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Decisions in Cloud
John EnochBusiness Development Manager | Cloud Economics
22 September 2016
Big IT: What can possibly go wrong? Technology or People?
Source: http://blogs.gartner.com/thomas_bittman/2015/02/05/why-are-95-of-private-clouds-failing/
• 31% Failure to change operating model• 30 % Doing too much or too little• 13% Failure to address cost allocation and funding• 10% Focusing on the wrong benefits
• Only 6% = wrong technology choices
“…we don’t make money when we sell things. We make money when we help customers make purchase decisions.”
Jeff Bezos
Who Decides? Who can say no?DemandCreationDemandFulfillment
Busi
ness
Impa
ct: C
ost,
Ris
k, V
alue
IT Infra
Devops
Procurement
CxO
Legal / GRC
Task based
Trust based
Division Heads
What comes before a good purchase decision?
• Ready, willing & able?
• What needs to change?
What comes before a good purchase decision?
• Ready, willing & able?
• What needs to change?
Is the customer engaged in the
decision?
The three good conversations
1. Make Money
2. Save Money
3. Reduce Risk
Opportunity
Risk
So where’s the risk?!BU1 BU2 BU3 ITSO Global
Functions
AB
Bus
ines
s
AB
Fun
ctio
ns
TBC
Fina
nce
Glo
bal
TBC
R&
D
AB
C
IT
HR
IT
Fina
nce
IT
BA
IT
Fron
t Offi
ce
Bac
k O
ffice
Fina
nce
OP
S
AB
C
Business Units
Parent portfolio
Number of portfolios in parent portfolio
32 1 4 13 3 3 9 6 2 9 4 2 9 3 7 6 10 9
Delivery Vertical
Managed Services Provider
AB
C
ABC
BS
PO
AB
CA
BC
In-H
ouse
In-H
ouse
In-H
ouse
ISP
s: x
xxxx
:
AB
C
SD
I
AB
C
3rd
parti
es
In-H
ouse AB
C
DC
E
In-H
ouse
AB
C
ABC
AB
C
InfrastructureABCD-Systems: Hosting & Middleware
Outsourcers: Cloud operations
XZ
Bus
ines
s
TBC
TBC
TBC
ACC
Cloud Providers: AWS, Others (coming up)
illustrative
In-H
ouse
In-H
ouse
SD
I
Why spend time on decision analysis?
V.S.
10:1
A cloud decision support framework
PROBLEM STATEMENT
1. Objectives?
2. KPIs?
3. Language?
4. Information sources?
IT/Ops Finance
Risk/IA
Decisions, Influences & Consequences
• Input: Workshop discussion of the cloud decision• Output: an influence diagram of the decisions and influences
OBJECTIVES: What matters most?Owned-IT Cloud Impact?
Pay upfront Metered: Pay for usage Cost Efficiency
Risk reduction
Productivity
Innovation
Governance
Reputation
Over/Under provision Elastic: Match usage/demand
Limitations Scalable: Resource pooling
Delays, complexity Instant: click “on” globally
Big IT & ITIL Lean, DevOps, innovation culture
Limited cost visibility Transparency & monitoring
Some possible objectives
• Financial: IT CAPEX / OPEX reduced by X% p.a.
• Margins increased by X%
• Throughput of new products and releases increased by X% p.a.
• Time to service provisioning reduced by X%
• Data centre floor space reduced by X%
• NPS increased by X%
Where are we today?• Business assessment of current IT delivery• 10 areas of value… takes 5 minutes• Consulted = included• Output: Heatmap view of IT quality & risk
ALTERNATIVES & TRADE-OFFS
Comparing Alternatives (TCO+) illustrative
Hardware – Server, Rack Chassis PDUs, ToR
Switches (+Maintenance)
Software - OS, Virtualization Licenses
(+Maintenance)
Facilities CostHardware – Storage Disks, SAN/FC Switches Software - Backup
Network Hardware – LAN Switches, Load Balancer
Bandwidth costs
Software – Network Monitoring
Server Admin, Virtualization Admin, Storage Admin, Network Admin, Support Team
Diagram doesn’t include every cost item. E.g. software costs can include database, management, middle tier software costs. Facilities cost can include costs associated with upgrades, maintenance, building security, taxes etc. IT labor costs can include security admin and application admin costs.
Space Power Cooling
Project planning, Advisors, Legal, Contractors, Managed Services, Real-Estate, Training, Cost of capital
Less-tangibles:
Cost of delaysRisk premium
Competitive abilitiesPerformanceGovernance
Etc.
IT Labor Costs
Network Costs
Storage Costs
Server Costs
4
1
2
3
Extras5
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling
Comparing the economic benefits
• Provide a list of IT assets• Agree assumptions on costs and allocation• Output: a granular TCO model
Migration Bubble and Incremental Benefit
TCO Modeling
Staff Productivity
Business Benefit
Inclusive
Typical One-time activities that increase cost for the migration duration. • Planning and Assessment• Duplicate Environments• Staff Training• Migration Consulting• 3rd Party Tooling• Lease Penalties
Cos
t $
Time
Current Operating
Cost
TargetOperating
Cost
Benefit Realization• Infrastructure Savings• Staff Productivity• Business Value
5% 10% 30% 60% 80% 100%
Migration Cost Bubble
Benefit Realization Schedule
Impact assessments
85% Reductionin Unit Cost!
Eliminating Options – Trade-Offs
16MM Ledger Saving Velocity = 50 apps/qtr.
Operational CostsWorkforce ProductivityCost AvoidanceOperational ResilienceBusiness Agility
• 98% reduction in P1/P0’s
• 77% faster to deliver business applications
• 52% average TCO savings
• 35% reduction in compute assets (792)
• 15 automated bots developed
• 80% cloud first adoption
• 15 cloud services created
• 50 applications decommissioned
• 8 cloud migration parties
• Improved security posture
• Shift to self-service culture
• Rapid experimentation
• Reduced technical debt
• 14M YOY Savings
• Improved Performance
• Streamlined M&A Activity
• DevOps in Practice
Progress as of May 2016
14.2M Investment Focus18
Months311 Appsin Cloud & 14M YOY
Savings
A Customer Case Study: GE
http://www.slideshare.net/AmazonWebServices/demystifying-cloud-economics-how-to-build-an-investment-case-for-scale-migration-to-the-cloud-business
Summary
Influence Diagram
Readiness Self-
Assessment
Problem Statement
Survey & Heatmap
TCO
Value Assessment
Optimisation
At Amazon, we always work
backwards from the customer.
