Oh no. Here it is again; The religious debate over build versus buy, in-house versus third-party, one-stop shopping versus best of breed, and all the other dimensions of this age-old question.
I’m sure you’re already saying to yourself “it depends.” And I agree! So why read any further? you ask. With all the “XaaS” options out there how can there being just one strategy? Obviously there can’t and won’t be a single strategy – but there are some key factors that should be taken into account when developing your approach to the cloud. The intent of this post is not to actually try to answer the question posed in the title. But I would like to offer a few thoughts that will hopefully generate some healthy dialogue on the subject.
There are some pretty good examples of companies that have been successful in deploying a roll your own (RYO) cloud strategy. Netflix always comes to mind. The Netflix team has done some very interesting work on cloud architecture, design and implementation – and have been very open about how they do it. Adrian Cockcroft (Director, Cloud Architecture at Netflix) has posted a very informative and detailed Cloud Architecture Tutorial. If you follow the technical side of the cloud discussion I think you’ll agree that what they’ve done is very sophisticated and has allowed them to build specialized applications that take advantage of the cloud and enjoy its economic and operational benefits. And more importantly, weather some of the availability issues that have plagued cloud deployments. The key to Netflix’s success is that they took a very aggressive “all-in” approach to the cloud and had buy-in and support at all levels of the company.
Obviously not every company can do what Netflix has done. The vast majority of small to medium businesses, and some larger enterprises for that matter, simply can’t afford the time and expense to build specialized cloud applications. There are open source and commercial cloud solutions on the market that are making the process of building private and hybrid cloud infrastructures easier, faster and somewhat affordable. And companies can definitely take advantage of SaaS applications for basic services such as email, sales management, outbound marketing, etc. But what about the applications that support the core competency of the company? That question leads us to the approach of utilizing fully integrated cloud-based suites of services.
Cloud-based suites of services offer some attractive benefits. First and foremost is that they eliminate a lot, if not all of the upfront development costs and potential CAPEX costs for infrastructure acquisition. And they “stabilize” the back-end or ongoing support costs, making OPEX outlays more predictable. However, there are still costs beyond just the subscription fees. Companies still need to plan for data integration and security and there is a need for application expertise for configuration of business-specific options and development of unique interfaces as appropriate. But most suites (think SaaS) on the market today offer multi-tenancy, good security, rich integration features, self-configuration, built-in business analytics and more. So in most cases with proper planning and execution, initial and add-on support costs can be significantly reduced.
Many on the RYO side of the discussion will argue that subscribing to a third-party solution forces the company to adapt its business processes to the application (service) instead of adapting the application to the needs of the business. A risk in some cases, but for the most part solution providers have learned over the years to provide a high degree of modular, configurable services that allow companies to “build” solutions that support their business model.
Another point deals with the issue of “lock-in.” Again, without proper planning a company can find itself in a position where it is tethered to a solution that may no longer meet its business needs, or has become onerous in terms of the business relationship. The corollary to this is that many companies have become locked in to their legacy in-house systems through years of tweaking code and integrating little add-ons (for which the source code is probably lost) that make it difficult to move forward with new business services.
Finally, Service Level Agreements (SLA) are a hot topic in the cloud world. Companies considering cloud-based services should pay close attention to this area and pick services providers who have clearly defined agreements and a robust account support structure to work with you throughout the relationship life cycle. Otherwise you might find yourself “alone in the storm” when problems occur.
As I stated earlier, there is no one size fits all answer to the question. But for most companies I think it makes sense to take the path of least resistance so to speak. Roll your own gives you a lot of flexibility and can help you address specific business and performance problems. On the other hand, cloud-based suites remove a lot of the headaches associated with services and application development, allowing your company to invest in new products and markets. In each example given above, whether it be RYO or cloud-based suites, there is one common thread – careful planning and disciplined execution are essential!
What do you think?
Robert brings to his clients a record of results-oriented innovation, industry insight, superior service delivery and operational know-how complemented by a variety of information technology industry experiences. He has a network into high level executives in the information technology sector and has partnered with industry leaders to develop innovative and disruptive capabilities. He has relationships with numerous venture capital firms and has evaluated, developed and helped accelerate the business plans of several of their portfolio companies.
He is currently serving as Vice President, Business Development and Product Strategy for LAYERZngn, a leader in the emerging Software-Defined Networking market.