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Cloud or traditional provisioning? Examine both financial and non-financial performance

 keithmacbeath.jpgBy Keith Macbeath


(Keith Macbeath is a senior principal consultant with HP Software Professional Services)



It’s no secret that cloud computing offers tremendous business benefits, such as near-instant IT service delivery as well as the potential for significant cost savings in some instances. With cloud, organizations can have resources provisioned in minutes or even seconds. And cloud offers  productivity gains in operations, which are typically 60 percent to 70 percent of overall IT costs.


But those benefits often come with a tradeoff in loss of control over IT performance. Many businesses, compelled by the promise of faster time to market, are moving to the cloud anyway, without proper visibility into their IT environments. Others are hanging back, and are missing out on cloud benefits.


You CAN have both. But it requires some financial planning and analysis.


Why performance management gets fuzzy in the cloud

Cloud vendors, particularly those offering public cloud services, can tell you exactly what the infrastructure costs will be for running your business service. So from a financial tracking perspective, cloud gives you cost metrics most businesses have never had. In organizations with traditional provisioning, if somebody asks, “How much does it cost to run this business service?” the answer often is, “I’m not entirely sure.”


But when you look at non-financial performance metrics, very often the cloud vendor either won’t tell you or can’t give you any commitments around availability, transactional latency and so on. These non-financial metrics are ones you probably know very well in your traditional provisioning, particularly if you’ve put in something like business service management (BSM) software.


Cloud can tell you everything about finance and relatively little about performance. Traditional provisioning can tell you almost nothing about finance but a lot about performance. So how do you square this circle? People want to get to apples-to-apples comparisons so they can make intelligent sourcing decisions, but they can’t because of this mismatch. They can only answer half the questions they need to at any one time.


Comparing cloud versus traditional provisioning

It is possible to get to an apples-to-apples comparison of cloud versus traditional provisioning. Here’s how.


In your traditional environment, you need do performance management for business services and include service costing. If yours is like many of the organizations I talk to, you’re creating a catalog of business services that you’re going to measure performance against. Do not leave out the financial dimension. Use a financial planning and analysis tool such as HP FPA to get to a point where you understand what your services cost.


On the other side of the coin, when you start thinking about cloud provisioning, define the performance metrics that you want measured out of the cloud. In your agreement with the cloud vendor, you need to ask for metrics around:

  • availability
  • security
  • latency


Essentially, you’re setting up SLAs for your services in the same way that you set them up internally today.


If you take these steps you’ll be in a much better place to understand the true benefits and tradeoffs, whatever sourcing you choose.


Related links:


Labels: IT provisioning
Nadhan | ‎01-06-2012 02:33 PM

Like the way you have contrasted the cloud versus the traditional environments, Keith.  This is exactly why CIOs of today are stretched when it comes to Cloud Computing.

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