The Economic Waste Factors of Private Cloud

We are living in a new age of sustainable thinking. Individuals and businesses are becoming more focused on controlling waste – of all kinds — and working to reduce impact. Whether recycling at home, driving a more efficient car, or working to evolve the process in a company’s supply chain, reducing waste comes in many forms.

You may find it surprising, but this thinking applies to IT infrastructure as well.  As I work with clients, I’m often asked to justify “moving to the cloud.” The justification to start using infrastructure as a service in an established enterprise (not that young startup that is all about cash flow and being cool) typically ends up in two major categories: Economics and feature benefits. The first should not only be about cost and where it ends up on the balance sheet but also about the ability to time and adjust it downward when needed. The second should not be just about technology features but also global distribution, capability (improving performance and availability) and agility.

When deciding on the right cloud strategy for your business, I hope this point of view on Economic Waste Factors will be helpful as you weigh options.

Waste of Money

Most organizations compare hardware quotes to the monthly cost of a cloud service and try to justify it in the context of a single project and purely based on the cost of a set consumption, maybe including a growth factor but rarely includes a projected decrease over time.

However, planning and deploying yourself creates waste. To illustrate this, the below graph shows a common Compute and Storage consumption scenario and its impact of having to buy ahead.

Note: Assuming a two percent daily growth curve (to emphasize the dynamic). IaaS vs Do it Yourself (DIY) cost is assumed to be equal for the same services and normalized by month to reflect a typical cloud billing cycle. DIY assumes it requires three months to get future capacity ready for end-user consumption including acquisition and payment.

This scenario shows that DIY is 124% of IaaS without the reduced usage at the end of the year. If you include a downturn, DIY goes up to 138% of IaaS solely because of the waste that is created by having to build ahead of the demand.

Waste of Time

There is another challenge inherent to providing infrastructure yourself.  For example, an IT organization was asked to investigate what the application performance would be if they were to service Hong Kong from a Singapore datacenter. In a DIY model, it would have taken $100K in hardware, a 12-month lease for a datacenter and at least six to nine months to set it up. Working with an IaaS service provider in Singapore, it took $10K and 30 days to build up the application infrastructure and run real tests. They found out it would NOT work.

Waste of Talent & Resources

As an enterprise, running your own IaaS should be considered carefully. When you can make a long commitment to a workload and/or need a lot of control of the infrastructure, DIY may be the only way to go. However, I believe most organizations grossly underestimate what it takes to provide an IaaS with the availability, performance, security, economics and change aspects the business expects in today’s digital world.  And you still must consider having your DIY team deliver the type of releases of new features that IaaS providers bring quarterly nowadays. To do so would require a considerable investment in skills and resources not necessarily critical to your specific business.

While there are valid use cases that require private clouds, I would argue that given the increased business change velocity requirements, investing money, time and resources in designing, deploying and managing your own services creates rarely a competitive advantage.  And the level of effort is often underestimated. So be sure to make careful, informed decisions.  And avoid the waste.

If you want to learn more about what might be the best strategy for your organization, feel free to reach out.

Edward Wustenhoff

 

Simplifying the IT Infrastructure Management Framework

Having a clear framework can make a big difference in the success of your infrastructure services.  As a part of my career at companies like Netflix, Sun Microsystems, Complete Genomics and recently as a Partner of StrataFusion Group, I developed a toolkit to help get my head around all the aspects of IT infrastructure management to enable successful change for growth and higher efficiencies. The framework’s innovation is primarily around how to look at the ever-changing technology landscape but is complemented with organizational and process points of view.

To help others who may be struggling with this topic, I wanted to provide this overview.

The Layers:

To start, I define IT infrastructure by layer:

• Services: Think of identity (active directory), databases and common services like email and collaboration. Out of scope for this discussion would be the actual business apps like ERP and CRM, etc.
• Compute: All server and Operating Systems (e.g. Linux, Windows) components.
• Storage: Anything that holds data like Hadoop, SAN, NAS and is often shared between servers and applications.
• Network: All Wide Area and Local Area network components, including load balancers and firewalls.
• Data Center: Power, cooling and space to hold it all.

