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Roadmap to Cloud Success:How to Get There?
Mastering The Cloud in Eight
Easy Steps: Top Strategies to
Rocket Your Companys Growth
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Roadmap to Cloud Success:How to Get There?
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Roadmap to Cloud Success: How to Get There? 1
Cloud Strategy and Roadmap:
ThePathtoanAgileBusiness
The case or cloud computing adoption sounds compelling. But how should
companies make the move? What are the most important steps to get there?
What should their cloud strategy and cloud roadmap look like?
This white paper explains eight steps involved in successully transitioning
to the cloud, as ollows:
1. Adopt a progressive mindset
2. Watch, learn, and experiment
3. Demonstrate quick wins
4. Develop a business case
5. Understand the risks
6. Analyze the current IT portolio
7. Create a vision o the end-state
8. Develop and execute the roadmap
Step 1: AdoptaProgressiveMindset
The frst step in a cloud computing strategy and roadmap is or your com-
panyboth management and employeesto adopt an open progressive
mindset regarding application o new technologies to gain business benefts.The move to cloud computing also involves changing mindsets, cultural pat-
terns, process patterns, and colleagues hearts so that they willingly adapt to
new approaches and technologies.
Spearheading disruptive change in the organization will be the most di-
fcult part o the journey.
Use of the cloud in our industry is an exception rather than the norm. I
think a lot of companies in more traditional, mature industries like ours are
missingoutonalotofopportunitiestotakeadvantageofwhatthecloud
has to offer. I would encourage these companies to be open-minded and
progressiveandlookatalternativestotraditional,client-server,on-premise
systems. CEO, manuacturing company
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Roadmap to Cloud Success: How to Get There? 2
Understanding the clouds power and potential is certainly important; but
getting mentally ready to take the plunge can be a stumbling block. The
underlying reasonsperceived or realare many:
Fearoftheunknown
Fearoflossofcontrol
Fearofjobloss
Riskaversion
Lackoftoleranceforchange
Machiavelli said this about change more than 500 years ago:
Thereisnothingmoredifculttotakeinhand,moreperiloustoconduct,
or more uncertain in its success, than to take the lead in the introduction
of a new order of things.
A companys top management should drive change in order to ultimately
generate value or customers and shareholders. Transorming a companys
business using cloud solutions is not just about technology adoption and
implementation. It also involves broader business and operational changes
in several areas including governance, budgeting, contracting, regulatory
compliance, polices, people, and processes. Thereore, management needs
to educate and convincingly explain to everyone in the company who will
be impacted by the change what the company is doing and why the new
approaches bring value to the company. Success in getting to the cloud
depends on adapting to change.
Step 2: Watch, Learn, and Experiment
Embracing any new technology involves learning. Sand Hills 2010 Leaders
in the Cloud research study (see Appendix A) ound that companies typi-
cally conduct experiments to see how the cloud really works and how it fts
or doesnt ft into the requirements o the business. Through this process,
companies became amiliar with constraints, issues, and benefts o the
technology.
Many surveyed executives described this testing phase as similar to that
o adopting outsourcing services: experiment with nonstrategic projects to
acclimate the company to a new way o doing business, evaluate selected
vendors, and assess business benefts. As their companies experienced
the benefts and understood the technology, their outsourcing initiatives
matured successully and gained a signifcant share o projects.
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Roadmap to Cloud Success: How to Get There? 3
Step 3: Demonstrate Quick Wins
Many o the companies participating in the Sand Hill survey set up innova-
tion sandboxes (a.k.a. Skunk Works projects) where their project teams were
allowed to work with the new technology within the context o a specifc
business initiative.
Here are some examples o such small, experimental projects that the com-
panies in our study are executing in the cloud:
Initiatedevelopmentprojectswheresmallteamsworkonspecic
business-driven projects on a public Inrastructure-as-a-Service (IaaS)
cloud such as Amazon. Examples o these projects include a short-
term marketing campaign, IT resources or oshore developers, and a
new website or photo sharing.
