Global e-Commerce in the Cloud

Global e-Commerce in the Cloud

Original posted by Robert Koornneef on Thu, Sep 29, 2011

While flying at 10,000 feet recently, I tried to structure the overwhelming stream of information on cloud computing. After gathering information at several webinars and seminars regarding cloud computing and its impact on (IT) organizations, I noticed that there is still confusion on cloud solutions and their role in e-commerce.

Based on my observations, there are three different points of view on cloud computing:

Cloud views

  1. Those that are on cloud nine, who believe that cloud computing is the medicine for all IT issues
    (mostly business/sales that identified opportunities to deliver new services from the cloud instead of their internal IT organization).
  2. Those that have lost visibility due to the lack of standardization and increased complexity
    (IT management /CIO, who in reality have their heads in the clouds and have lost sight).
  3. Those that view cloud computing as just another IT environment (mostly IT staff that are worrying about the complexity of managing an extra environment).

The question is: Who is right?

Cloud defined?
As there is no clear uniform definition of what cloud solutions are, it is difficult to understand what cloud computing really means.

Cloud solutions can vary from traditional/virtualized data centers to public cloud solutions.  There are also private clouds, local clouds and other cloud varieties. I even noticed that existing SAAS (software as a service) solutions have been transformed/renamed to cloud solutions.

Suited for all?
It seems like IT is urgently seeking another revolution and cloud computing is at the center of it all. According to leading information technology research and advisory firms, cloud computing is the number one focus area and it seems to be at the top of the priority list of every CIO. The most excitement can be found in the public cloud. This is probably the environment where most of the new cloud business will be done. Organizations that are not hosted by old legacy environments are best suited to quickly adopt and move to cloud computing solutions to take advantage of all the possibilities  that cloud computing has to offer.

So, what to do if you already have systems in place?
Treat cloud computing as any technology change from an architecture perspective for all roles.  What does this mean?

  • Business/Sales
    Make cloud computing part of business innovation.  This can be an opening to quickly introduce new services. When a new service is needed, the availability of cloud solutions offers an additional perspective to the -make or buy- decision. Nevertheless, those kinds of decisions have to be made in line with the business architecture. Before creating a cloud strategy, you will first need to understand your business strategy, and then determine the role technology must play in your organization. The cloud strategy will be much less about platforms or technical decisions and linked more to the innovation of business processes and, for example, your business process outsourcing (BPO) strategy.
  • IT management/CIO
    With the enormous growth of (so called) cloud solutions and missing uniformity it can be difficult to find the best-suited solution. Will all cloud players that are in the market still exist after two years and have you bet on the wrong horse? If you have tuned your solution on a cloud solution will it be easy to move to another vendor/solution? The reality is that there is not one type of cloud. The lack of a single standard makes integration more difficult than creating a hyperlink on a webpage. Most likely, connections between different services/systems need to be forged manually. For example, synchronizing user login details across multiple platforms is not that easy. As e-commerce solutions consist of multiple services running on several (cloud) platforms, it will be a significant task.Besides a technical implementation there are several items that have to be dealt with:- Data classification/ Patriot act / PCI
    – Licenses (SaaS/ Infrastructure as a Service (IaaS)/ Platform as a Service (PaaS)
    – Virtual solutions
    – Legacy platforms
    – Vendor lock- in
    – Ensuring knowledge/information
    – Legislation

    To manage cloud solutions in a controlled manner, it is best to add those solutions to the normal technology roadmap as one of the options. Don’t forget that in order to move applications to the cloud, they must be virtualized. From that perspective, virtualization of the IT environment must be set to priority one on the CIO innovation agenda.

  • IT teams
    In order to get accustomed to the possibilities and boundaries of cloud computing, it should be added to the sandbox/portfolio.  IT specialists have identified that adding a cloud computing solution may also mean adding another environment that needs to be connected and managed. They are mostly worried about the extended complexity of managing an extra virtual environment. Although cloud computing has its advantages, the risk is there that when the set-up is not done under steering of the IT architecture team, the complexity will increase and the possible benefits will not be achieved.

