Six steps to choosing the right Cloud Strategy for You!

Cloud computing can be defined as the delivery of computing services, over the Internet, to offer faster innovation, flexible resources and economies of scale. The move to cloud computing has become such a dominant theme in IT over the last many years that it is hard for a CIO to resist this trend. Yet for many CIOs, a reason for them to be slow in their move to the cloud has been that it is unclear to them which cloud option(s) are the best for their organisation. That and they fear being locked into any particular option or any particular cloud vendor. This perception of risk and fear of lockin has led to slow decision making for many organisations on a Cloud journey.

But now, more than ever, the technology is there to prevent vendor lock-in and to make an organisations transition to the cloud seamless and productive. Organisations just need to use the technologies available, have a solid understanding of their business strategy and make some well thought out choices.

What follows in this article is my analysis of the issues that organisations need to consider when mapping out their journey to the cloud. These six (6) steps are the common steps I've seen in successful cloud migration strategies. It is based on my 20 years of practical experience having watched many organisations move to the cloud, some more successfully than others. Hopefully, this article will give you some ideas and help you with some of your strategic choices.

Before I start, whilst there are many cloud options out there for organisations to choose from both in terms of Private and Public cloud I have restricted my examples in this article to the three public cloud providers Gartner has nominated in their recent Magic Quadrant as "Leaders" in this space. These are Amazon Web Services (AWS), Microsoft (Azure) and Google (GCP). Please don't take this as any specific recommendation on my part. Just a recognition that for most of the people reading this article they will likely have one or more of these three providers on their shortlist along with a number of other credible and well-qualified cloud players.

So in terms of your Cloud journey, the first step I would suggest is to...

Step 1) Begin with the end in mind

"Begin with the end in mind" is a phrase first quoted by Stephen Covey in his Seven Habits of Highly Effective People (a business leadership classic) in the 1980s is still highly relevant for any technology project these days. The are many business reasons to move to the cloud. The key is to understand which ones are more important to your organisation before you embark on your cloud journey. So it is important, to begin with, the question "What do you want to achieve with your move to the cloud?".

The business reasons for a move to the cloud are many and may include trading capital expense for operating expenses to free up your capital for more critical business needs. Alternatively, you may be looking to reduce your IT costs by utilising the economies of scale that a cloud vendor can provide. Your business may also be asking why you are spending money on data centres when that money could be better spent providing direct business value. So $ is certainly one valid point of discussion in identifying your reasons to move to the cloud.

Speed and agility is also a key concern for most IT organisations. Being able to respond to new ideas from the business in what Gartner has called a Mode 2 fashion is incredibly important. More and more bimodal IT has become a key tenant of most IT organisations strategy, with responsiveness and agility being key requirements of the services they provide their business customers.

Uncertainty is also an issue. If COVID has proven anything, organisations making assumptions about the future do so at their peril. Cloud allows organisations to more closely match capacity to their needs in a very uncertain world. As a result of this uncertainty, the demand for Cloud computing has increased significantly due to COVID.

Finally, the advent of COVID has certainly increased the use of Digital as a Channel. By some estimates upwards of 65% of all customer, interactions are now online. This move to Digital means that an organisations basis of competition changes. No longer is your competition restricted in terms of geography. Customers now have access to and actively seek global providers for their products and services. This need to go global is yet another reason why organisations have adopted the cloud at an accelerated rate as they increase their use of Digital and they seek to provide their Digital infrastructure closer to their increasingly global customer base.

Whatever your organisations reasons for moving to the cloud it is important that you identify those reasons upfront, tie these back to your business strategy and have a clear view of what you want and what is most important to you. Most cloud vendors, including the three I've mentioned in this article, have well-developed sales organisations and the ability to apply "Jedi Mind Tricks" to convince you that their cloud solutions are the best ones for you. The best way to defeat this "push" is to have a clear view of what you want up front before you engage any vendors.

Once you've figured out what is important to you, the next step is to determine your shortlist of potential cloud vendors. In that regard, I'd recommend ...