DevelopasmalltacticalapplicationonaPlatform-as-a-Service(PaaS)
cloud such as Force.com or Windows Azure. Because the platorm wasso easy to use and did not require any programming knowledge, one
CIO o a manuacturing company developed a simple HR application
in less than a week. He said this would have taken several months or a
proessional technical developer using traditional platorms.
AcquireaSoftware-as-a-Service(SaaS)applicationforanon-mission-
critical business process. An executive in a media company rolled out
a cloud-based e-mail system to hundreds o users in less than a month.
Based on high user satisaction with this new e-mail system, the com-
pany decided to roll out the e-mail system to all o its users.
When the companies successully completed these projects in much shorter
time and with less eort than it would have normally taken, they then
pushed the results up the value chain and unded new pilot projects. The
Sand Hill study ound that many companies used the cloud to solve specifc
and tactical problems and, or the most part, achieved successul results.
At the next stage o getting to the cloud, however, companies need to
develop a business-case-driven cloud strategy that is fne-tuned by fndings
and value gained rom the tactical projects. The emphasis needs to shit at
this stage rom too much how to more o what and why. Otherwise,
short-term, tactical projects will dominate the transition to a cloud-based IT
reality, which wont necessarily generate global business value or, even
worse, will end up with vendors driving the companys agenda.
Step 4:DevelopaBusinessCase
Companies should consider the ollowing undamental business drivers
when building a case or cloud computing:
Businessagility:Identiy how to apply cloud applications and plat-
orms to the business, enabling better and aster competitiveness.
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Roadmap to Cloud Success: How to Get There? 4
Operationalexcellence:Investigate how cloud solutions can lead
to improved availability, reliability, and lower total cost o ownership
(TCO), acilitating investing the savings back into the business.
Ihaveneverestablishedacloudcomputingstrategyorissuedamandate
thateverythingneedstogooffpremiseormovetosometypeofhosted
model.Thedriverbehinditisabusinessneedandwasdenedand
executed by line-of-business stakeholders. CIO, healthcare company
Like any other emerging technology, the undamental decision to embrace
cloud computing comes down to fguring out how the investment in the
cloud will yield positive returns to the business at an acceptable risk level.
I the company uses a public cloud or solving specifc business problems, it
also becomes an outsourcing decisionone where the company also looks
or value in solutions that are less expensive, saer, and better than what itcan create by itsel.
In the past ew years, public cloud solutions have improved, becoming more
robust and also more compelling in quality, stability, and overall cost-to-
beneft ratio.
Many commodity services (e-mail, backup, archival, collaboration, etc.) are
now available as public cloud services. Commodity services now available
in the cloud also include the ollowing standard business processes:
Customerrelationshipmanagement(CRM)
Expensemanagement
Accounting
HRmanagement
Manufacturing,wholesale,andprofessionalservicescomponents
ERP(whichisespeciallybenecialforfast-growthcompanies)
For each business problem a company seeks to solve, it needs to look at a
cloud solution and compare it with alternative solutions rom both return on
investment (ROI) and TCO perspectives.
Step 5: Understand the Risks
Like any new technology that oers credible business value, there are also
risk actors to consider. Risks around security, privacy, and governance
are major concerns or nearly every company. Sand Hills Leaders in the
Cloud 2010 research study ound a broad range o attitudes about security,
privacy, and governance.
Security concerns vary greatly by companydepending on the ollowing
actors:
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Roadmap to Cloud Success: How to Get There? 5
Businessgoalsandrewards
Perceivedorrealrisks
Levelofrisktolerance
Valueandsensitivityofinformationassetsanddata
Regulatoryconcerns
Sand Hills survey o IT executives ound large enterprises were more
concerned about data privacy, security, and governance issues than smaller
companies (see Exhibit 1). Most o the small and midsize SME IT leaders
were emphatic that a cloud vendors security processes must be superior to
any that their own company could provide. The reason: small companies
cost structures are such that they cannot aord to build secure inrastruc-
tures that match those o large enterprises or the leading cloud vendors.
