The Cloud Hybrid or All-in?

Posted on October 4, 2010


Fred Studer, general manager of Microsoft’s Information Worker group, encourages partners to go all-in with Microsoft in the cloud saying they won’t regret the decision should come with a health warning and Microsoft are not alone in that either.

I must confess to having already Cloud enabled one clients business 100% with resounding success. But this is I believe going to be the exception more than the norm for any organisation. The decision was only taken after a detailed business strategic analysis and was influenced greatly by the unique dynamics of this Professional Service organisation. That having been said when it comes to Cloud Computing I have found ALL organisations are unique in how it can positively and negatively impact them.

At the moment the market is still woefully unprepared in education and awareness and Vendor Channels starved of any structured training in real terms as to how to remedy this. As I have written earlier in my ‘Cloud Channel Challenge’ piece, the challenges break the mould of traditional technology sales and adoption.

For now the best that IT Companies can do is learn by treading VERY carefully; and the best adopters can do is NOT rush in.

In the absence of any clear differentiator between IT suppliers in terms of Certification or capability in this space, any Customer buying from an IT Company that is not servicing some tangible part of their business from Cloud Computing should pause to think.

Focusing on the functions that are core is a good start for IT Companies. Identifying processes appropriate to the Cloud service model for their own business BEFORE they start peddling to their customers is a mandatory baptism of fire. In so doing, by walking the walk and talking the talk, Cloud benefits will filter into an organisations awareness by osmosis and become part of the companies DNA to the betterment of their service delivery and wellbeing of the customer base.

Where Fred Studer gets it right is in the sense that Microsoft Partners MUST be walking the walk if they are going to talking the talk. With the concessions Microsoft gives its Partners through its online services and Azure Partner Program benefits there is no excuse not to be.

In my presentations when I speak to IT Companies I challenge attendees with a simple exercise:

Services IN   v.   Service OUT

· Services IN = Any IT service you consume material to your own business operations such as email etc.

· Service OUT = Those service or product you supply to your customer that drive your revenue stream and build your brand value such as development, hosting or demonstration systems.

Services IN -> Put in the Cloud; Microsoft Online Services, Google, Amazon, SalesForce etc (NB: With the exception of Microsoft, European organisations should be wary of as they are not 100% EU Data Complaint in by default.)

Services OUT <-> Blended model, work the numbers and you will find where best to spend your Business Capital and budget your cashflow. Platforms like Microsoft Azure offer great potential for many IT service companies to mitigate CapEx on their own hosted environments.

Having worked this model through for a couple of IT Companies I can share some real benefits:

· Reduced Non-Billable time for technical resources previously assigned to managing and maintaining internal IT systems. Real world figures include:

o Sys.Admins from 80% cost centres to 70% revenue generators / influencers.

o Developers increased billable time by 10%

(I will be blogging on Cloud and the Business Savvy Developers at a later date)

· With a reduced commitment of Capital required to support internal IT services, this represents direct Capital cost savings or resources that can be assigned to revenue generating roles increasing the capacity for bottom line profit.

· Organisations for the first time have a true DR capacity and business continuity plan. Previously a discipline or cost not bothered with, and where it was, it was often out of date and unreliable.

· The business had clear service metrics and agreements that clarified what was being received. No longer subject to the lag of provisioning or upgrading experienced with in-house systems.

Having challenged a number of IT Companies, few have been able to credibly qualify retention of in- ‘Services IN’. The common defence is ‘I am a specialist in Microsoft Exchange or SharePoint or Unified Comms. so must run the systems in-house to build experience’. Why? I know of no company that allows its team to ‘build experience’ hacking around with the company email or document management platform or communications! When challenged I find that in fact these VAR’s (Value added resellers) or Service Companies maintain separate platforms for ‘building experience’ and coporate email etc remains sacrosanct, a no go area.

Come on people, no-one today can afford to compromise their own operational platforms and few can better say Microsoft at delivering Microsoft product than Microsoft! So stop moaning and contract Microsoft as part of your IT department, at least they will give you a Hard Service level Agreement and pay you a cheque if its breached! Other Vendor resellers and service Partners likewise need to reflect on their own technologies. Or be honest with themselves, and accept it as an elective overhead of doing business for the luxury of going alone.

As for customers of IT Companies the principle is consistent. If you are a Microsoft house there is little credible reason not to integrate Microsoft, in essence, as part of your IT department. Leverage the costs you have to commit to IT resources on building your business revenue, innovation or capability. BUT don’t go at it blind, there is more to integrating Cloud Computing than just engaging the Credit Card. See the Education Challenge I note in my Blog ‘ The Cloud Channel Challenge’; this also applies to the customers in the context of an education in the beneficial impact of a business correctly aligned with Cloud Computing at a fundamental strategic level.

I have no doubt readers may have their own views on this and actively invite and welcome comments. Do you think the same applies to customers?