When cloud probably isn’t the right solution

  • Services that store/process sensitive data: customer information, credit card data
  • Many independent/loosely coupled applications, as the need for data integration and processing speed of data can be problematic
  • Services/solutions that require a high standard of control/audit and accountability
  • (3rd party) services/solutions, which do not support virtualization or are not cloud proof (including license strategy )
  • Services which require a lot of customization.

When cloud is likely an “easy” solution

  • Software development and test environments
  • Short-term, high-performance need, e.g. e-commerce solutions which have to deal with regular “unpredictable” bursting (new product release) or with “predictable” bursting (end-of month sale)
  • Temporary solutions: For example, a recall solution, a campaign-related web service, to facilitate a company which requires a temporary environment with little or no need to be integrated and contains no sensitive data
  • Any content delivery network (CDN) services that, inherent in its functionality, is best in the cloud and outside of the organization, like download functionality and/or public video hosting

How to start
As mentioned in one of my earlier blogs, it is almost crucial to make sure that business strategy and IT architecture are aligned and that based on the desired outcome, an innovation portfolio/roadmap will be defined. Cloud solutions must absolutely be a part of it, as well as common sense.

So, as far as the question of  who is right?

They all are.

 

Cloud computing services from a business viewpoint – Part 2: How to implement

Cloud computing services from a business viewpoint – Part 2: How to implement

Original posted by Robert Koornneef on Wed, Jan 30, 2013

As mentioned in my previous blog, the implementation of a cloud solution is not a pure IT project.  Most of the time, an implementation of a cloud solution—especially in case of software-as-a-service or “SaaS”—will have an impact on the entire business.

If you are thinking about implementing a cloud solution, what is the right approach? What is needed to stay in control during implementation and once the solution has gone live?

Cloud “readiness” check
It is best practice to validate that there are no functional limitations or restrictions to migrate or add IT solutions into the cloud. Therefore a check needs to be performed in close cooperation with the audit, compliance, legal and business teams. It is also advisable to review current service level agreements and validate that there are no restrictions based on client contract limitations. Since many contracts or SLAs can be several years old, it’s also wise to check with your clients in case of doubt. A list of items to review could consist of:

Limitations

  • Legacy or complexity
  • Virtualization
  • Licensing model
  • Maturity of the market or solution
  • Governance model

Restrictions

  • Data classification and privacy
  • Data ownership
  • Legislations
  • PCI / Patriot Act / Safe Harbor

Another topic for organizations to consider is the changing influence on the IT solution based on the chosen cloud model. This illustration shows the change of influence for each cloud model:

Cloud -influence

Preparation
When a decision has been made to implement a cloud solution, step-by-step preparation is essential. As mentioned, there is a need to approach the project from a business perspective and ensure that the project team has a clear understanding on the following topics during the preparation phase:

  • Business and client demand: do we have a clear picture of the business services portfolio, the future roadmap and the current financial models?
  • Architecture, both business and IT: Do we know the business solution and its requirements, the related compliancy and legislations and do we know our IT landscape and lifecycle?
  • Usage: have we metrics on the usage of our systems, current volumes and a forecast of the expected volumes?

Implementation approach
Implementing cloud services into your IT solution has the characteristics of outsourcing and the same methodology with four basic outsourcing phases can be applied. The understanding gathered during the preparation phase can be used for the next steps: 

Define strategy

  • Scope of IT, application and service, based on a transformation roadmap and aligned with business and IT
  • Requirements, both functional and nonfunctional
  • Financial models
  • Governance models

Make Selection

  • Market investigation
  • Long and short lists
  • Due diligence
  • Financial scenarios
  • Check on exit options
  • Contracts

Deploy

  • Business and IT project managers
  • Define contingency exit strategy steps during implementation
  • Define governance, roles and responsibilities

Manage and control

  • Set measurement parameters and Key Performance Indicators (KPIs) for usage, performance and finance
  • Innovate and align with business according to volume, forecast and changing requirements
  • Periodic benchmarking

A change in the organization
The implementation of cloud solutions will change the way organizations work. The role of the IT organization will shift more to a facilitator role, to coordinate the business IT requests with the cloud solution providers.  The business teams—especially with the use of SaaS solutions and if they really want to benefit from cloud solutions— need to stick to the standard functionality and avoid deviations. What we often see is that even for software used only for internal process support, the business unit may force the IT team to make adjustments and add-ons to the standard functionality while it is usually more beneficial to in the broad scope to simply make adjustments to the standard functionality, otherwise the benefits of using hassle-free software are jeopardized, especially since future updates or upgrades of the SaaS solution must also then be re-designed

Conclusion
When you are planning to adopt/implement a cloud solution make sure that you are aware that the Cloud Computing market is still changing. Make sure that you stay in control to ensure business continuity. Validate that all legal aspects are known and taken into account. And do not forget that the business needs are leading.

