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NigelS

Cloud Services: Agility-based buyers, and how to spot them.

by Juniper Employee ‎09-19-2011 06:20 AM - edited ‎09-19-2011 06:31 AM

In business, agility means being flexibility, acting with speed and embracing innovation. Agile companies can react to new market opportunities more adeptly than their less agile competitors.

 

In my blog ‘Matching Service Propositions to Buyer Preferences1 I discussed how cloud adoption is typically motivated by agility for initial deployments which, in larger organisations, is superseded by a need for cost savings phase II roll outs.

 

The Sand Hill Leaders in the Cloud paper2 states that ‘The cloud enables enterprise IT organisations to anticipate and respond to the changing needs of the business more quickly and efficiently than ever before.’

 

But agility goes beyond an ability to react. IT organisations are increasingly looking to lead the business, as evident in the comments in Silicon.com’s CIO50 video interviews4

 

 

The agility afforded through the adoption of cloud services allows CIO’s to become service brokers with the opportunity to proactively lead business initiatives.

 

So, how do you recognise a customer looking for agility benefits over cost?

 

Case studies on agility focus on rapid roll out, tear down and provisioning of services. Typically applied to existing services, but I expect this will increasingly apply to the adoption (perhaps temporarily) of new services in future which are linked to new ways of doing business.  Ultimately, agility is about capturing new opportunities.

 

If you adopt the argument that ‘IT is a necessary cost’ then the business case is straight forward – to do the same for less. Agility is more complicated to define. Agility has distinct characteristics that would be lost or not present in a simple cost-based justification. For example, agility objectives may include:

 

  • The ability to adapt business processes
  • Enabling new channels to market
  • Creating more flexible sales structures and operating models
  • Measurement of business and production processes
  • Tracking sales and marketing outcomes

In a blog post5 Intel’s Ajay Chandramouly puts the top 5 benefits of Intel’s private cloud deployment as:

 

  1. Agility (server provisioning time)
  2. Efficiency (server consolidation)
  3. Business Intelligence (usage measurements) and
  4. Elasticity (scalable resources)

He then says

 

  1. “Finally, I mention the cost benefits of cloud ... because it was the least important reason”.

Clearly Intel’s motivation was for increased agility.

 

Enterprises tendering for services with the above or similar requirements are looking for agility characteristics in a service offer. The service must be open, flexible, scalable, offer portability and reflect this in both the technical attributes and the service contract.

 

If the requirement document focuses on improving existing processes and business models, then the organisation is more likely measuring with a cost-based metric. Services and contracts for this type of customer are more likely to be biased towards maximum efficiencies and cost control and may be able to tolerate less flexibility in order to achieve this.

 

Who buys based on agility?

 

The Cloud Industry Forum3 survey “Adoptions and Trends 2011” identifies flexibility as the primary driver across both public and private sector organsiations. They note that “The flexibility of cloud-based services is the most reported reason for its adoption” and “it is the SMB sector ... who are now recognising far faster the benefits of migrating to the cloud.”

 

Agility still dominates the thinking of larger organisations in the early stages of cloud adoption before looking towards cost justifications in larger roll outs. Evidence suggests that it will be difficult for the public sector to embrace agility6 due to the overwhelming pressure to reduce costs, and to be seen to do so.

 

How does this affect cloud service providers?

 

Cloud providers can look for signs of agility motivators versus cost in the request for proposals (RFPs) generated by prospective customers. Where requirements include a number of agility needs, the provider can ensure openness, flexibility, scalability and portability feature highly in their proposals.

 

Where the focus is on existing applications and services migrating to the cloud, looking to maximise the immediate financial benefits is likely to be a more appropriate approach and price points will be key. How to meet these price points, or competing with Amazon EC2 services, may be the topic for another blog! Let me know...

 

Nigel Stephenson

Head of Cloud and Managed Services Marketing, EMEA.

 

References:

  1. Juniper Networks. Matching Service Propositions to Buyer Preferences. Blog. (2011)
  2. Sand Hill Group. Leaders in the Cloud. Report. (2010)
  3. Cloud Industry Forum. Cloud UK. Adoption and Trends. Survey. (2011)
  4. Silicon.com: The Future of the IT department. (2011)
  5. Data Center Knowledge. Intel IT’s Top 5 Reasons for Implementing Cloud. Industry Perspective.  (2011)
  6. Public Sector Cloud Services: Agility is the carrot but will cost savings be the stick? Blog. (2011)

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