The Aspects:

To make sure you manage all key aspects of each layer, ask yourself the following questions:

• Availability: What is the availability profile? MTBF and MTTR for hardware or a service, for example.
• Security: How do I ensure only authorized people and processes can affect the device or service?
• Performance: What are the latency requirements for any response from any device or service?
• Economics: What are the key cost metrics and how does that impact how I deploy new devices and services? Think of reserved instances vs. on demand in AWS terms.
• Change: What changes do I need to plan for: Operational (patching) and business (how long will the device or service exist? 1 hour or 5 years?).

Simplifying is always helpful when dealing with complexity and for the keen observer, you might have noticed that if you take the first letter of each aspect I get: ASPEC. Both the layers and ASPECs can be used in many different contexts. For example, when writing a project definition document, you can use these to describe all key and relevant requirements.  From an operational management perspective, you can use this to define KPIs. From an organizational perspective, you can use it to find gaps in capability or focus.

To leave you with some examples below is a matrix that illustrates the types of considerations per layer and aspect.

I hope this framework can help you and your teams improve your infrastructure services and assist in driving the right decisions as you implement new Infrastructure paradigms, like cloud computing, during your transformation projects. Don’t hesitate to reach out if you have any questions or comments.

Edward Wustenhoff

The KPI Conundrum: Are You Really Moving the Needle?

In an evolving digital landscape, are we measuring the right things? Key performance indicators (KPIs) can seem staid and old-school, but credible measurement of results is a common struggle for any organization managing change.

Recently, our SFG team participated in an informal panel discussion with product and service companies to talk about the best metrics to understand digital transformation progress, challenges and failures. The consensus of the group’s discussion is that leaders today advocate action-oriented and defined approaches to measurement centered around revenue or the customer. It’s no longer the era of implementing a new system and simply hoping for long-term ROI to show up in a non-specific indicator six months later.  So how do you do it?

If you aren’t measuring the right things during a digital transformation, is the needle really moving? 

 Successful transformation simply must be driven by tangible goals with outcomes in mind from the start. But a big challenge centers around what to measure in order to quantify success.  Are transformational initiatives streamlining the business, delivering on product or services, and monetizing efforts?  The argument for using traditional KPIs is to tap metrics already in place so data will be consistent with stated corporate goals. On the other end of the spectrum, many standard KPIs may be too traditional for the changing digital landscape and won’t correctly analyze the information that transformational advancements create. In addition, it often takes too long to harvest and analyze the data. Many in the group complained that their metrics are outdated, oriented to infrastructure or basic service and simply no longer relevant, or altogether nonexistent.

Can We Solve the KPI Conundrum?

A few of the more experienced members of the panel said that data collection, feedback and monitoring work best when it is intrinsic to the DT effort itself, with two to four data collection points at critical release junctures, feature activations and phases for client/customer response about satisfaction and service.

These are all big questions for today’s IT leaders.  In fact, the Wall Street Journal recently looked at how IT executives are finding value in real-time metrics.  According to the WSJ, as CIOs need to prove the value of IT as a revenue generator, metrics are key.  New tools are allowing CIOs daily visibility into their organizations.

Across the board, both panelists and audience members agreed that alignment on quantification is instrumental to success and progress, as is early course correction, in digital projects. The bottom line is that every business, and every transformation, is unique.

Defining your expected outcomes from the start is key to how you can measure more effectively to actually see the needle move on your transformation progress.

Maureen Vavra

Igniting Animal Welfare through Technology

Celebrating National Adopt a Shelter Pet Day

In today’s digital world we see every day how technology is transforming lives – and for me, that also means helping animals in need.  April 30 is National Adopt a Shelter Pet Day, and to ensure success, we need to employ technology to improve lifesaving efforts, whether assisting in search engine results, boosting social media, running shelters, or helping shelters and support organizations collaborate.

