Five steps to a successful cloud applications strategy

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Five steps to a successful cloud applications strategy

Rob O'Regan

How can CIOs ensure a smooth migration to cloud applications? Vendors may tout the plug-and-play nature of cloud services, but there's no instant fix for migrating legacy applications to a Software as a Service (SaaS) model. Best practices are beginning to emerge, however; here are five gathered from interviews with CIOs, solution providers and analysts.

Take stock of your assets: Conducting and maintaining a complete inventory of all applications should be common practice within any IT organisation. Evaluating SaaS solutions increases the need to have a clear view of assets across the organisation in order to determine which software or services should move to the cloud, which should stay on premise, and which are redundant and should be phased out.

 

"IT needs to do a thorough audit of what they have and start to understand which ones can be delivered in a true SaaS model," said Phil Fersht, CEO of Horses for Sources, a global outsourcing advisory firm. "Assessing how current applications can be cloud-enabled will help you think about what you want your future IT organisation to look like."

The SaaS guys seem to think they can take these apps, just slam them in and run them.

 

Phil Fersht, CEO of Horses for Sources,

The audit should document all aspects of an application, including where the software is installed, number of licenses, status of licenses or service-level agreements (SLA), who the business owners are, and how the software is being used -- the frequency as well as for what purpose. All of these inputs will help IT determine the total cost of ownership (TCO) of each application, which will serve as a baseline for modeling potential cost savings of a SaaS solution. Tools such as a cost-and-performance diagram can help CIOs assess an application's business value.

Think process, not product: A SaaS evaluation should look not just at packaged applications; CIOs should also be evaluating how cloud services can help a company improve its business processes. In this regard, CIOs are starting to consider cloud solutions in the context of business process management (BPM). "Business process and technology are converging in a whole new delivery context," said Fersht.

Business process services, according to Gartner, comprise any business process "delivered as a service in a scalable, elastic way, via the Internet with access via Web-centric interfaces and exploiting Web-oriented architecture." These processes span a broad range, from payroll, HR and finance to e-commerce, customer service and advertising. Delivered through the cloud, these processes can help companies do business more effectively or more efficiently.

Gartner predicts cloud-based business processes will account for nearly $58 billion of the $68 billion in global cloud services revenues for 2010 -- or about 85 percent of the market.

There's plenty of precedence in delivering processes through a managed services model: ADP, for example, has been offering outsourced payroll services for decades. Though not a cloud-based solution in its strictest sense, ADP payroll service offerings speak to the potential of turning non-core functions over to cloud providers.

"It's a growing ecosystem, with plenty of diversity," said Woodson Martin, Salesforce.com's vice president of strategy for the EMEA (Europe/Middle East/Africa) region.

Avoid vendor lock-in: The delivery models are changing, but cloud providers -- like their enterprise counterparts -- still want to lock customers into long-term contracts. In this regard, the pay-per-use pricing model -- one of the key selling points of cloud services -- remains elusive. Gartner's David Cearley estimates that 90 percent of SaaS deployments are not pay-per-use.

"True SaaS means you should be able to pay by the drink, and switch when you need to," said Fersht. "But vendors still want three-to-five-year lock-in."

Avoiding long-term commitments may be a shock to the system of CIOs, many of whom are used to cozying up with one or two primary enterprise software developers who promise compatibility and easier maintenance around a single platform.

"In many cases, CIOs in the past followed a vendor consolidation strategy, in some cases buying everything from one vendor," said Stefan Ried, a senior analyst with Forrester Research. "With cloud computing, this is changing. You can now look at best-of-breed solutions. This is not so traumatic because exchanging data in the cloud is becoming much more sophisticated."

CIOs still must be wary of the lack of interoperability standards in the cloud space, adding to the difficulty in switching providers, at least for the short terms.

As cloud services become more interchangeable, Forrester believes this a new service provider will emerge: the cloud broker. Ried describes cloud brokers as the travel agencies of cloud services, used by CIOs to coordinate services from a variety of carriers.

"We'll start to see the first iterations of this in 2011," when the first de facto or official standards begin to emerge, said Ried. "Today this is not the case, but this is the future model for cloud computing."

Don't go cold turkey: Provisioning cloud services may be easy, but CIOs should not underestimate the transition time users will need to adapt, especially in the case of applications that feature different interfaces or functionality. CIOs should consider running cloud solutions in parallel with legacy applications until users are comfortable with the new software.

A lot of businesspeople who have felt constrained by their IT organisation now feel liberated by being able to deal directly with the vendor.

 

Richard Parker, executive vice president, Nimbus,

CIOs will also have to manage the angst of employees who aren't ready to give up applications they are comfortable using. "The SaaS guys seem to think they can take these apps, just slam them in and run them," said Fersht. "What they don't think about is the amount of change and governance required to take applications they had before and make them redundant in the cloud."

When Dee Set, a York-based fulfillment and logistics company, replaced its Microsoft Exchange mail system with Google Apps, IS director Gavin Jones made sure users still had access to their Outlook inboxes during the transition. The trick was letting them warm up to the functionality of Google Apps on their own.

"We took the flack initially from loyal Outlook users," said Jones. "Then we gave them chat and it went quiet -- people love the chat function." As Jones begins to evaluate Google Documents as a possible replacement for Microsoft Office, he knows he'll have an even tougher sell to Dee Set's base of Office users.

"We're not ready to go there yet, we would have to pry Office from people's cold, dead hands," Jones joked. "But you can start to show people the increased functionality in Docs, show them new ways of doing things, and let them think it was their idea to start using it."

Become a champion, not a critic: Cloud computing represents a new model for delivering IT services -- one that can actually bypass the IT organisation. Line of business leaders and operations managers can order and begin using cloud applications and other services without any interaction from IT -- a potentially chilling prospect for CIOs.

"A lot of businesspeople who have felt constrained by their IT organisation now feel liberated by being able to deal directly with the vendor," said Richard Parker, executive vice president of Nimbus, a UK-based developer of business process management software. "This is particularly true in the UK, where COOs [chief operating officers] are leading the charge to drive solutions and are no longer feeling the constraints from the CIO."

To counter this shift, CIOs must position their groups as facilitators of cloud computing, not barriers to it. They should work closely with business units and functional groups to develop use cases and evaluate potential cloud solutions -- without any bias toward internal solutions or the "status quo." In other words, CIOs need to be more approachable and offer constructive guidance on where cloud solutions can drive business performance.

"CIOs tend to take a negative stance toward cloud," said Lucy Mills, Nimbus' business excellence manager. "We tell them that if they become their company's trusted advisor on cloud, they won't be jumped. At the moment, they're being jumped."

Rob O'Regan is a freelance writer. Let us know what you think about the story; email editor@searchCIO-Midmarket.com.


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