Step 2) Understand that where you end up can often depend on where you started

The practical reality for most IT organisations is that they have already committed significant investments into their IT infrastructure and you can often see themes in those investments. People often refer to an organisation as a "Microsoft Shop" or an "SAP Shop", and so on and so forth. It reflects the fact that for many organisations early on in their IT development they felt that working with a few vendors would minimise their integration costs.

Whilst that might have been true 10 or 15 years ago, the development of Open Standards and the general adoption by most IT vendors of those standards means that the technical costs of maintaining multiple technology vendors have dropped considerably. There are still the organisational costs of maintaining many vendors (for example negotiating agreements, managing vendor relationships, etc) but again most organisations have learned to optimise those costs. So the arguments for keeping a shortlist of technology vendors have slowly weakened over time. There is also the issue of innovation. There is research that shows that the shorter the list of IT vendors you use the less innovation your organisation will be exposed to. These days innovation is almost as important as cost when it comes to IT vendor management. So there has been a slow swing back with organisations beginning to increase the list of IT vendors they work with.

This being said, there is admittedly a natural tendency for organisations to look to their current technology stacks and seek to use vendors that support those stacks. For example, if you use a lot of Microsoft Office, Windows, Dynamics, etc., you might want to have Microsoft Azure on your shortlist of potential Cloud providers. Conversely, if your organisation is heavily reliant on custom developed web-based applications then you might consider AWS.

So to me, it does make sense to begin your shortlist of cloud providers with those vendors who seem to have the ability to better integrate with your current technology investments. I would suggest however that you treat with a high degree of scepticism the argument that it is always better to put all your eggs in one basket as many of the cloud vendors would suggest. The longer-term costs in terms of the loss of innovation that results from fewer vendors can be more than the short term price discounts you might be able to negotiate by offering to give a vendor a bigger piece of your IT spend. So it is important to dig into the detail when you consider the costs of integration when evaluating the cloud providers on your shortlist.

So having looked at your current technology stack and included on your shortlist the cloud provider(s) that you think might be best to leverage your current investments, whom else should you consider? The next step is to look at your industry or adjacent industries for ideas...

Step 3) Look around you to see what the competition is doing

There is no doubt that certain vendors have made greater inroads into specific industry verticals either by virtue of unique capabilities or because of just good salesmanship. For example, many utility providers are avid users of Microsoft based Cloud solutions because of Microsoft's $5Billion USD investments in the Internet of Things (IoT). Conversely, you are hard-pressed to find an Insurance company in Australia that is not using AWS as their Cloud infrastructure solution. Google on the other hand has built deep IP around Health Care and Life Sciences. Their investments in Google machine vision and genomics which is now heavily used in Health Care for analysis and diagnosis makes them a go-to for many in that industry. So if you look at your industry you will probably find one or two Cloud providers that are dominant because of their IP.

I'm not saying you should be a sheep and do what everyone else is doing. But there is no doubt that certain Cloud vendors because of their dominance in certain industry verticals have been able to develop deep industry-specific IP. So you probably want to investigate whom your competitors are using, look at the industry-specific IP of those Cloud providers and at least consider them for your shortlist.

The key question in terms of your evaluation of this industry-specific IP is to understand what is your Sustainable Competitive Advantage as an organisation and does your Cloud providers IP support it. Unfortunately, many organisations can't effectively identify what their Sustainable Competitive Advantage is and therein lies the problem. If you want a 10-minute instruction on the concept look here. Organisations that have a clear understanding of what their Sustainable Competitive Advantage is and how it compares to their competition will be best placed to understand whether the cloud provider used by their competitor is also the right one for them based on the unique industry IP that they have.

So now that you've come up with a list of potential cloud vendors by looking at your own organisation and your competitors it's important to understand how those cloud vendors strategies will map to your business strategy...

Step 4) Depth vs. Breadth vs. Niche - Determine which Cloud Vendor Strategy is better for you?

