The Journey to Hybrid Computing

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1 White Paper The Journey to Hybrid Computing Part 1: A reality check An independent report commissioned by Attenda

2 Contents Executive summary: A reality check The background The interview group Which stage have they reached on their cloud journey? Hybrid is the rule Building the business case IT as a back-end office function or as a business enabler The business case: cost or agility? The right application for the right platform: Conclusion, some takeaways and a look ahead to the second white paper About Attenda

3 Executive summary: A reality check Which applications should we move to the cloud? That s really not how we look at it. Firstly we look at the applications, we assess the risks, costs and benefits of different options; and only then do we select the right platform. Oil and Gas CIO Cloud computing promises the world, and at cheaper prices. How many other innovations in IT offer such agility, speed-to-market and flexibility, all at a significantly lower cost? That, at least, is how commentators, analysts and the technology press see cloud. But what do IT departments in the real world make of it? We were asked by Attenda to speak to a broad selection of their enterprise clients to find out. We asked CIOs and IT Directors how widely they had adopted cloud services (or if they had adopted it at all), and if so, did they have any best practices or lessons they could share publicly? We looked at what triggers or motivations lay behind a move to cloud adoption as well as what might prevent or prohibit usage. The picture that came out of these discussions was not black and white. In no case was there wholesale adoption or rejection of public cloud. What emerged was much more nuanced and interesting than that. Every participant saw considerable benefits in cloud services: but also participants felt there were considerable barriers to achieving the benefits. These benefits, barriers and the lessons that can be drawn from them are the theme of these two white papers. The IT leaders were generous and open in sharing their experiences and we hope readers will find them as instructive and as useful as we did. In this first paper we will discuss the business and technical aspect of a business decision to adopt cloud services. In our second paper Making it real we will look at real life issues that come with a cloud deployment such as migration as well as day to day operational issues for business critical IT such as monitoring, security, availability, and latency. The stories and journeys we are describing here are told in the words of the people that use these technologies day in day out. As a consultancy we know that end users are the ultimate authority when it comes to technology, even if we don t always agree with what they say, and even if sometimes (such as during the discussions on security and availability) their comments were contradictory. Interviewing such a diverse group of people and hearing their individual stories was fascinating. We enjoyed each individual conversation greatly and never failed to come away from the interview without feeling we had learnt something. We d like to take this opportunity to thank all the individuals we spoke for their time and their insights. 2

4 1. The background 1.1. The interview group During the course of this research we spoke the IT teams at a wide range of companies, all customers of Attenda, over a period of six weeks in the spring of The interviews lasted for at least an hour and sometimes as long as three. The companies selected were all UK based, and had turnover between 200mn and 5bn. IT budgets were roughly in the 2-4% of revenue and the IT teams we spoke to varied in size from 150 to three. A wide number of verticals were represented, the breakdown was as follows. Vertical make up Financial services Not for profit Contstruction and property Logistics Hotels and Leisure Oil and Gas 1.2. Which stage have they reached on their cloud journey? Hybrid is the rule As to their readiness for cloud adoption, there was a range of usage across the group. If there was a spectrum of cloud readiness, with we have moved everything to the public cloud at one end and we will never touch cloud services at the other, the majority were squarely in the middle, using a mixture of off and on premise, public and/or private cloud and managed hosting, SaaS and IaaS. We did not speak to a single IT department that was or was planning to move everything to public cloud, or a single IT department that had no plans whatsoever to use cloud services. 3

5 1.3. Virtualisation is ubiquitous, VDI common, users are wary of public cloud Every company we spoke to was running virtualisation internally, usually on VMware software. Citrix or Windows virtual desktop infrastructure was also in place in close to under half the enterprises we spoke to. We did not speak to a single company who was using cloud for critical infrastructure. Not surprisingly given the group consisted of Attenda clients everyone in the group was using third party colocation and hosting. About a third also had an outsourcing arrangement in place to manage either their data centre or their equipment in a third party data site Cloud and hosting readiness As could be expected there was some degree of variation within the group as to attitudes toward cloud services and hosting. Also, not surprisingly the more data sensitive and regulated industries such as financial services showed a greater reluctance to use shared infrastructure and public cloud. Cloud readiness? Using cloud for critical IT application support above operating system 3rd party managing applications in data centre Using hosting/outsourcing Using SaaS Using virtualisation Using IaaS but not for core IT Evaluating IaaS No plans to use IaaS except for test and dev 0% 20% 40% 60% 80% 100%120% 4

