Cloud adoption in the era of accelerated Digital Transformation (Part 1)

Digital transformation
Digital transformation

(It’s does not apply only to the pandemic, but it’s influenced a lot)

It’s not going to be another work from home journal, or similar series of articles. Within the past few months, I had a lot of interactions with various community members, IT Pros, business professionals, read/watched a lot of social network posts, blogs, trainings, follow discussions on the topic. I wouldn’t say its general rule, but the concept of Digital Transformation was kind of super charged and rushed within the past 2 months, since the global lock-down occurred.

This shows that the Digital Transformation initiative, which is alive for couple of years, suddenly pushed forward and expanded significantly. The process is heavily influenced by the way we changed how we do business today – how we “go” to work, how we interact with colleagues, customers, partners, “attendance” on meetings, conferences, trainings. Given the time, we may realize that some tasks are more easily and efficiently done vie digital presence, rather than physical. I don’t expect that we will go to the “dark side of the Moon” and move to the other extreme, but the way how we interact, from business perspective, is changed.

We see this trough impressive number and statistics, published for various cloud services – Microsoft Teams reported 2.7 billion minutes of talk within a day, increase of utilization was at 775%, 44 million daily users at peak. Google had similar experiences with their services as well, Google Meet has 2 million users per day added (they even enabled it to function with Google Classroom), over 2 billion minutes on daily basis. Some of the services, like Zoom, also recorded significant increase in utilization and popularity, but also serous security issues and privacy concerns  were exposed (most recent one is that half a million accounts are available on Dark web to be bought).

In Azure, Widows Virtual Desktop deployments raised 3x. This caused some server sprawl in the Microsoft datacenters, which is being mitigated, as part of ongoing effort to accommodate the increased need of resources.

This implies that, all these datacenters (Microsoft, Amazon, Google etc.), not including the co-location hosting providers and telecom providers, need to extend their hardware capacities (servers, memory, disks, network etc.), which means that we might get to a shortage of hardware for the rest. I have seen couple of local companies (Enterprise), stockpiling servers, network equipment, laptops and PC’s to compensate for the potential lack of equipment (mitigate issues with production, distribution, and potential delays).

Based on all that, I see the following things are happening (now or in near future):

  • We are seeing the architecture/design cracks in our current services (increased workloads, capacity thresholds, security/privacy issues)
  • We will get the senior management onboard with the transformation, but we might not have clear targets (short to mid-term).
  • When choosing the “Lighthouse Project” in cloud adoption process, lets focus on the “quick wins”.
  • There will be gaps, mistakes will be made (but, they can be corrected).
  • Digital divide (people, technology, skills) will become more obvious.
  • We can learn from experience of the others, that already went through the process or are more advanced then we are.

I have been talking about Cloud Adoption Framework (CAF) few times with clients, mapping their business and technical needs towards cloud adoption. I see it as a valuable tool within this process of accelerated digital transformation we are experiencing right now. But, first things first … Lets set the stage 🙂

Cloud Adoption Framework (CAF) for Azure

Microsoft defines the framework for cloud adoption as joint effort in sharing best practices between them, customers and partners. It tackles business (justification and outcomes), technical (skills, capacity), and governance and management (ITOps, DevOps, SecOps), all backed with best practices and process improvement steps. In a nutshell it’s a full life cycle framework. The framework aligns around the following phases:

  • Strategy – Define business justification and expected outcomes.
  • Plan – Align actionable adoption plans to business outcomes.
  • Ready – Prepare the cloud environment for the planned changes.
  • Migrate – Migrate and modernize existing workloads.
  • Innovate – Develop new cloud-native or hybrid solutions.
  • Govern – Govern the environment and workloads.
  • Manage – Operations management for cloud and hybrid solutions.

Cloud adoption as  process, begins when business and IT can realize that cloud can accelerate a specific business transformation process. These days, we might need to fast track the model, as seen by some of the numbers stated above, as well as customer and partner behavior recently. What would the common ground between them be, considering the recent development? Let’s walk through the steps.

Strategy

There are few categories that define the motivations, that will influence our move to the cloud. Depending on situation, your motivations will fall under several of them. The more we focus on them, discuss and fine tune, we will choose the dominant one. Based on that, we can define our adoption direction and strategy (business outcomes and justification), hence getting to our Lighthouse Project.

For our quick wins process, the focus would be on:

  • Critical business events: Reduction of disruptions and improvement of IT stability
  • Migration: Increase in business agility, Preparation for new technical capabilities, Scaling to meet market demands
  • Innovation: Preparation/Building for new technical capabilities, Improved customer experiences and engagements, Transformation of products or services

Business outcomes

For Digital Transformation process to work, it must start with the business outcome in mind. /such transformation, can be costly, time-consuming process. It will affect multiple aspect of the organization, influence already established processes, digital divide, people readiness.

For our quick win process, business outcomes would be:

  • Reduce capital expenses for hardware and software
  • Improve service provision times based on flexible capacity and scaling
  • Meeting and exceeding Customer engagement outcomes

This will be our bare minimum, in areas of Fiscal, Agility and Customer outcomes. This means that the Lighthouse Projects we choose, will support these outcomes, and based on that we can provide the appropriate justification (ROI) on those projects – financial model. High level calculation would be:

Creating the financial model is rather complicated and overwhelming task. The model varies, since the business justification varies, and being accurate is also a complex issue.

The Initial investment will aggregate the CapEx and OpEx assigned to the transformation process. The actual Gain from Investment is based on Revenue and Cost deltas.

Revenue deltas need to be obtained from the business stakeholders, and Cost deltas will increase/decrease based on the transformation process. Since we are talking about extending to the cloud, focus would be on expenses, such as:

  • Hardware procurement, including maintenance and support costs/contracts
  • Energy consumption (electricity, cooling)
  • Increased capacity of Internet link
  • Backup and Disaster Recovery

We might simplify the calculations, hence focusing on qualitative, not only quantitative model of calculations (quick win). For example, using cloud as datacenter extension, when you hit performance bottlenecks on your hosted services. For a long term cloud adoption process, all ROI analysis should be performed, as detailed as possible.

For quick win solution, calculate the detailed cost/benefit ratio further down the line. Given the tools how we can calculate the cost of the service in the cloud, we won’t be jumping blindly and incurring enormous costs. Rationale behind it would be that, within a short period (i.e. 3 months) we will have a very precise insights on the costs and benefits of the cloud solution. Based on that we can do corrections on the model, or given the circumstances, discontinue the service in the cloud, and move back to traditional model.

Conclusion

Once we complete Strategy Phase, which means we have aligned our business (outcomes and justification), we have a cleared vision what we want to achieve. Then we are ready for the Plan Phase. We will cover that in Part 2 of the series.

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