Moving to the Cloud: Part 1 - What & Why

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October 15, 2015
Cloud
Nick Price

This article is the first in a three-part series discussing key strategies that a company’s IT leadership should be considering in making a move to the cloud. Part 1 covers what the cloud is and why it should be attractive to most organizations.

For most enterprises, moving to the cloud is a strategic shift in the application of resources that fundamentally changes the way a company does business. Executing this strategic shift requires vision, planning, and above all, communication. The IT leader that is driving the move needs to have that vision and articulate it in a meaningful manner to the business, especially finance, and to the IT team.

Clarify what you mean by “cloud” early in the process. Are you talking about an application remotely hosted by the vendor instead of in your data center and accessed by terminal services? That isn’t the cloud. Or are you talking about the primary workflows that run the business, hosted on platforms outside of your control, where the funding model is operating expense based on some usage metric.  This is the cloud, and if you are still reading this, you are probably ready for it.

Components of vision to communicate as benefits or outcomes of a cloud migration may include:
+ Focusing IT on driving competitive advantage, not on writing code
+ Getting out of the hardware and software business and being in our business
+ Taking cost and capital expenditure out of IT and deploying those resources elsewhere
+ Buying only the computing resources you need when you need them
+ Improving the reliability and performance of applications you are currently maintaining internally today

The key is that the IT leader needs to identify the aspects of cloud computing that will resonate with his or her organization and move its business drivers, not another organization’s business.  There could be many attractive reasons to move business processes to the cloud, but three of four at most should stand out. If you are having difficulty identifying these benefits, or if you personally can’t explain them, then you or the business are almost certainly not ready, so cloud is not for you – yet. Once you have your cloud rationale checklist though, practice your elevator pitch and start communicating the benefits of the cloud in your company’s terms, and do so to anyone who will listen.

Once you have identified why you might want to move to the cloud and what you might want to do with it, start thinking about when to make the move. The move to the cloud is one of those once-in-15-year tectonic technology shifts, like minicomputers, PCs and Internet that have punctuated the technology landscape since the 1970s. Choosing the right entry point along the adoption curve is important to ensure eventual success. Determine the risk/reward profile of your company and time your entry point accordingly.

One key aspect of communication that is all too easy to underemphasize is the conversation with the finance function in your company.  Typically, major IT expenditures are considered capital expenses (Capex) to be amortized or depreciated over years, with ongoing staffing and support costs treated as operating expenses (Opex). In a cloud model, you generally have little need for Capex but Opex will go up significantly. In fact, total spend may not change much, but will be allocated differently between Capex and Opex. This shift has particular import in the hotel industry, where ownership and management are often separate entities. The owner generally controls Capex and funds it directly, while the manager usually controls most Opex. You need to ensure that your peers in finance understand this shift and its implications.

The next part of the dialog with finance will make them pleased: cloud computing resources tend to cost less and/or include more services over time, as competition forces price cuts.
 
Another crucial conversation needs to be had within the IT team.  Established IT professionals will tend to default to approaching cloud computing under an infrastructure-as-a-service model. This seems familiar and comfortable, allowing them to manage and maintain applications, operating systems and databases in a manner fairly similar to the way they run the data center today. 
 
We believe that the platform-as-a-service (PaaS) model is far superior and should be the goal for organizations that cannot find a complete software-as-a-service (SaaS) solution, which, in the broad hospitality industry, would be most companies. PaaS deployments remove IT system administration from internal responsibilities, moving the focus up the stack to application management and administration. And, the pain from ineffective IT systems management is often a key driver in moving to the cloud in the first place. Essential attributes of a successful PaaS implementation include:
+ Applications written or re-written for the cloud environment
+ Real-time quality dashboards visualizing the services being delivered and managing the provision of supporting resources

Here we have reviewed components of the vision for cloud computing and some of the essential aspects to communicate to a couple, key internal groups, finance and IT.  In the next issue of Hospitality Upgrade, some of the key decisions IT leadership will need to make in this journey will be discussed: specifically, what to move to the cloud and when, and which cloud option to use.

Nick Price is the CIO of citizen Hotels, former CIO of Mandarin Oriental Hotel Group and a member of the HFTP International Hospitality Technology Hall of Fame. Mark Haley and Mark Hoare are members of The Prism Partnership, a consultancy serving the global hospitality industry.

The formal definition of cloud computing is maintained by the National Institute of Standards and Technology at http://csrc.nist.gov/publications/nistpubs/800-145/SP800-145.pdf. While certainly an accurate and comprehensive document, and compelling reading for some, it won’t go far in communicating a vision in most commercial enterprises.

 
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