6 2. Building the business case 2.1. IT as a back-end office function or as a business enabler In the group there was a wide divergence in the attitude towards IT. This drove many of the strategic decisions as well as the overall effectiveness of the business unit. At one end was a group of what might be called old fashioned IT, where the function Reports into the Finance Director Is a cost centre that could and should be cut No or little visibility into the strategy, is unable to shape the business Has little or no engagement with revenue generation Is essentially reactive, a firefighter Spends most time spent on keeping estate up and running, little time on new projects At the other we saw the agile engaged IT department, with a C-level title and seat, fully involved in company strategy. We found the proximity of IT to revenue generation was a strong indicator of IT s strength. This group typically: Reports into the CEO Is an agile front foot IT department, able to suggest and execute strategies that affect the and benefit the business Is a key part of revenue generation/sales team Provides valuable input into the business Is involved in product development from early stage Has high percentage of time/employees engaged on new projects Of the group we spoke to, about a quarter could be described as old fashioned IT and about a quarter as the newer variety, with the rest were somewhere in between. It should be emphasised that we spoke to several frustrated IT Directors who would like to have a fuller role in the business. An oil and gas IT Director told us I am always reading CIOs should do this that and the other I know CIOs who would love to be more involved in the business, but are beating their heads against the wall. 5

7 I would love to go to meetings with the sales team. What we in the IT group provide is the highest margin part of our product, gross it s over 80%. Our sales team give it away for nothing. Anything technical, they don t understand; it s very frustrating. Business Services IT Director 2.2. Tactical or strategic decisions? There was a close correlation between the closeness of the IT function to the business and level of long term strategic thinking in the group. A small minority of companies we spoke to admitted to having no IT strategy at all. In these cases, the decisions made were almost entirely tactical. A financial services director commented We are a conservative business. A lot of people in this building would like to go back to pen and paper. For us the cloud and the internet is not our front end. It s just not that important to us as it would be for, say an ecommerce company. In this group, evolution is slow and public cloud usage, where it occurs, is for purely non-core activities such as application development. The attitude of the business and IT seems to be if it works, why break it? With such groups cloud use tends to be a small part of the IT engagement, typically use of public cloud for standalone projects such as test and development rather than cloud services for strategic purposes. At the other end there was a group that had a clearly thought out IT strategy. Here is a typical methodology from an Oil and Gas sector company with operations in place all over the globe A sample IT strategy from an Oil and Gas sector company Four Pillars Agility: Operations are spread out across the globe with many small local offices in remote places. It is not impossible in these circumstances to run a big IT team in such circumstances, it would be unmanageable. The goal of the IT team is to make all employees self-sufficient. Standardisation: The strategy is standardisation across everything, processes, software. This means avoiding a mish mash of applications. For example Lotus Notes, Exchange, and some other capabilities were recently migrated to one platform. Mail was outsourced to a third party, with IT buying the supporting hardware. 6

8 Collaboration: whether growth comes from acquisition or it s just organic, collaboration is key. That s particularly so when the object is to achieve standardisations. To take one example, when the company decides to open up a new office in a new territory, it is vital to work how IT can support the business and enable a team who are far away from HQ and new to the business to leverage the corporate tribal knowledge. Customer intimacy: needs no explanation. It s vital for to know what s on the minds of our end users 2.3. What triggered the move to the cloud? There was a wide variety of circumstances that drove each individual enterprise to move in some shape or form to public or private cloud adoption. Each enterprise had their unique reasons, but a few trends became evident Companies in the front foot IT part of the group tended to be following a stated and evolved strategy, but that was rarely enough by itself to trigger a move The single most common event to prompt a migration was a hardware refresh Sweating the asset is common; most enterprises, are happy to run ten year old hardware and software (Such as Windows Server 2003 or XP), only ceasing with sunset Several expressed desire to move away from managing hardware: as one CIO said we no longer want to manage servers, patching re-booting, it s not our business Dealing with legacy dictated strategy to a large degree if we were starting anew we would move lock stock and barrel to the cloud A small percentage of enterprises had been forced into emergency migrations, caused by landlords serving notice on internal data centre leases and vendors ceasing business It was interesting to us that we did not speak to a single organisation that had decided on a cloud first policy or, in the opposite case, had decided against any type of cloud usage altogether. 7