Animals are an important part of my life, and at one point my family included 17 indoor cats!  That may be hard for some people to imagine, but it was our way of making a difference.  Since 2003, I’ve served on the Board of the Humane Society Silicon Valley and now also serve as CIO of Maddie’s Fund, a national family foundation established by Dave and Cheryl Duffield to revolutionize the status and well-being of companion animals.  I have been able to merge two important themes in my life: serving animal welfare by using technology to make a purpose-driven difference.

How Technology is Transforming Animal Welfare

Technology is helping create a new level of interoperability between funding organizations, shelters and technology partners.  Technology helps stakeholders more effectively work toward the same goal of saving lives by sharing knowledge, resources and information.

Here are five ways technology is making an immediate impact:

1. PROMOTING ADOPTION: The Shelter Pet Project connects various organizations with a goal of emptying shelters through adoption.
2. PROVIDING EDUCATION: sites like Maddie’s Pet Forum and Maddie’s Pet Assistant help people interact with others or learn how to introduce a new pet into the home. Maddie’s University, a free learning management system for animal shelters to train staff and volunteers, as well as providing online certifications and continuing education for veterinarians.
3. DEVELOPING APPS: apps like Adopt-a-Pet and Paws Like Me make it easier than ever to connect people to animals in need. These types of technology solutions pull data from shelter systems into apps, including animal background, microchips and medical records.
4. SEARCH: Ensure search engines are working seamlessly with tools and apps to connect pets to people.
5. CONNECTING NETWORKS: Systems like Maddie’s Pet Forum are helping connect emerging networks of people, especially during times of crisis, to coordinate where people can volunteer and animals can be taken for assistance when areas are overwhelmed, or transfer based on demand.

Since my first board member role with the Human Society Silicon Valley16 years ago, I’ve been able to focus on influencing and educating others around technology applications to help drive success and awareness for animal welfare. Today my role as a consulting Partner with StrataFusion, allows me to be part of a group of community-minded technology executives.

In this age of digital intelligence, resources are a big challenge when it comes to non-profits and community organizations. And let’s face it, technology solutions are expensive, especially when it comes to staffing and talent. It is crucial for people with deep technology experience to get involved —  because the world needs the help.

You Can Help

While animal welfare was the natural choice for me, there are so many organizations that need volunteers and board members who can help guide operations and enable success.  You don’t have to share your home with 17 cats to make a meaningful difference — you can share your expertise as a volunteer or a board member to help others.

The bottom line is that passionate people are change agents, and we all have something special to offer – especially a home to a shelter pet.

Lars Rabbe, StrataFusion Partner and CIO at Maddie’s Fund

 

CIOs and the Board

Earlier this week I moderated a lively panel of CEOs at the HMG Strategy CIO Executive Leadership Summit in San Francisco, exploring what Boards need from CIOs and c-suite technology executives.

Are you exploring what it takes to join a Board of Directors? Here are a few tips from our panel.

• Most boards have two major reasons for seeking an IT professional on their board. They want strategic and operational risk assessment and mitigation, including cybersecurity. They also want business strategy, including technology and business model disruption across the enterprise/industry.
• Focus on the three Cs: Credentials, Communications, and Contacts. Having business-related credentials (MBA/Ph.D.) to denote more than a technical background.  Write books, seek out public speaking engagements, make strategic contacts and develop relationships.
• Boards are looking to optimize stewardship of a strategy to leverage technology in two frames: internal transformation (modernize, understand, protect and enable the business) and external transformation (innovate products, services, customer engagement).
• Boards are charged with balancing the intrinsically competing priorities of minimizing risk while maximizing long term opportunity and profitability.  The most useful and insightful contributions that anyone can make to a board discussion around technology are those that zero right in on the fulcrum issues between those competing priorities.
• All businesses, whether established operations or start-up potential disruptors, face repeated build vs buy decisions.  A CIO that has a clear vision of where a company’s real and valuable innovation is likely to occur, and who marshals resources (time, focus, money) to prioritize internal development in those areas, while guiding the efficient acquisition of everything else, is a CIO that can help a Board crystalize strategy.
• Tech leaders with a broad knowledge of business and technology trends, who can speak in an easy to understand and compelling way, have a unique opportunity to help boards understand the issues and opportunities for companies in technology-related businesses. They can help anticipate and lead disruptive change, which typically requires a fairly deep understanding of multiple technical disciplines and a good sense of business fundamentals and strategy.