Among many examples o surveyed business executives rom SME compa-
nies who were pleased with the security o their cloud vendors is the ollow-
ing statement rom a SME manuacturing company executive:
WehavebeenusingSaaSapplicationsformorethannineyears,and
wehaventhadasecuritybreachsofar.Attheendoftheday,weare
veryvigilantaboutsecurity,includingstrongpasswordsandfrequent
password updates; and we audit usage patterns of our users to monitor
foranyuntowardbehavior. CEO, manuacturing company
Exhibit1: Comparison of large and small companies concernsabout cloud computing
LargeEnterprises
Small andMidsize
Enterprises
Data privacy 63% 46%
Governance (e.g., policies for control, security,monitoring and services)
53% 36%
Developers/corporate culture 38% 28%
Lack of practical experience with cloud computing 33% 47%
Migration/interoperability 25% 25%
Lack of standards 23% 19%
Regulation 15% 7%
Lack of development and monitoring of service-levelagreements (SLAs)
5% 18%
No barriers 0% 11%
Dont know 3% 2%
Large enterprises refer to companies with $20 billion or more in revenue. Small and midsize Enterprisesincludes companies with less than $500 million in revenue.
Source: Sand Hill Group Cloud Computin Survey 2010
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Roadmap to Cloud Success: How to Get There? 6
However, vendors could ail, as was the case with Amazons high-profle
ailure in April 2011, which resulted rom a confguration error. What
would happen to a customers data in that case? Would the provider return
the data, or would it be lost orever? The good news is that companies thatproperly understood their cloud vendors oering made sure they included
data backups and redundancies in their applications. They also conducted
due diligence to ensure they properly understood the vendors oer-
ings, service level agreements (SLAs), and architecture. Such companies
remained unscathed and ran their operations without any interruption
during the Amazon outage.
Many vendors are getting certifed to security standards such as SAS 70.
Even i a vendor is certifed, the most important question to ask is: does the
certifcation meet yourspecifc security requirements? As one surveyed
executive stated:
Youshouldreallyaskforasecurityreview,especiallyifyouareabig
company dealing with a smaller company and the risk to you is greater
thantherisktothemincaseofasecuritybreach.Ontheotherhand,
if you are a small or medium-sized business, your risk is much lower if
youaredealingwithawell-establishedlargecloudvendorsuchasSAP,
Salesforce,Amazon,orMicrosoft,thatisbettingtheirbusinessontheir
cloudservices. Principal consultant, leading security frm
Step 6:AnalyzeYourExistingITPortfolio
Another important step in the roadmap o getting to the cloud is perorm-
ing an inventory o the companys current IT systems and developing a
logical model o the existing architecture including all relevant systems,
data, applications, processes, unctional components, and services. As part
o this exercise, companies should ask the ollowing questions and analyze
the systems rom the ollowing perspectives:
Whatisworkingandwhatisnot?
Whatiscoretothebusinessandwhatisnot?
Whatisdrivinginnovationandwhatispreventingprogress?
Wherearethecostinefciencies?
Whatisdrivingbusinessvalueandwhatisnot?
Howarethesystemscoupledandinteroperatingwitheachother?
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Roadmap to Cloud Success: How to Get There? 7
This analysis not only provides a snapshot o the companys current state o
IT but also delivers crucial inormation to help fne-tune its business case
based on the new architecture.
Without doubt, the cloud deployment options in the architecture will drive
down cost inefciencies and improve agility and scalability, among other
benefts. Analyzing an existing IT portolio in this manner typically takes no
longer than our to six weeks in a midsized company.
Step 7: Create a Vision of the End-State
Once the company has a clear understanding o the current state o its IT
portolio, the pain points, and the cost inefciencies, it can then begin to
map out the vision o moving purposely to the end-state. That end-state will
include a description o which architectural components, data, applications,
systems, services, and processes will move to the cloud in what order, and
how much decoupling will be required to isolate the components. In design-
ing the end-state vision, the company needs to design a reerence platorm
that leverages cloud technologies or highly scalable automation, low-cost
hardware, middleware, and application servers to connect new and existing
applications.