9 2.4. How is IT perceived within the business? With several of the companies we were able, through our network of existing contacts, to speak to individuals outside the IT department to see how IT was perceived in the business at large. Generally there was pride in what the IT department had managed to achieve, and not surprisingly the more in tune the IT department was with the business, the more highly the group was rated. The converse was also true: where the IT department occupied a more back office black box type function, the IT department was not regarded so highly. A member of a household name retailer went so far as to tell us of an unfortunate incident when IT ordered a mainframe but made an error with the size of the door frames in the data centre which mean some expensive hardware spent a night or two in the car park. Stopping stories of this kind (which are no doubt exaggerated in the telling) being released into the wild has to be one of the more compelling reasons for bringing IT closer to the business Applications that will always stay on premise It s common for IT directors to say that they are not looking to shift ERP crown jewel applications out to public cloud but the reasons for so doing are not quite what would be expected. Rather than the typically cited security and availability, the reasons seem to be cost, predictability of workloads, and the need for constant fine tuning of the application. Other applications that are deemed not for cloud services are: Ecommerce applications such as Magento that do not run well in a virtual environment, preferring bare metal servers Applications written for non-x86 servers such as the mainframe; these require a major, expensive and logistically challenging rewrite and the perception is moving them out to public cloud brings little benefit Replace the mainframe? Imagine how long it would take to rewrite the applications that have been chundering away there for twenty odd years Financial Services CIO For large retailers and banks, the MIPS advantages and security of a mainframe are considerable De-coupled applications that need to pass large volumes of data and therefore have network requirements for throughput that cannot be guaranteed on a shared public cloud platform 8

10 Big data in production; for the same reason, Hadoop s cluster and replication model means that switches are soon overwhelmed and big data workloads are generally run on private cloud or in colocation/hosting environment Applications that need large amounts of bespoke configuration and/or support Applications typically ERP-type, applications where the workload is predictable and not spikey, and therefore the scale and cost advantages of the cloud do not come into play I am never going to move our ERP to the cloud- not because of security or control but because my team are continually making ad hoc restores and other changes to data bases. It sits better on a managed service platform. Our finance department is continually tinkering with the systems, whereas mail and CRM we tend to leave alone. Business Services CIO 2.6. The business case: cost or agility? As mentioned earlier, there are many diverse reasons for moving to public cloud and for not moving to public cloud. In popular lore, cost is always the reason for the migration. Of course, public cloud, with its pay as you go model offers considerable cost advantages but the real decision making process is much more nuanced. With every senior IT leader we spoke to about how the business case was made for moving applications to the cloud, we came across the same conundrum. Cost savings were always a key part of the business case for cloud services adoption. But privately the IT group did not believe it would bring significant financial benefits: cost savings were almost a camouflage which made the proposition an easy sell to the business while IT s real interest lay in more technical benefits that cloud services can deliver. 9