Good advice.

Mark Egan, StrataFusion Partner

Transformation in Our Communities

We are living in an era of transformation where technology is changing not only how we do business and go about our daily lives, but also how we connect to each other.

It’s an exciting time to be part of driving this evolution. But there is another area of transformation that inspires: the transformation that takes place in our communities any time we get directly involved to help others.

At the heart of any transformation is the ability to make change happen. Here at StrataFusion, our partners have built successful careers across industry helping business grow, primarily in technology-related areas. Now, having established a partnership of trusted advisors to serve a spectrum of clients, it’s especially gratifying to contribute our expertise to the organizations doing great things in our communities. This is where our collective experience and know-how is put to use to help create change in the lives of others.

The organizations our partnership works with are diverse, from youth-focused STEM programs and university level education to mentoring, assisting with domestic violence intervention and raising funds and awareness for animal welfare. A snapshot of organizations and institutions includes: Year Up, Fresh Lifelines for Youth(Youth Intervention), Wonderfest(Youth STEM), Merritt College Security Program(Education), Women Unlimited, Inc.(Mentoring), Maddie’s Fund(Animal Welfare)and First Robotics(STEM).

On a personal note, it is gratifying to work with colleagues who are so passionately dedicated to helping others succeed by sharing time and professional expertise to serve on boards, mentor, support, educate and support in many other ways.

From our clients to our communities, I think this dedication captures the core of StrataFusion’s purpose: a passion to help others succeed.

Ken Crafford, Founding Partner

A Tale of Two Transformations

StrataFusion partners frequently meet and speak with business leaders across industries. This network of clients, colleagues and peers provides valuable insights into how companies view digital transformation, culture, operational and organizational challenges in the digital age.

“It was the best of times it was the worst of times …” Charles Dickens, A Tale of Two Cities

Digital Transformation has been a revolutionizing force for business for more than a decade. It’s an exciting time for companies, but also brings many challenges that can test leaders and cultures.

While there are things common to business that every CIO should consider, the journey is different for everyone.  We recently spoke to two heads of technology at mid-size companies to understand their views on Digital Transformation and how it fits with their strategy. Both are fairly young companies in similar industries with less than 20 years in operation.  Given the age of these companies, you might assume they would not face much need for digital transformation, that they already have the underlying technology, skills and processes ready to evolve in step with the market demands and new entrants.  Here is what they had to say.

Company A:  Focusing on Big Themes

The first company in our comparison is all about solving for complexity:   complexity of systems, technologies, decision-making, methodologies and all the interrelatedness that needs to be addressed. The questions they ask center around the following:

• Value Model: what is the value proposition to launch a large system replacement? What is the value proposition to simplify and eliminate so many in-place vendors and products – and add new different ones?
• Change Management: why do all business units need to standardize IT? Won’t it delay a lot of more important things and take money away from their initiatives? With global business diversity (when operating in many regions and countries), is it best to standardize or differentiate?
• Scalability: it’s easy to go overboard with digital. How much is enough and how is cost structure impacted?

Company B:  Drilling Down on Tactical Planning:

The other company in our comparison is focused more on starting with results and less on starting with strategy.  It is about looking at some of the “quick wins” to move the case for transformation forward.  The questions they ask center around:

• Metrics: how exactly will they measure success?
• The Test Drive: can they try before they buy? While they believe an overall approach is needed, they want the experience as a proof-point.
• Customer: when operating in a commercial space, how do you execute transformation activity to align with customers and their business outcomes in every step of planning?

