an adjustment by offering consumers the ability to select from a catalog of service and resource offerings, delivered under the guarantees of a service level agreement, and billed out on the basis of actual usage.
The internal cloud is often considered to be an invalid construct, particularly by external cloud providers, which emphasize the areas in which they have a considerable advantage -- namely their ability to offer limitless scalability at a rock bottom price. However, enterprise IT can compete in other areas of the cloud deployment model.
Service Selection and Cost Visibility
First, IT can indeed create a service catalog of offerings and deliver them under a service level agreement. Many IT organizations have already created tiers of services (a tier of service is simply a number of service attributes grouped together as a service offering).
Automated service selection and provisioning allows IT to offer an a la carte selection, achieved by repositioning its current service tiers into a more flexible and granular set of service offerings -- also giving IT a competitive advantage. IT needs to select software that allows it to achieve these functions, and today there are a significant number of vendors providing this functionality.
In addition, back-end billing is an essential component of the external cloud, which lets customers pay only for what they consume. IT has traditionally offered its services effectively "free" to the end consumer. Often the entire IT budget is allocated to business units as a single charge based on factors that have nothing to do with usage.
IT can transition to the new billable services model by developing a cost model that provides a unit cost of the deployable resources, typically per configured GB of storage and per GHz of compute capability. Whether the charge is delivered as an actual invoice or simply as a monthly usage and cost report by the end consumer, the mere visibility of the actual cost of a deployed resource starts to have a dramatic effect on the IT/consumer relationship. Cost visibility tends to drive awareness of service selection in light of the business benefits expected from the service.
Cost visibility also has a downside, because it facilitates the comparison of IT charges with those of an external cloud provider. In this scenario, IT looks uncompetitive; however, when compared with the cloud SLA (service level attributes), the picture changes.
IT typically offers 5x9s of availability, where cloud typically offers 3x9s; IT offers infrastructure-based resiliency through operational recovery and disaster recovery. Cloud offers these functions often as optional add-ons. And finally, IT is able to satisfy internal and external risk management audits on security and compliance issues better than a cloud provider.
With an internal location of IT resources, there is comfort in knowing that the business' data is on the premises and, per company policy, protected with encryption, firewalls and compliance audits. While this latter area may treat the external cloud provider unfairly, the perception that data security is a real issue in the cloud is a competitive factor that favors internal IT over external cloud solutions.
SLAs and Cost Reductions
External cloud providers offer their clients a dashboard-like capability to show allocation, usage, and performance against service level agreements. IT can compete by making sure this functionality is included in the RFP (request for proposal) process to select automated provisioning and other orchestration capabilities for the internal cloud. The key is to ensure that any metric offered in the service level agreement, in the provisioning process, or in the billing process can be measured and reported with integrity.
Now that IT resources are provided under a service level agreement with guarantees, IT must be able to operate as professionally as a public cloud provider. IT must take rapid steps to mature its internal processes to support key performance indicators against each area of interaction with the consumer.
This new maturity should support trending and reporting against upper and lower thresholds in each area of service to support the committed SLAs and to facilitate continuous improvement. Incident management, change management and service management must be developed to the highest levels of maturity.
Other areas like service management, capacity management, change management and release management must also be formalized and highly mature. Imagine the power of this change with IT now being able to demonstrate not only that it is delivering service to stated guarantees, but also that it is continually improving across the board to deliver ever higher levels of satisfaction at ever lower unit costs.
Cloud providers have a significant edge in delivering almost unlimited elastic scalability, as well as an edge in OpEx costs from utilizing open source and white box hardware. Internal scalability cannot be as limitless as it is with an external cloud provider, but in reality, all one needs are techniques to make sure resources don't run out under a rational growth scenario.
Your ability to match utilization levels with time to purchase will drive your CapEx (and subsequently your OpEx) costs for the deployable unit. Even here, there are software vendors who will provide you with an effective gateway to the very external cloud provider with whom you are competing.
This allows the internal cloud to appear unlimited in its scalability. This is called "cloud bursting." Even with cloud bursting, the prudent CIO will ensure that IT raise its competencies in supply and demand management, ensuring allocations, utilizations and growth. CIOs will ensure that these competencies are professionally measured and trended with appropriate forecasting techniques to trade off the highest levels of utilization with the ability to respond to predictable growth.
The courageous CIO may also consider the pros and cons of more closely competing with the external cloud by utilizing open source software for orchestration and auto provisioning, etc.
Should the CIO have available a skilled and up-to-date development resource, taking advantage of open source virtualization opportunities can drive further significant savings in licensing fees.
So, all is not lost. The beleaguered CIO, aided by a competent and change-oriented staff, can develop the type of service deployment model used by external cloud providers, and can meet and even beat the external cloud provider in many areas of functional equivalence. In any event, every IT team is aware of the need for continuous improvement in both service levels and unit cost reductions. The cloud deployment model for the delivery of IT resources (internally) is an opportunity to make huge strides in each of these two key corporate focus are