This is every IT manager’s worst nightmare. You walk into the office. Everyone in your department looks gloomy. The mood in the air is a bit unsettling. As you work through the various worst case scenarios in your head, you open up your email inbox. And right there, at the top, is an email from the CIO titled “Adopt cloud by Q4“. You open the email. Due to various “business benefits”, it has been decided that the company will move its key applications to the cloud – starting with the CRM. The new CRM will be a SaaS application and the old one will be retired soon. All this needs to be done by Q4 this year. WHAAAT? You have less than 90 days to move one of the most critical applications of the organization to the cloud. You clutch your hair and suddenly, you hear the CIO call you, “Honey, honey…“. You wake up with a sweat and you stare at your spouse.
Okay, I may have been a bit dramatic there but the reality is that companies are adopting SaaS applications by the dozen everyday. Personally, in the last 3 years, I have seen the mentality of an average IT manager in the Bay Area mature from skepticism to fear to apprehension to acceptance when it comes to moving functional applications to the cloud. Third party industry analysts have seen the same surge in adoption of SaaS applications. The purpose of this post is not to validate this trend but to understand why companies are doing so and also, if they are doing it for the right reasons. In this post, I will address SaaS, PaaS and IaaS in the same breath when I say cloud adoption. I will go into their differences in a later post.
On-premise infrastructure cost savings – If at all anything, this is what companies consider as the #1 reason for adopting the cloud. The common belief is that by moving to the cloud, the company can save thousands of dollars in infrastructure and support costs. It may be true but remember that cost is not the only factor that should determine a move to the cloud. One should first consider if the move actually aligns with the business benefits that the company plans to reap with this approach. As a matter of fact, one could even argue that the NPV (Net Present Value) of on on-premise solution may be lower than a cloud-based solution if it is a long-term investment!
Options to scale massively – This is probably the #2 reason that companies give for adopting the cloud. Yes, if you need to increase your throughput multi-fold or setup a test bed temporarily with 1000 instances of your application, it is easily possible with a cloud infrastructure. The on-premise solution is not even imaginable on these grounds.
Operational costs savings – If you have too many support / maintenance staff along with an army of developers that support custom enhancements for a single application, then that might be right candidate to move into an equivalent cloud-based solution to save on all the operational costs.
Build vs buy decisions – There is no better time to start talking about the cloud than at the start of a brand new project. With hardly any CAPEX on the cloud project, you have the flexibility to roll back the project if it does not go well.
Loosely coupled architecture – When adopting cloud-based solutions, you have more open connectivity options (WSDL, SOAP etc) than proprietary interfaces. This helps in enabling / extending your SOA landscape and also, to create a more loosely coupled architecture for future growth.
And then, there are a few companies that just move to the cloud because everyone else is doing it. These companies are the ones bound to fail. Hopefully, after going through the list, you understand that adopting the cloud and cloud-based applications is not so bad after all. So, the next time you have that nightmare, it is important that you remind yourself that your cloud strategy is well-aligned with your business benefits. As for the CIO calling you honey, I can’t help you with that!
Last words of wisdom – Take it slow. I have seen a large high-tech manufacturer in the Bay Area adopt a cloud strategy over the last three years over several phases. They have moved 11 of their 18 core applications like CRM, HR, Healthcare etc into the cloud over the last three years. It takes time since cloud adoption comes with its own set of challenges. I will cover some of the key data challenges in this regard in my next post. In the meanwhile, tell me what are some of the challenges that you or your company faced during the process of cloud adoption.