Such an analysis will consider not just the technology piece but also the
people, process, and the cost aspects including the most important areas
such as budgeting, TCO, service level agreements, governance, and compli-
ance.
The Sand Hill study ound that, even i the cost o moving to the end-staterom the current state is $5 million (or example), most small to midsize com-
panies will move ahead with the initiative i the end-state generates cost
savings o more than, say, $10 million per year.
Step 8:DevelopandExecutetheRoadmap
Ater creating a vision o the end-state, companies then need to determine
which applications and data to move when, and where, beore detailing the
specifcs around how to move them. It is not necessary or practical to move
everything all at once. Create a roadmap or a long-term perspective (say,
three years) and map out how the architectural components will move overin a staged manner to a much more eective, efcient architecture. This
roadmap exercise should not take more than a month to map out in a small
or midsized company; this includes a cost and beneft analysis or each stage
o the roadmap.
Typically, companies ocus on the low-hanging ruit with the most busi-
ness value and place them on the roadmap frst. For example, companies
initially select a relatively less-critical application that is currently not
running cost-efciently in house. Moving it to an external cloud quickly will
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Roadmap to Cloud Success: How to Get There? 8
create signifcant business value. As a next step, they then select the less-
valuable and more risky systems that are still worth moving, and place them
at the back end o the roadmap.
Another consideration is to review the project portolio and identiy new
and innovative revenue-generating projects that will beneft rom a aster
time-to-market advantage using cloud technologies.
For each o the identifed applications, companies need to evaluate the ven-
dor capabilities and the risks associated with the security, data privacy, and
governance with each vendor. Compare dierent cloud provider oerings.
They also need to evaluate the oering o cloud vendors to ensure that it
meets the security, scalability, reliability, and privacy needs o the enter-
prise and meets established security and compliance (SAS 70, FISMA, ISO/
IEC 27001, PCI, and HIPAA) standards. This evaluation includes:
ReviewthevendorsSLAprovisionsbasedonthecompanysspecic
business risks, risks that typically may not be covered in standard
SLAs.
Identifychangesrequiredinthevendorsdatacomplianceand
security procedures (i any) to adapt to the companys risk, compliance,
and business metrics.
Identifyinteroperability,lock-in,andcompatibilitiesissuesanddeter-
mine workarounds as applicable.
Carryoutahands-onproductandtechnologyvalidationandevalua-
tion against the above criteria.
Assessthecompanysnancialstabilityandlongevity.
Evaluatethecompanyscommitmenttoinnovatingwithitscustomers.
Obtainexamplesofcustomerssuccesses.
ConclusionTransitioning to the cloud is similar to a major change initiative and needs
top management support, clear vision, and careul planning. The eight steps
presented here are sequenced in a logical order designed to yield maximum
value. Typically, the more detailed activities o later steps provide addi-tional inormation that helps companies fne-tune and refne the results o
previous steps. In this sense, this is an iterative and cyclical process that
companies can apply throughout the IT lie cycle.
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Roadmap to Cloud Success: How to Get There? 9
APPENDIX A
OverviewofSandHill2011CloudSurvey
During January-February 2011, Sand Hill Group conducted a research study
to gauge sotware vendors cloud outlook or the coming year and beyond.
The study utilized an online survey to gather executives impressions on the
direction o the cloud market, their cloud strategies, and customer readi-
ness or adoption.
A total o 100 sotware CEOs and senior executives responded to the
24-question survey and provided insight about their cloud revenues today
and next year, customer attitudes and readiness, and which products and
services are gaining traction. Thirty-two percent o the respondents identi-
fed themselves with titles o CEO/Presidents, and another 32 percent identi-edasVicePresidentsofsales/marketing/services.
