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- August 18, 2016
- Victor Tung
- IT & Technology
Today's guest post is from Victor Tung, Chief Information Officer, Corporate and International for BMO Financial Group. Victor will be a panelist at CIO Summit Toronto on August 30, 2016, speaking on the topic of “Using Cloud Delivered Services to Enable Business Transformation.” The session will be moderated by Coupa Executive Advisor Kendra Von Esh.
The cloud is the future of IT – providing a more flexible, scalable and cost-transparent way of delivering technology to the business. While it’s not the dead simple, no-IT-needed, lower-cost delivery model many seem to think it is, neither is it something to be afraid of.
This is just the next step in the evolution of enterprise IT, similar to when we moved from mainframes to open systems. It's something you've got to embrace, but not blindly. Now as then, IT and business leaders have to partner to figure out how to work successfully under the new model within the context of their business. That begins with sorting out why it is that a business unit wants to use cloud technology, and setting the right expectations.
Fast, easy and cheap
Generally, the business is looking for a particular capability, or a solution to a problem. They usually want it to be fast, easy and cheap. While cloud technology might be the right solution, it isn’t necessarily all of those things, especially if it’s not managed properly. IT needs to sit down with the business leaders and talk about what they want to achieve, what they expect from the solution, what’s possible and what the parameters are.
How fast, easy and cheap it will be depends a lot on your organization and what you’re trying to do.
An important discussion point within any organization is that ‘fast and easy’ is a byproduct of not doing customization. This is one key way in which cloud applications differ from on premise software, and it’s important to set that expectation with business users who are used to being able to customize anything and everything. They may not get every feature on their wish list, but the tradeoff is that it’s a lot faster and easier to get up and running, and keep applications current without having to build and regression-test everything.
The other aspect of ‘fast and easy’ has to do with your organization’s current architecture. A lot of industries are talking about DevOps right now, which is a more collaborative and agile approach to application lifecycle management. If you're looking at IT from a greenfield perspective where you're starting a new company and most of your infrastructure is as-a service in the cloud, you'll be able to leverage the DevOps methodology of continuous integration and testing to provision applications a lot easier and faster.
For older companies that have lived through several technological revolutions, DevOps may not be so easy. A lot your systems may run on legacy mainframe environments, and that makes things more complicated. You have to figure out an appropriate hybrid model to harmonize these different applications, depending on what types of business capabilities you’re running in the cloud.
A different cost model
Cost is another key area where proper expectations need to be set since the cost structure of cloud services is different from previous models that most businesses are used to. Cost shouldn’t be the main driver for going to the cloud, but the implications of the cloud cost model need to be understood and governed.
Since these are typically usage based-models, cloud Software as a Service or Infrastructure as a Service can end up being expensive if it's not managed appropriately—sort of like using your cellphone a lot and then getting surprised with a huge bill.
In a self-hosted brick-and-mortar environment where you control your server capacity, usage was more predictable and this wasn’t an issue. With the cloud, you need to have appropriate governance. That starts with understanding the business process you’re supporting and how much capacity is needed. The beauty of the cloud is that you can scale up and scale down on demand, but there must be checks and balances in place to keep the costs of using the service predictable.
There are some other cost differences to consider. From a company perspective, the cloud reduces capital expenditures because there’s no hardware to buy; you pay as you go and you don’t have frequent capital outlays to refresh hardware.
Setting up disaster recovery is easier and more cost effective because servers are distributed across multiple areas. Faster implementation times can also lead to cost savings.
Cost is always a focus in IT, and from a cost transparency perspective, what you get with the cloud is a bill you can show people and divvy up. With your traditional open platform, if you own your servers and you've got multiple businesses using them, how do you distribute the cost? That can be pretty complicated.
Where the data lives
Another conversation that needs to take place is around data residency—where does the data live? We didn’t have to think too much about this before; our data lived on our own servers or in our data warehouse.
With the cloud, it could live anywhere the provider has servers. This is a developing issue from a regulatory perspective. If you're operating in a highly regulated area, you need to be close to your regulators and stay current on what the laws and the legal implications are. When you sign up for a cloud supplier, you've got to make sure they’re compliant, and have a process in place for staying that way.
Beyond that, you also have to think about what’s best for your business and your customers. If you operate in the US, do you want a US citizen's data sitting outside the country? If so, what places are acceptable? Different countries have different rules around data security and data privacy and you need to pay attention to that. You need to ask the vendor where your data will live, and tell them where you want it to live. That's where you need to be best friends with your chief procurement officer, because they help negotiate those contracts.
It’s a more complex situation than in the days when you hosted your own box and your data was right there, but in general these are good discussions to have. The cloud is forcing a lot of active discussion around data lineage and data ownership in the industry as a whole, and with so many data breaches in the news, it forces us all to step up our game and to be better, more accountable stewards of our client's data
The cloud is not just a faster, cheaper, easier way to deliver infrastructure and applications. Treating it that way could be career suicide. It’s a different model altogether, and that means that business and IT leaders need to have different conversations about intent, integration, usage, cost, data residency and risk.
The learning curve on my first cloud implementation was very steep, with months of legal discussions since we were entering untested waters. We’re in a better place now where a lot of these issues are better defined and easier to understand, so we can move more quickly.
We've got to embrace the reality that this is the way the industry is moving. IT and business leaders who sign cloud agreements without understanding these key differences, without coming up with governance and cost models could land themselves in a heap of trouble. It comes back to understanding your business process, what it is that you're consuming, and bringing the relevant stakeholders together to have these conversations as they evaluate and implement solutions.
Victor Tung is CIO for Corporate and International at BMO Financial Group, responsible for technology for the corporate functions, including legal, compliance, digital marketing and human resources. He is a member of Coupa’s Executive Advisory Board. To register for CIO Summit Toronto, click here.