It's at this point I'm going to say something that all my friends who work at the various cloud providers will likely argue with. In my experience, the big three (Microsoft, AWS, Google) like to be all things to all people and don't like to be categorised. But to me, there are unique differences in their business models and technology strategies that you need to consider when selecting the appropriate cloud provider(s) for you.

For example, in my experience, Microsoft has very much a Depth Strategy. With Microsoft 365 and their Dynamics offerings, they extend further up into the Software as a Service (SaaS) space than the other Cloud providers. They have about 34% market share in the SaaS space and they, therefore, like to sell their IaaS, PaaS and SaaS offerings together as package deals to their end customers emphasising the synergistic benefits.

Amazon Web Services is much more focused on the Infrastructure as a Services (IaaS) and Platform as a Service (PaaS) space and they have little to no SaaS offerings. Given that they have been in the IaaS and PaaS spaces longer and that they are by far the largest Cloud provider at around 50% market share they tend to have a bigger breadth of offerings in the IaaS and PaaS space than the other two. So I like to say AWS has a Breadth Strategy.

Finally, Google Cloud Services, being at less than 5% market share have had to employ a more Niche Strategy focusing on those markets and capabilities where they can compete more credibly and where their dominance in other areas (search, mapping) can give them a competitive advantage.

These differences in strategy tend to lend to different behaviours amongst the 3 cloud providers I've mentioned in terms of how they will sell their solutions to you. For example because AWS focus on IaaS and PaaS they will prefer you as the customer to own responsibility for all the software you run on their platforms including the security. Conversely, Microsoft whilst happy to own and manage more of your stack and own more of the security issues may not have a database (IaaS) option specifically tailored to your needs. As a relatively smaller player that is at the same time experiencing rapid growth, Microsoft has had many more challenges with capacity over the last year or two. This may also affect what they offer you and they may be less inclined to make special deals or financial offers to achieve even more growth compared to AWS who can spread these costs over a bigger customer base.

My overall point is that you need to look at the Cloud providers, their business models and their market position to assess how that fits in with your business strategy and ultimately your cloud strategy. This in combination with an assessment of their specific offerings should allow you to shorten your list of cloud providers to consider.

So having a well-defined list of business requirements and then having developed a shortlist of cloud providers based on your own understanding of your technology stack, what the true costs of integration are, those vendors who are currently popular in your industry and what IP that they have which is truly useful, and their market strategy and position, the next question is "How many Cloud providers should you pick?".

Step 5) Single Cloud vs. Multi-Cloud vs. Hybrid Cloud: Sometimes it is better to choose a couple of Cloud Providers or a couple of different types of Cloud

Many organisations will settle with one cloud provider. But an increasing trend in the IT industry is for organisations to adopt either a Hybrid Cloud Computing approach or a Multi-Cloud approach. This is the idea that an organisation will make use of multiple cloud providers and/or multiple different types of cloud and infrastructure. It takes into consideration my previous comments in that the costs of integration have dropped, that having multiple providers facilitates innovation and that many of the cloud providers have now developed industry-specific IP which makes them good in specific areas but less so in others. It also recognises that in some instances you may have truly unique requirements which may mean that having a private cloud tailored to your unique business needs may also be appropriate.

There are costs involved in maintaining either a Multi-Cloud or a Hybrid Cloud approach. But these costs are dropping as the technology is evolving. For example, certain technologies such as Redhat are specifically targeted at supporting a Multicloud or Hybrid Cloud approach. So you may want to pick one or multiple Public Cloud providers to address your needs.

Next, having defined your business requirements, identified your cloud provider(s) ( and whether a Hybrid approach or Multi-Cloud approach is right for you ) the next question is how do you move to the cloud?

Step 6) It's not necessarily about where you are going but how you get there: Lift and Shift vs. Containerisation vs. full PaaS

So to me, "How will you get there? " is one of the most interesting and perhaps critical questions to ask and answer about your Cloud journey. Because, in my experience, how you move to the cloud, can have as big an impact on your costs and achieving your business requirements as the cloud provider(s) you choose and whether you adopt a Multi-Cloud or Hybrid Cloud approach.