The study also identifed the long-term trends including which layers o
the cloud stack will take hold in the next three to fve years. In addition,
researchers conducted in-depth telephone interviews with some executives
to gain more insight. Participants in the initial survey as well as the ollow-
up interviews were guaranteed that their identities would remain confden-
tial in order to protect the strategic nature o the corporate inormation
provided.
A broad cross-section o sotware companies participated in the survey.
Nearly three-quarters o the respondents were rom product companies.
The executives represented primarily midsize and small companies. Thirty-
seven percent were rom companies with less than $10 million in revenues,
and 28 percent have revenue o at least $10 million but less than $250 mil-
lion. About 18 percent o the respondents were companies with greater than
$1 billion in revenues.
The fndings o this study are intended to give sotware companies direc-
tional insight as they make business decisions. Although eorts were taken
to survey a wide variety o sotware companies, the study is not necessarily
a representative sample o U.S. sotware companies.
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Roadmap to Cloud Success: How to Get There? 10
APPENDIX B
Overview of Sand Hill 2010 Cloud Research Study
In 2010, Sand Hill Group released a landmark research study identiying the
business value realized by companies deploying cloud-computing initia-
tives today. A two-phase interview study design uncovered both the in-depth
insight o specifc customers and vendor experiences, and a quantitative
market survey provided a snapshot o cloud initiatives and priorities at a
variety o companies. The interviews and survey questioned respondents
about their current cloud initiatives, current and planned use o specifc
cloud models, business benefts, organizational and technical challenges,
and details o specifc use cases.
In-depthInterviews
In order to gain an understanding o the cloud experience at a variety o
types o companies, Sand Hill conducted a total o 40 one-hour, in-depth
interviews.Twenty-twointerviewsinvolvedCIOs,VPsofIT,systemsarchi-
tects, and technology directors at small, midsize, and large companies. This
group o executives represented a variety o industries, including insurance
and fnance, energy, telecom, manuacturing, healthcare, media, and tech-
nology.
To gain insight rom leading sotware vendors, Sand Hill conducted eight
interviews with executive-level individuals who were responsible or cloud
strategy and products within their organizations. Again, a mixture o repre-
sentatives rom large and small sotware companies was included.
QuantitativeSurvey
As part o the study, Sand Hill Group conducted two Web-based quantitative
surveys in collaboration with McKinsey & Co. and Tech-Web. These surveys
received a total o 511 qualifed responses. Most respondents were CEOs,
CIOs, or other senior IT executives at their companies, which ranged in size
rom small businesses to global corporations.
The combination o qualitative interviews and quantitative surveys present
frst-hand accounts on the current state o cloud computing initiatives rom
an impressive cross-section o enterprises. However, the results may not be
reliably projectable across the universe o American businesses. Thereore,
the fndings and implications in this report are intended to provide direc-
tional guidance during product development.
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Roadmap to Cloud Success: How to Get There? 11
AboutSandHillGroup
Sand Hill Group (http://www.sandhill.com) provides strategic management,
investment and marketing services to emerging market leaders. Sand Hill
Group is best known or its work in the $600-billion sotware and services
market. As ounder o the Enterprise and Sotware conerence series,
Sand Hill Group has been credited with uniting the sotware business eco-
system o executives, entrepreneurs, investors and proessionals. The frm
is also the publisher o SandHill.com, the premier online destination or
strategic inormation on the sotware business. The site and its newsletters
are read by thousands o top sotware industry executives every week. Sand
Hill Group also unds primary research into key technology and business
model trends that impact the sotware business.
Copyright2011SandHillGroupThe inormation contained herein has been obtained rom sources believed to be
reliable. Sand Hill Group disclaims all warranties as to the accuracy, completeness or
adequacy o such inormation. The Sand Hill Group shall have no liability or errors,
omissions or inadequacies in the inormation contained herein or or interpretations
thereo. The reader assumes sole responsibility or the selection o these materials
to achieve its intended results. The opinions expressed herein are subject to change
without notice. Reproduction o this report in print or electronic orm is strictly pro-
hibited without written permission rom Sand Hill Group.