What is the price of a mousetrap? The assessment of value from cloud services pptx

What is the price of a mousetrap? The assessment of value from cloud services. By Ernie Zibert Copyright 2012 Ernie Zibert Smashwords Edition Smashwords Edition, License Notes Thank you for downloading this free ebook. Although this is a free book, it remains the copyrighted property of the author, and may not be reproduced, copied and distributed for commercial or non- commercial purposes. If you enjoyed this book, please encourage your friends to download their own copy at Smashwords.com, where they can also discover other works by this author. Thank you for your support. Discover other titles by Ernie Zibert at Smashwords.com. Table of Contents Value from your Cloud provider? The price of a Mousetrap If it were only as simple as a mousetrap IT Infrastructure is a tumour of the modern corporation Conclusion In this ebook, I discuss one functional transformation that has taken placed as a result of cloud services, namely; the impact on the assessment of value. This is a timely discourse as the vast majority of customers are using cloud services. In fact, numerous recent surveys confirm that more than 80% of customers are using cloud services (http://www.wired.com/cloudline/2012/03/cloud-here- to-stay/, http://venturebeat.com/2012/05/10/cloud-services-data/). Moreover, several surveys have replicated the finding that four out of every five customers believe that cloud services met their flexible infrastructure needs. The bottom line is cloud services are here to stay and customers must be able to articulate the value of their cloud investment. How do you know if you are getting value from your cloud services provider? In the traditional model, most customers would simply compare their existing IT costs against their cloud services costs. This is best seen as a ‘generation one’ performance measure. This measure is no longer suitable for the assessment of value from cloud services. It is akin to undertaking a Return on Investment (ROI) without taking into consideration the time value of money, or where applicable, foreign currency exposure. The title of this ebook hints at the error in this traditional performance measure. Why would you want to know the price of a mousetrap? Customers no longer need to know the price of servers, software and the rest of the parts making up the IT service stack. This knowledge is as useful as knowing the price of a mousetrap. Customers, however, must know the price of the equivalent services from other cloud providers. This is the crucial performance measure. It is only this performance measure that constitutes a true apples- to-apples comparison for the assessment of cloud service value. In addition, the traditional performance measure is not relevant because it doesn’t factor in agility/flexibility. Attempts to incorporate this into the traditional performance measure are absurd. It is pure guesswork to forecast IT demand over a multi-year period and translate that back to IT costs. How many and what types of servers are needed, together with all the other pieces, to manage current demand, new projects, forecasted growth, end-of-life IT services, mobility moves, etc? Who wants to bet on a probabilistic extrapolation of demand, based upon exponential or other disruptive consumption rates? The figure below displays mobile phone subscriptions as just one example of the exponential and tectonic forces currently at play in the IT landscape. An example of the disruptive consumption rates is shown in the chart below. This chart presents the forecasted market growth-rate for cloud services (Forrester, 2011 - http://www.zdnet.com/blog/btl/cloud-computing-market-241-billion-in-2020/47702; http://blogs.forrester.com/stefan_ried/11-04-21-sizing_the_cloud). It is simply not credible to use yesterday’s IT investment to compare against tomorrow’s IT cloud solution. The latter has the additional attributes of being available anywhere, at anytime and on any device. If it was only a simple as a mouse-trap. The complication is that for most customers they already have an IT investment. So the assessment of cloud value will involve a comparison between what other IT investments are required versus the equivalent cloud service costs. A very obvious example pertains to development/test environments (sandpits). If you need to invest in these environments, that cost might be greater than the equivalent cloud based platform-as-a-service offering. IT Infrastructure is a tumour of the modern corporation. IT Infrastructure is a tumour of the modern corporation. It forces asset specificity; it limits flexibility, agility, and availability. Most customers have this tumour, and they should actively avoid growing it. In another ebook, I explain a new business paradigm, Augmented Managed Services (AMS). This is yet another approach businesses should use when assessing cloud value. AMS is the paradigm where a predefined level of demand is managed internally and the remainder augmented with cloud services. The apothegm is ‘Own the base and rent the peak’. Conclusion The customer’s overall cloud health starts with an assessment of value. The assessment of value of cloud services can only include a comparison against other cloud providers. The comparison of cost between traditional IT investment and cloud services must be avoided. Such a comparison is not even apples-to-oranges rather fruits-to-vegies. About the author: Ernie Zibert is an influential IT Management Executive with 20+ years of international achievement in leveraging technology and strategic partnerships to drive growth, performance, flexibility, and customer satisfaction. A proven change agent, capable of orchestrating transformative business strategy. Champions innovation with a focus on developing flexible, scalable solutions for customer and organisational problems. Diverse experience across government, communications and media, and finance industries. World class financial, relationship and commercial management of IT sourcing relationships. Respected leader in highly-matrixed global corporate environments and in the Australian IT Services community. Other titles by Ernie Zibert: Discover other titles by Ernie Zibert at Smashwords.com. The Science of Sourcing Governance What’s the difference between a million and a billion dollar IT sourcing deal? Ordering IT Services: Would you like CHIPS with that? Sourcing's Three Fates The IT Outsourcing RFP COW is too FAT AMS - The next stage in the evolution of IT Outsourcing Outsourcing’s Two Evils Apply CREAMS to your IT Outsourcing pain Sourcing’s Five Critical Governance Processes The Five Dimensions of Sourcing Value The relationship between the five dimensions of sourcing value Connect with Me Online: My blog: strategicsourcingblog.blogspot.com For more information, contact Ernie Zibert at ernie.zibert@gmail.com Thanks go to Mohandass Ayyappath for his insightful comments and editing. . customer’s overall cloud health starts with an assessment of value. The assessment of value of cloud services can only include a comparison against other cloud. corporation Conclusion In this ebook, I discuss one functional transformation that has taken placed as a result of cloud services, namely; the impact on the assessment of value.