11 2.7. Making the business case for IT spend is never straightforward Cloud is not the first technology to be sold on cost rather than its real benefits. A few years ago when virtualisation was becoming widespread, its main selling point was cost saving through reducing the server estate. But those cost benefits were elusive: in many cases, it turned out that the extra cores and storage needed mean that no money was saved. But IT were not overly concerned, true value lay not in cost but in features like rapid cloning, business continuity and other areas. Similarly with VDI, a technology widely used in this group. Does deploying VDI save money? A financial services customer is using Citrix XenApp to for Virtual Desktop Infrastructure. The cost per user is quite significant for VDI, so significant it doesn t give you much of a cost saving. Says the IT Director It gives you centralised management, that is the main advantage. We have a lot of remote offices and remote users and the remote offices don t have IT support. If we were trying to maintain a thick client it would be quite difficult. Another advantage is security as a much higher percentage of corporate data sits behind the perimeter in the corporate data centre. Not just from a data centre perspective either, we run Citrix VDI for a 1,000 seats from a third party data centre said a client in the not-for-profit sector about 80% thin, 20% fat that is the goal, but the key advantage is we no longer have to worry about the device. With cloud services something similar seems to be happening. To win the argument in the C-suite, IT will use a cost argument: it s easy to understand. What then is the real rather than the business case argument for cloud adoption? On this point the group was unanimous: agility How the cloud brings agility to business In the world of traditional IT, a disproportionate amount of time was spent with keeping the lights on and dealing reactively to random requests from the business. This creates difficulties in terms of capacity planning, as well as making it difficult for IT to have a forward role in the business. The ease of deployment of cloud, its self-service, pay as you go model is a perfect answer for an IT team. The Education CIO below who used public cloud as an effective tool for dealing with IT noise for his team is using the extra time and budget he has gained to build his own ERP application. In his view there are no ERP applications or modules that exactly fit his business. Quite an example of what cloud services can enable an IT team to do, just by freeing up its time from unnecessary distractions. Time-saving But public or private cloud doesn t just solve issues round the periphery. Its elasticity, its ability to scale up and down in minutes means IT can shorten 10

12 lead times to the point where it can walk in lockstep with the business, rather than spending days, weeks and months, planning capacity, obtaining approval from finance, then provisioning. Agility comes with the cloud: clearing the noise from IT A new project? Off to the cloud you go One of our General Managers in Africa wanted to enable candidates taking our English exam to record voice and video files of themselves as part of their submissions. This addition would have created some big files, too large for our existing server infrastructure. Our Ops Director was thinking of spinning up some VMs, which would have clogged up his team, and as they would have been in the UK, would have been no good for anyone in Uganda. Instead I let the local manager spin up some public cloud instances all by himself. We had 10,000 sound files and it cost me 30p! My team was left undisturbed they could get on with their real, new project work. Education CIO Reducing staff costs The impact on staffing can be quite dramatic. One CIO we spoke to was running IT for one of the UK s most well-known financial companies with a staff of three. But he had one caveat I have to be very careful about the partners I pick. Similarly a Not for Profit IT Director has seen his team halve in size over the last few years. The team is smaller but they are no longer just patching servers, they are learning new languages and applications, working on new projects. I keep on telling them they can t plan a career round one stack or one language. Capacity For an Oil and Gas CIO we spoke to, capacity was a key selling point. Doing battle with internal systems is never easy within any organisation, and having a vendor that can scale up massively is a major bonus. What do you do when you have one application that hammers the system? Scaling is very difficult to do in house. Few individual enterprises can compete with the tens of thousands of servers operated by leading cloud suppliers. Innovation Finally, cloud adoption can help drive innovation. One IT director in the Hotels and Leisure industry is using cloud services in combination with mobile tablets for a genuinely innovative efficiency improvement. Our cleaning staff use a simple workflow app installed on tablet when they find something in a room that needs fixing. They take a photo that is dispatched to the maintenance staff, who then know exactly what they need to do and 11