In this regard, there are a large variety of options available. But I will simplify these down to three basic options which are 1) Lift and Shift, 2) Containerisation and 3) full Platform as a Service (PaaS). To explain these options let me grossly oversimplify a typical application architecture.

The applications you use whether for HR, Operations, Servicing your customers, etc. are made up of various functions and capabilities. For example, your HR application might have the functionality to process a leave request. These applications typically sit on servers or machines much like the computer you are likely reading this blog article on now. So in sum functions sit within applications that sit within servers/ machines. There are usually many functions within an application and many applications sitting on a given machine and the machine itself is often virtualised (Virtual Machine or VM).

So the question is when you move to the Cloud do you move all your Virtual Machines with their resident Applications as-is to the cloud (often referred to as a "Lift and Shift") or do you move them application by application using a technology called "Containerisation", or do you pull your applications apart into their various functions and make use of the Cloud providers "Platform as a Service (PaaS)" capabilities to move them to the Cloud in a more granular fashion. Clearly, Containerisation will be more costly to implement than Lift and Shift and PaaS will be more costly to implement than Containerisation. But the trade-off is that the more granular you go the more closely you can match your Cloud capacity to your business needs which will mean lower operating costs in the long run. Also going more granular allows you to be more agile.

It's also important to understand that it is not all or nothing situation. You can move some of your applications to the Cloud as Lift and Shift, some as Containerised Applications and some as PaaS. Or you can Lift and Shift all of them first then Containerise or move to PaaS later. There are a number of permutations as you can see. Even within Lift and Shift, Containerisation and PaaS, there are various options depending on the technologies and Cloud providers you use.

As it stands I would say that Lift and Shift is still the predominant mode for moving to the Cloud. Not because it is the best strategy but because, unfortunately, more often than not organisations rush to move to the Cloud because of external business reasons. If I had a $ for every time some client said to me, we've decided to not renew our data centre contract, therefore, we need to rush to be out of our data centres in 12 to 18 months therefore Lift and Shift which as the quickest option is the only option, I would have a lot of $.

Organisations that are more proactive in their approach to the Cloud tend to be exploring the Containernisation option more frequently because of the advent of specialised container solutions such as Azure Redhat Openshift (ARO) for Azure and Redhat Openshift for AWS (ROSA) and the fact that the cost of Containerisation is dropping significantly. By some estimates, 75% of global organisations are running some Containerised applications. So this is becoming an increasingly popular option for organisations moving to the cloud.

Conclusions

So to sum up my 6 steps, first, you need to begin with the end in mind by understanding your business strategy and your business requirements. Then you need to draw up a shortlist of potential cloud providers by looking both at your own organisation and your competitors to assess which Cloud providers will best integrate with your current technologies and which might have IP that will help your business maintain its Sustainable Competitive Advantage. Once you've drawn up a shortlist you need to look at your Cloud providers market position and their business strategy as well as their specific functionality and capabilities before picking one or multiple providers. You also need to figure out whether you want to adopt a Multi-Cloud or Hybrid Cloud approach, both of which are becoming more common. Then lastly you need to consider how you will migrate to the cloud as this will have a big impact on longer-term costs and agility.

Hopefully, you've found this article useful. If you take anything away from my blog article its that business strategy, technology strategy and migration strategy are the most important components of any organisations cloud journey. The costs of individual features and functions that any Cloud provider will quote you will be more than overwhelmed by making bad strategy decisions. So don't let price discounts or smart salespeople lead you to make bad cloud strategy decisions.

Dr David Goad has a number of roles including Industry Professor for Deakin University, Adjunct Faculty for AGSM (UNSW), Honorary Associate for the University of Sydney, CTO for IBM Consulting Australia and New Zealand and is a Regional Director for Microsoft. He frequently is asked to speak at conferences on the topics of AI, IoT, Cloud and Robotic Process Automation and teaches Digital Strategy, Digital Transformation and Executive Education Courses for a number of universities.