It’s clear that even younger companies and start-ups have digital transformation challenges.  The size of the problem may be different, but the legacy (and the potential for legacy) issues can be very similar to larger, more mature organizations.

Is there a right answer to what approach is best for transformation success?  Even if in the same industry, every company is different:  from the communications of their leadership teams to their workforce and their culture; what works for one may not work for the other.  This is the value a trusted advisor delivers: experience that understands the unique facets every company brings to the equation of any digital change in the business model.  That’s our approach.

Now it’s your turn to weigh in! We love feedback, so share your thoughts in the comments.

—

Future installments on this topic will dive into StrataFusions’s point of view on various approaches to transformation.  We will provide deeper consideration around the successful starting points, the questions and data needed for successful digital transformation.

 

A Decade of Digital Transformation

Digital Transformation (DX) has been underway for more than a decade now. With a significant amount of time under our collective belt, it feels like a good time to evaluate a couple things.

Maybe not so surprisingly, many companies are stuck in their DX or struggling to make sense of the opportunity it presents.  I’ve spoken to plenty of CIOs and business leaders in this situation and offer a few observations:

1. Many companies remain skeptical of DX and will miss out on the rewards.
2. Other companies are either taking a short-sighted approach or they are trapped by the digital hype cycle. Neither are winning.
3. Some business leaders see DX as a technical problem leaving CIOs without a method to strategically partner with the business, where DX can make the most impact.

Still Skeptical of DX?

Here at StrataFusion, we’re more than a little allergic to consulting hype. But the “big hairy beast” that DX represents is clearly making history and is much more than simply moving your data centers to the cloud. It’s also about embracing technology to:

• Create new business models and growth trajectories
• Shape customer-obsessed companies
• Build products that have a relationship with their users
• Move at faster and more agile speeds
• Win the talent war

It’s been said that every company is now a technology company – like it or not. While IDC reports that 75 percent of companies are in a DX deadlock (2), it’s crucial to operate as if your competitive threats are not deadlocked. Consider Kroger CEO McMullen who recently justified a $2.5B acquisition to accelerate the company’s digital technology position saying, “We assumed that, at some point, Amazon was going to do something in the physical world.”

If Amazon isn’t on your radar, then start-ups likely are. Are you ready?  Here are two questions you should be asking:

Do you have a clear understanding of your strategic digital opportunities and threats?

We’ve seen an industry leader wish to become the “Amazon of Information” when it was struggling to deliver basic services. We’ve seen another leader squeeze technology spend to less than a percent of revenue while largely missing out on the biggest product leap in a century. Another leader has been in the process of transformation for an entire decade but created more re-orgs than business results.

In many ways, industry-leading CIOs have a greater challenge to face:  the business. Your executive partners often lack a way to focus and almost never a mechanism to measure progress and work together.  And DX is more than a series of initiatives. You can’t simply keep up, playing like a football team moving the chains when the game is becoming more like soccer. Your strategy may rely on leadership off-sites and benefit from strategic roadmaps, but alignment and executive teaming must be supported continually along the way.

Is your DX strategy both focused and truly transformational?

You’ve got to measure to see the progress. Companies are awash in data but still not yet measuring their Digital Transformation. Most are managing operational KPIs and some are measuring their DX strategy or strategic initiatives. Who is measuring the company’s transformation? Yes, there is a difference.

Consider fitness goals. Let’s say you’ve signed up for a race to serve as a motivation for getting in better shape. You’re going to measure your practice split and completion times, but those are like operational KPIs – lagging indicators. You hit a plateau, so you get a trainer. They’ll probably ask how much sleep you get, grill you about your diet and want details on past injuries. Those are the leading indicators that measure your fitness transformation and eventual success.

