don't make your ceo grumpy just because you are going cloud native!

by Ravi Veerasubramanian, Director, Cloud & Digital Managed Services at NTT Data UK

CTOs and IT teams love the public cloud (IaaS and PaaS) for the elasticity, feature-set, ease of use and flexibility. Its freed them up from some many constraints they've lived with....

BUT : Do you know a CFO who loves surprises - unpredictable, unforecasted OPEX and unplanned CAPEX makes them grumpy...

A lot of IT leaders are chasing promised savings right now as they migrate workloads to the public cloud – but are they really finding it?

Nirvana would be moving from legacy “on-prem” to cloud at the push of a button, even better a "Siri command" – but I know that is not reality.

Many IT leaders and buyers are disappointed that the promised agility turns out to be “barely nimble” during a painfully slow migration process. Personally, it seems more like a very scary and exotic trek through a tropical jungle with a lot of traps and wild animals lurking in the under growth!

I know many enterprises who have leveraged "Black Friday" migration funding from hyperscalers to kick-off agile cloud build-outs and migrations - sorry! no "pot of gold" at the end of the rainbow, just a mind-bogglingly big monthly cloud invoice. 

Finance is IT’s “best friend for forever” a.k.a. BFF, legacy or cloud – this relationship is so critical and is quite multi-dimensional.

Treat your finance team just like you treat your “cloud gurus” and other IT rock-stars – they need familiarisation and training to plan and forecast in a cloud-native world.

So what are the common focus areas?

Cost models: Every planned cloud workload migration needs a cost model based on full-lifecycle TCO metrics like for any other IT workload.

  • As part of this, don’t forget to do an as-is / on-prem v/s in the cloud comparison – as far as possible using the same cost-drivers!

Consumption based financials: Spinning-up resources in the cloud is so easy, maybe a bit too easy? – the days of creating and approving large PO’s for procuring IT assets are distant history. Strong IT <–> Finance collaboration will ensure robust budgeting, chargeback and resource accounting is adopted.

  • As part of this, don’t forget to align your IT budgeting process to the shift from large cyclical capex spend to ongoing opex spend.

Existing fixed and already capitalised costs will prove very sticky and hard to off-load: on-prem costs won’t magically vanish at the end of your cloud migration.

  • Plan and budget for some retained workloads on-prem and how you will manage the disposal / resale / reuse of any newish kit that still has usable life / service.

You can’t really afford to say “ I am not getting on that bus” – so you might as well be prepared. So what to expect on the rollercoaster called “Cloud Migration”?

In uncertain times (and are we in some or not!!) – “cash is king” and poorly executed cloud migrations hoover them up like loose dirt!

  • On-ramping and minimum $$$ commitments : DON’T let your hyper-scalers tempt you with a price profile where you pay a fixed fee after a set migration period. Tie the migration period to actual workload units, not time.
  • Throwing good money after bad and it’s all sunk : you MUST include the ability to only pay for actual migrated workloads, not the estimates on which your minimum $ commitment is based. Look at a mix of “compute units tiering” and “volume by SKU based model” with a charging formula and rate-card – not a fixed price.
  • Workload optimisation : when performance, compliance, and cost are well-balanced and continually drive the use of "best-fit" compute infrastructure in real time, nirvana is achieved. And.. this is policy driven and automated - don't even try a manual fix.
  • Delayed and/or lost benefits and no quick-wins – this more relational and vendor management : hold your hyper-scaler to account on any post-migration value and cost benefit claims made in the sales cycle. 

Just like you have to get to grips with the how the IaaS/PaaS platform works – you’ll also have get to grips with its pricing model and how your work-loads drive the costs you’ll be charged for.

There is no shortcut to making the public cloud work for your enterprise financially – don’t let it become a money-tree for your friend hyper-scaler : does not matter if it is AWS, Azure or GCP.

Few critical “must-haves” that cut across the technology and finance

“Tag it and bag it” – it is surprisingly easy to tag cloud resources by assigning metadata values to simple things like name of application, project or service, user group, cost centre and workload group. Tagging is hugely powerful but requires an enterprise wide convention that is adopted @ scale. It is the cornerstone to enable budgeting, billing alerts, usage monitoring and the ability to spot & suspend orphan services/workloads before you get an unexpected bill. In this case – “prevention is far better than a cure”.

To be spontaneous or not to be spontaneous”, that is the question. As your cloud strategy matures and the future state becomes more anchored – engage with all your cloud service providers to trade committed spend for higher discounts. As your experience increase, the learnings to develop decision making frameworks for these key areas:

On Demand v/s Spot v/s Reserved : which instance is right for you? 

1.    File v/s Block v/s Object : which storage type to use – when, why?

2.    Technical strategies for Serverless Computing, Replication, Regions/Availability Zones, Database strategy.

"Infrastructure as code" and auto-scaling are quite cool features and the ability to automate these takes a lot of drudgery out of IT Ops – but be careful! Without adequate control and monitoring – these nifty features can lead to unforeseen and sudden large increases in your monthly bill.

Experts for hybrid and multi cloud are hard to come byFinding a good partner with real expertise in hybrid and multi cloud is key – especially as experience and accelerators in this area are hard to come by. Why?.... 

1.    “Faster time to value” – using the right technical expertise, cloud-native tooling and automation can maximise the pace and scale of adoption for your enterprise.

2.    “Pay for results, not resources” – a credible SI who “knows their stuff” will be comfortable signing up to a predictable cost model based on payment for each application / workload migrated successfully.

3.    “A zero-capex model” – right now there are many cash-strapped firms in a post-pandemic world. Many public cloud solutions providers are offering “migrate and run” managed services with all upfront migration costs being amortised into a minimum term opex fee based on the number, size and complexity of migrated workloads. 

So how do I make my CFO happy?

Ultimately from a CFO perspective – what are the key metrics to show if a cloud migration has delivered value successfully or not?...

  • Transparency – awareness and clear correlation between costs (monthly, annual spend) and value (service quality and features).
  • Predictability – defined year / year cost profile with known and quantified cost drivers.
  • Independence – ability to easily flex capacity, features and costs up or down in line with business needs, changes and cycles.
  • Market-competitiveness – pricing and charges that trend (typically downwards) with current market pricing.
  • Verifiable cost-savings – ultimately in TCO terms, going cloud native has to be cheaper than staying on-prem on a “like-for-like” basis.

Don’t forget – your cloud subscription will be renewed in 3 years’ time. 

Don’t force your CFO to block its renewal – you don’t have to force him to sign at gun-point.

Powered by Wild Apricot Membership Software