Cloud Computing from a Business Viewpoint (part 1)

Cloud Computing from a Business Viewpoint (part 1)

Original posted by Robert Koornneef on Tue, Oct 16, 2012

Based on a recent presentation that I gave at an IT executive seminar entitled Cloud Computing, When the Mist Has Disappeared,  I had discussions with several CIOs and CTOs on their experiences and views on cloud computing. What was noticed from those discussions was that cloud computing is still being seen as a pure IT topic, regardless if it is an Infrastructure as a Service (IaaS) or a Software as a Service (SaaS) solution. My view is that if an organization really wants to benefit from a cloud solution, such an implementation must be performed as a business project. This as most of the times the implementation will have a change on the business model, especially with implementing a SaaS solution.

Cloud- make-buy

A different approach
It is strange to see that “regular” outsourcing deals are being performed with a lot of control mechanisms and yet the same approach is not always performed for selecting and implementing a cloud solution. The technology part is given much attention but the impact on the business is often overlooked. My first question, likewise for any outsourcing deal, to a cloud vendor is always, “What is your exit strategy?” This as it’s easy to get into a cloud relationship, but it can be very difficult to leave.

Business perspective on cloud computing
Does this mean that cloud solutions are a no-go area? No, as mentioned in one of my previous blogs, cloud computing provides a wide range of opportunities that will help to leverage eCommerce services.

As the current business climate is still unpredictable, business organizations like to gain agility with variable, volume-based costing models. It allows them to be more flexible than ever before.
The benefits of cloud computing are obvious and can be grouped into three categories.

IT on demand- This category emphasizes the IT functionality available “at a finger click.” These characteristics are improved:

  • Flexibility and scalability
  • Availability and manageability
  • Time to market
  • IT resource independency

Service portfolio- This category underlines the ability to quickly add business functionality; the key features are:

  • New (reliable) functionality
  • Responsiveness to market
  • Location independence

Cost optimization- This category contains the benefits that come with the new financial models of cloud computing like:

  • No or less CAPEX
  • Costs aligned with usage
  • “Pay as you grow” 

So, what is new?

There is a lot of fuss about cloud computing. Is it a revolution? No not really, many cloud computing services have been available in the market for many years. Is it about new technology? No, the IT systems are being used for many years. Is cloud computing the next step in the IT as commodity evolution? That’s the most reasonable answer. Based on the increased network capacity, IT services/solutions have become available through the internet.  IT services have become location independent, and due to virtualization, the services can be used in almost any business format. Is it a new flavor? If we put cloud computing in the business perspective it can be seen as a new service model. Until now we had two service options: make or buy. With the introduction of cloud computing services, we have an additional option: rental, also known now as cloud computing.

Control demand management and IT roadmap
As described in my blog Increasing Complexity of Managing a Global e-Commerce Function, it is essential to channel the demand from multiple directions of the organization. The need to channel these demands is increasing to avoid conflicting directions which will jeopardize the ability to manage the IT (internal/external/cloud) solutions in an effective way.  If not managed well, the change for creating sub-optimized solutions is plausible.

The tool used to map available cloud computing solutions in the overall IT roadmap is not critical, as long as the process is being followed.  During the mapping, a validity check needs to be performed on the fundamentals: architecture validity, economic validity and business risk containment.

Beneath a graphic overview of how this can be done:

Transformation roadmap

If such an IT Transformation roadmap has been created it has to be maintained. As cloud solutions in the market mature and many new solutions are being offered rapidly, the need to perform a periodic review and map the available services/solutions into a roadmap is more needed than ever. If a SaaS (Software as a Service) solution has been implemented it becomes an integrated part of the application portfolio.  Be aware that probably not all applications in your portfolio are cloud ready (can be virtualized) and therefore can put boundaries on your ability to migrate solutions to the cloud.