Business results are the outcome of your transformation, but that’s not how companies are measuring. According to IDG, only 15 percent of companies are measuring DX success, and virtually none are measuring the transformation of the company (1). To address this problem, StrataFusion developed a simple DX measurement system that elevates the leadership conversation, focuses on partner alignment and helps regain forward momentum.

Do you have an easy way to talk with your executive business partners and CEO about Digital Transformation? StrataFusion partners have led companies through Digital Transformation and the technology waves that came before; in other words, sat in your seat and walked many a mile in your shoes. I invite you to learn how you can use DX measures to build momentum, alignment and stronger relationships with your senior executive partners.

Byron Kaufman

Sources:

(1) 2018 IDG State of Digital Business Transformation

(2) IDC Using IT Metrics and KPIs to Fast Forward Digital Transformation, 2018

 

Benchmarking that Propels Transformation Forward

Digital transformations are even more impactful, and often more disruptive, to corporations and their cultures than traditional IT transformations, which focus primarily on systems. The business value impact can be substantial, as is the risk of failure.

Benchmarking can help crystalize targeted outcomes by identifying what measurements are most important and showing progress against both internal and external guideposts. Whether they are used to compare to a competitor, track current performance, or understand the impacts of an industry trend, benchmarking can serve as a catalyst for achieving transformation goals.

How can IT leaders can drive successful digital transformation through benchmarking?

• Engage Your People
  Ensure that your transformation benchmarking is heavily informed by the people who will actually lead and work on transformation initiatives. While external benchmarks are valuable guideposts, your people and teams know best what your organization can handle.
• Be Clear on Timing
  Benchmark early in transformation scope planning. Delaying benchmarking until you are at the doorstep of implementation risks missing key signals that can come from benchmarking at the outset of business process redesign and the insight that comes from systematically testing and monitoring early stage transformation efforts.
• Support the Leadership Conversation
  Use measures to facilitate a regular executive conversation on your company’s strategic digital health. The right high-level measures give feedback on the pace of transformation that elevates the dialog above the quarterly tug of war. The ability to continue collaborative conversations beyond your last strategic off-site can improve your partnering dynamic and keep the focus where it belongs – digital competition.

When these benchmarking steps are addressed appropriately, several enablers of transformation success are bolstered:

• Clear, shared and measurable expectations and progress milestones are set
• Feedback loops focused on tangible, actionable points are established
• Course correction earlier in the process appropriately adjusts future targets
• Effective communication that demonstrates progress and motivates people and teams

We have more to cover in our ongoing benchmarking series. For now, we would love to hear from you about what role benchmarking plays in your organizations, where you run into challenges and how you are solving for success.

Maureen Vavra

This is the second installment in StrataFusion’s benchmarking series.

Career Day Outcomes: Trends in IT, IoT and Privacy Mean More Complexity, Opportunity for IT Professionals

With increasing prognostication around the looming IT talent shortage, it’s refreshing to engage with the students at Merritt College. As this next generation prepares to enter the IT workforce, Cybersecurity Career Day events not only help connect them to industry and business leaders but also create engagement opportunities for learning and collaboration.

At the event Nov. 2, about 100 attendees had the pleasure of hearing from three panels that included Instructors, leading CISOs from a number of industries, and students. During the day’s interactions, we clearly saw that the proverbial pendulum is swinging back toward privacy. In fact, discussion about GDPR and California’s Consumer Privacy Act explored what it will mean to students – from IoT expansion and an exploding attack surface to the increasing friction between IT and OT (Operating Technology).

As privacy discussions elevated, it was particularly rewarding to have Michelle Dennedy, Cisco’s Chief Privacy Officer, as the keynote speaker. She provided students and peers alike with a unique perspective of current trends, insight into the evolving landscape of privacy and IT, and shared the personal journey of her own career path.

An important outcome of the day is the awareness that cybersecurity and IT professions are not only needed but increasingly require more complex and greater ‘political’ skillsets inside organizations. Technical acuity and collaborative agility are professional strengths that are not only highly valued today but will be an absolute necessity in the future.

Thank you to all who participated!

Mark Egan