Enjoy the cloud but beware the thunderstorm
The power of the cloud has made for exciting reading for years, and rightly so because the cloud has fundamentally changed how businesses can - and should - evolve to become more efficient, more competitive and serve their customers better. However, like its namesake in the physical world, the cloud can also turn into a wild thunderstorm that can wreak financial havoc - especially if you’re unprepared.
No one wants to be caught in a downpour, and so, how, from a business perspective, how can the c-suite ensure the proverbial thunderstorm doesn’t dampen - or worse, flood out - the best intentions? Essentially, the cloud turns into a thunderstorm when organisations give IT teams a budget for the cloud without the foundational elements of a strong governance framework.
The best, and only, way to manage the cloud so that you enjoy all its benefits without being drenched, is through building this foundation of governance, ongoing optimisation and predictive budgeting and forecasting.
Let’s start at the beginning. C-suites correctly focus on the business case of moving into the cloud, but they often neglect to give enough attention to the long-term business case of actually “living” in the cloud, and so it gets away from them.
This thunderstorm usually takes one of three forms: the business has purchased a block of cloud services for a certain value and can see that at their rate of use, they’re on course for being over budget; the business has purchased a block of cloud services and is already - sometimes to a large extent - over budget; or the business has bought a block of cloud services and isn’t using enough and likely won’t use everything it paid for within the budget period.
All three thunderstorms can have a serious budgetary impact on the business, and in all three cases, it is not unusual to see the budget owners and/or key decision-makers lose their jobs over the fallout.
In the case of the first thunderstorm, it soon becomes apparent that the current trajectory will land the IT department and its decision-makers on a collision course with the CFO because the cloud usage is on track to go over budget. This is a crisis because the key staff don’t have budget nor do they have further approval and so they must act quickly to avert a disaster. They must conduct emergency activities to stop additional consumption of the cloud, and then find proactive ways to reduce consumption without harming the business. In most cases, organisations do not have the skills in-house to manage this.
To fully appreciate the analogy of this thunderstorm, let’s look at how the cloud works. You can’t just pause a week, or month, and see what happens - because you’ve effectively shortened the period of potential difference you could make. It’s like running a tap - if you don’t turn the tap off, the water will soon flood the basin, bathroom, and house. However, once you’ve turned the tap off, and prevented a flood, you can then proactively work out processes aimed at reducing water consumption.
The cloud works in a similar way. Once you realise you are on track for big bills that the business has not budgeted for, you stop moving new workloads into the cloud until you have the governance foundations sorted out. You then conduct an analysis of how you’ll optimise workflows and then reforecast. This is a rinse and repeat process until the usage is at an optimal level.
The second thunderstorm, where you are already seriously over budget, is probably the most frightening. Organisations and individuals will find themselves in deep trouble, and in many cases fighting for their jobs. As with a violent thunderstorm, there isn’t time to hang around and try to count the raindrops - you must act fast and decisively. Teams must stem the spend immediately - the CFO will want to know exactly where the spend will end at the end of the period. What can you do to mitigate this? Like the first thunderstorm, it requires forecasting, then a methodical process of optimisation, another forecast and a methodical overhaul of workflows and processes.
The third thunderstorm is a tad deceiving. While you may not be immediately flooded, its danger lies in the fact that your losses are likely to result from unused spend. This is the dreaded scenario where a budget owner is confronted because they motivated for a certain budget, didn’t use it, and then can’t recoup the money spent. In some instances, organisations will write it off. In others, they’ll feel compelled to use up what they paid for and throw any and everything - unstructured - into the cloud so that they can justify the spend.
While this may seem like a solution, it’s just set the business up for a huge thunderstorm of the second type next year. Because there is no governance and structure in place, cloud usage will spike drastically as it’s so poorly designed and this will result in large cost overruns. On the other hand, what the organisation should do in this instance is to aggressively start consuming the cloud with the correct governance and procedures in place. While there may be an underrun on the budget this year, the long-term picture is exactly where you want to be.
Now that we understand the three types of cloud thunderstorms, we must consider how to avoid this. It all starts with appreciating that you simply must put governance and structure front and centre before implementing. I like using the analogy of locking children in a candy store and telling them to eat the liquorice allsorts - only - in a controlled manner. Within no time, and surrounded by so much goodness, they’ll no doubt try the sour worms, nuts, chocolate brownies and more. Azure, for example, is a technology and business candy store - the potential is limited almost only by imagination, but there simply must be a culture of control to prevent a sugar rush that brings down the house.
C-suits would do well to invest in the right skills and partners, from the outset, that understand the intricacies of budgeting and forecasting for the cloud. Ultimately, businesses must understand where they want to be, how to target and achieve that, and then how to optimise their processes - and readjust on the go - to achieve their goals. While mixing metaphors between thunderstorms and sugar rushes may achieve a certain written objective, the realities that they portray are often far more painful.