13 the app is also integrated into our ERP, which means the room is taken off the booking engine until the room is ready again Is cloud always the cheapest option? As we have already pointed out, IT directors do not see the cloud as a cost saving tool for the most part. It was a surprise but one of the most commonly heard observations during the research for this paper was cloud is expensive. A typical comment from an insurance house was Public commodity cloud is cheap if you remember to turn off your servers we left them on overnight and found that out! Sometimes the opposite point of view comes from the top of the business, requiring the IT team to go out and engage in a major education exercise. Our senior management drives me mad telling me I have to use public cloud because it s cheap! In many instances though it is certainly true that cloud infrastructure services can come out more expensive than leasing or even outright owning hardware. While compute is cheap, there is widespread resentment among users at per GB pricing which can come out as much more expensive than the old method of 95th percentile billing. There is no denying that public cloud is most useful for short term projects and engagements. Stable state workloads can often be more effective placed elsewhere. Cloud versus colocation A real life pricing example We looked at outsourcing our 1,000 VDI estate. We see it as commodity IT rather than crown jewels so a good candidate for the cloud. We approached about eight cloud and colocation vendors. The cloud pricing came back more or less the same: capex was low, the actual migration costs were ok, but the running costs were huge. Compared to colocation about ten times. Moving this to the cloud just did not financially stack up. Education CIO One of the CIOs we spoke to showed us a pricing exercise he had undertaken. While each individual requirement is unique, and a solitary example does not prove a rule, the results certainly reflect the general view among the IT budget holders we spoke to. It seems that the market as a whole looks at price and public cloud in the wrong way. The cost of spinning up a server in the cloud is so low as a part of the overall IT spend (less than a hundred pounds in a budget of millions), price is almost immaterial, and the real interest is in the agility and in its 12

14 ability to take a weight off IT s back. There could be a lesson here for cloud vendors: IT departments seem to be more interested in the cloud s service model, than its price. My CEO says Why is hosting one terabyte of storage in the cloud so expensive when I can buy a drive for less than that at PC World? Logistics CIO 13

15 3. The right application for the right platform: Conclusion, some takeaways and a look ahead to the second white paper As we said at the beginning of this paper, we did not find one CIO who had placed a cloud first policy or an IT Director who had forbidden its use. What we found was a hybrid world: the IT teams we spoke to saw cloud as a valuable tool, but not the answer to every problem, rather, part of a set of valuable tools that could include private cloud, public cloud, dedicated hosted infrastructure, colocation and on-premises services. We also saw these enterprise IT cloud adoption trends: Commodity IT type applications are seen as good candidates for public cloud Business critical IT on the other hand requires a level of support, monitoring and performance that it is difficult to obtain on shared public cloud infrastructure There is a preference for keeping this kind of business critical IT on a dedicated on-premise or hosted private cloud platform where: Cloud brings useful agility to the IT function But is not always the cheapest option, and in fact has a reputation for being more expensive than other options To conclude, every enterprise we spoke to is looking to distribute existing and new workloads across hybrid architecture and that strategy raised a further set of questions: how to create and run this unique hybrid computing environment and how to select suppliers that can provide right level of support and the SLA to back it up. These questions and their answers we will look at in Part 2 of our Journey to Hybrid Computing whitepaper series, where we will examine the practical issues around platform choice and deployment. We will look in detail at issues such as migration, monitoring, performance and security. We will as before illustrate them with real live worked examples, before turning to what lessons in terms of vendor selection we can draw from the conclusions of the group. 14

16 4. About Attenda Attenda is one of the UK s leading managed service and cloud platform providers, specialising in running business critical applications. Our Business Critical IT approach combines business outcome focus with a structured engagement methodology and supporting services and infrastructure. Our role is to provide cost effective ways to overcome the barriers to cloud adoption to enable migration of business applications to a hybrid environment. Our Consulting services can help to guide clients in the selection of the appropriate hybrid combination of private cloud, dedicated infrastructure and leading public cloud services; we can then create and run this unique hybrid computing environment delivering the same peace of mind and exceptional service quality as for solutions designed and deployed solely in our data centres. We are starting to see more and more of our clients assessing the distribution of existing and new workloads across hybrid architectures and we recognise that provisioning hybrid platforms for Business Critical IT requires business-class service levels. A key component of this is the direct connection of our London-edge data centres to public clouds, removing the uncertainty of Internet performance. Today, we offer multi-tenant, dedicated and self-service options in our data centre estate and an almost two year track record of success with managed services for Amazon Web Services (AWS) public cloud. We have built up a commanding market reputation, with the industry's leading accreditations and an unrivalled portfolio of UK enterprise Clients. Attenda is ISO9001, ISO27001, ISO20000 and ISO22301 accredited, is a HP CloudAgile Partner, a Microsoft Gold Hosting Partner, VMware Premier Service Provider, a SAP Partner, SAP Certified in Hosting and Cloud Services, AWS Advanced Consulting Partner and a Citrix Service Provider partner. 15

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