Ben Waterhouse, CIO at Coates, a leading Australian construction equipment and hire business, has recently led the company’s Digital Transformation. He tells Intelligent CIO businesses are underselling the benefits of cloud when considering TCO and details what he learned about cloud along the journey.
The cloud hype cycle reached its zenith not long ago, but its popularity has started to fall among many of my fellow CIOs across the country. One of the main complaints about cloud – aside from potential latency and the risk of outages – is the price, which not only goes from a CAPEX to OPEX expense but for many seems to cost more in the long run, for a perception they’re receiving less.
Many seem to think that they’re best off reverting, at least in some form, to hosting applications on-premise themselves.
This line of thinking forgets the simple fact that these cloud hyperscalers have made billions doing this kind of thing as a prime business offering. They’ve invested just as much in making their infrastructure robust and constantly available, and the economies of scale ensure they can offer more bandwidth, more redundancy, lower latency and greater reliability than we could possibly fathom in keeping our systems on-prem or at the branch headquarters.
How did we ever reach a point in which we thought we could ‘do cloud’ better than cloud?
Along the journey to the cloud – and if you’re reading this you’ve used it or considered it for your business – we began looking too closely at costs and somehow misinterpreting them. We originally rushed to the cloud because no longer did we have to pay huge CAPEX for new systems, but in that rush forgot that costs would then be staggered over years as we moved towards an OPEX model.
CFOs suddenly got wind of this and saw costs being deferred and suddenly, many started to see cloud as more expensive in the long run, so many of us began to revert to the on-premise thinking or a hybrid of the two.
But this reversion is something of an over-correction which only considers the costs of the service in a vacuum and doesn’t consider the other benefits and efficiencies that a shift to the cloud provides, many of which directly link to business outcomes and execution speed. We need to put these benefits back into our cloud calculations as these tend to get lost when we’re speaking dollars and cents with the business.
We have recently undertaken a transformation at Coates – we’re a 136-year-old business which recently began looking at the digital side of the business. We began upgrading our systems, leveraging the Internet of Things and digitizing our customer portals, invoices and more. And the beating heart of all of this transformation has been the availability and scale made possible by the cloud.
With more than 150 branches across the country, close to two thousand employees and more than a million pieces of equipment, handing the infrastructure reins to a cloud provider is simply a no-brainer.
We don’t need to worry about IT hardware anymore – if there is a cloud equivalent of a necessary piece of hardware, such as storage and compute, there’s a good chance we’ll use that and eschew. Sure, you all knew that, but it’s also the time it takes to maintain and repair that piece of hardware, physically house the hardware, provide a sound HVAC environment for the hardware, and ensure that you are patching, securing and updating both the hardware and software stacks.
At that point, you’re not only spending on hardware and labor, but also real estate and travel time.
Furthermore, we now can release an internal resource to do something completely different for a change instead of testing and re-testing patches to hardware, firmware and hypervisors within our unique environment.
We need to calculate how much time we’re actually saving as well in a cloud environment. We’re no longer doing maintenance to storage, compute and hypervisors, for instance – it just happens. We no longer need to dedicate a resource to implementing a patch, testing it within an environment and more.
We’re also no longer fixing potential outages – that burden and expense has shifted to the provider, and while we may experience a loss of income during an outage, we won’t also pay for the outage repairs.
The truth is that the total cost of ownership for a cloud deployment is far less than many CIOs are calculating.
I’ve been at countless roundtables now and mixed with dozens of CIOs, and going full cloud is anathema to many these days. The default is some version of hybrid, and many are looking at on-prem as the more dominant solution, jaded by outages, OPEX costs, cybersecurity concerns and more.
While you can’t outsource risk, you can shift many of the time-consuming administration and maintenance tasks that contribute to overall risk profile. And let’s face it; how effective are we at staying on top of the on-going maintenance of the lower levels of our cloud environments?
With cloud, we’ve been able to shift that burden to another provider whose sole purpose is to stay online and secure as much as possible. Do we want sole responsibility back? If there is an outage of our on-premise infrastructure, or a vulnerability is found, do we seriously believe we’ll be able to remedy the issue faster than a company whose business relies on being ‘always on” and meeting strict SLAs?
Sure, do your due diligence. Make sure the cloud environment you’re migrating too meets your unique requirements. If you do need something on-prem, make sure you’re doing so for the right reasons (reduced latency, for instance) and not because you’re blinded by a simple CAPEX versus long-term OPEX calculation.
But let’s not overthink this. Unless we run a significant engineering team, we cannot and will not be able to provide what a cloud provider can. These companies are multibillion-dollar behemoths for a reason; they know what they’re doing, and the benefits are clear.
Take advantage of the economies of scale, reduced risk and everything they provide, because the truth is they’re good at what they do and better than us at cloud. Let them do what they do best so you can do what you do best, such as looking at innovative ways to catapult your company forward.
