This entry was originally posted on the CloudSource blog in February 2012.

In part 4 we looked at criteria to decide which application to locate where, in part 5 we discussed single-tenancy versus multi-tenancy, and in part 6 we looked at different types of clouds we could use to host specific services. Let’s now try putting it all together. Rather than giving you a lengthy theoretical discussion, let’s look at an actual case. And I propose we take ACME Corporation, the well-known imaginary company manufacturing everything.

Let’s pretend we are flies on the wall while the ACME services governance board discusses how it will provide the six key service areas they have moving forward. The six areas are:

  • ERP/financials
  • customer relationship management
  • e-mail
  • HR
  • product development
  • digital product testing.

They use applications for the first three and home grown software for the latter. They recognize three options for where they can place their services or source them from, a private cloud, a virtual private cloud or the public cloud. They do not make a difference between private and managed-private cloud as they have not made their mind up whether to outsource their legacy and other IT assets.

Let’s fly in when the discussion starts.

ERP/financials

Currently ACME uses SAP. The software is rather expensive to run and maintain, while it frankly no longer provides them with differentiation. So, any way to run the services cheaper is welcome. Virtual private cloud is an option as it allows them to save money substantially. However, there is no way they are prepared to go to the public cloud as they have all their financial data in this system. As public clouds lack transparency in security processes and procedures implemented, and do not clearly provide the list of who is participating in the delivery of the service, ACME will not take the risk to transfer their key financial information to a public cloud.

Customer relationship management

Here ACME is using Siebel, and frankly, like SAP, Siebel is rather expensive, and in the case of ACME, does not really offer a true differentiator. So, going for a virtual private cloud (VPC) is a no brainer. Well as long as all copies of the data remain in the region of origin so ACME is compliant with various privacy regulations around the globe. But that can be negotiated with the VPC provider. However, ACME bought a small company a couple months ago and the top management is puzzled by what those guys did with Salesforce.com. Would it make sense for ACME to go to Salesforce? Maybe, but a couple questions should be asked upfront:

  • First, can compliance be guaranteed for all copies of the data?
  • Second, what happens if later ACME decides to move to another CRM provider? How will they get their data back?

Well the good news is that you can export your data out of Salesforce as described by Shell Black. Salesforce creates a zip archive of CSV files. Exports typically finish within 48 hours of submission. Be aware that you have 48 hours to recoup the files, after which they are deleted. The question ACME has to answer, if they want to go to Salesforce, is if a series of CSV files is OK for them. So, before going to a service, ask yourself how you can get out of it… that’s the trick.

E-mail

Eh, migrating e-mail to the cloud looks like a no brainer doesn’t it? These exchange servers cost a lot to maintain, so why not go to Office365, BPOS or Gmail? Well, from a technology point of view, ACME is absolutely right, but they better have a discussion with their lawyer before they make a final decision. There are a couple issues that may make such migration unacceptable to the legal team. Frankly it’s 50/50. I’ve seen legal teams going both ways. But what are those issues? They are related to two things. On the one hand email contains a lot of privacy information and the service provider must be compliant with local privacy laws. And by the way, the issues are serious. A Ponemon study points out that 73% believe cloud service providers do not protect user’s confidential information.  On the other hand, who owns the emails once they are in the cloud, ACME or the service provider? In case of a judiciary request, who is taking the decision that your information is handed over to justice? What are the implications of cloud on e-discovery and digital evidence? I could go on like this…. I hope you got it. Prior to making a decision on where to put your email, have a discussion with your lawyer. Depending on what he or she says, you may want to choose private, virtual private or public cloud.

Human resources

ACME’s HR system was written 35 years ago in RPG-3 (you even remember that language?), and the guy who wrote it retired about a year ago. It runs, but nobody really knows whether the source code really corresponds to what is running on the system. This system really needs to be replaced. ACME has decided for PeopleSoft to perform the key HR functions. And they’ll run it behind their firewall. It’s the core information of their key asset, their employees, so they do not want to put that at risk. They’ll use external systems for payroll, recruiting etc. and most of those will be SaaS services on public cloud, but the core database and information remains within the enterprise.

Digital testing

Being a quite progressive company developing all sorts of products, they have replaced a lot of prototyping with digital methods. For example they perform many destruction tests digitally by using mathematical models. Running those requires a lot of compute power for short periods of time. This is ideal for the public cloud, with one caveat. How much data do they need to transfer to the public cloud prior to be able to run the models? If the amount of data is large, it may take them longer and be more costly to transport the data than to run the model internally. Fortunately, in their case, in most situations, the amount of data is rather limited, so they decide public cloud will be a good option for them.

Supply chain visibility

While participating in these discussions, the supply chain VP suddenly tells his pairs that he actually needs a new application. Indeed, ACME increasingly uses external contract manufacturers and needs better visibility of what happens through the supply chain so he can respond faster to customers. For that he is looking for a platform where all players in the eco-system can share information. Obviously ACME is not going to develop such a platform internally. A virtual private cloud could be an excellent way to do this. It’s actually known as a “community cloud.” Now, if this function is not considered a competitive advantage (which I doubt), you could argue the public cloud could also be used.

Product development

As product development is definitely what makes ACME unique, the savings performed by migrating those other areas to virtual private and public clouds, allows ACME to invest more to augment their true differentiation. Private cloud will definitely be used here as it’s a key “core” application.  That’s a no brainer.

Conclusion

You don’t need to agree with the decisions taken by ACME Corporation. But what you should do is going through a similar thinking process, looking at all aspects as they relate to cloud and not limit yourself to the technological elements. It’s really all about risk management and keeping your own destine under control. So let’s leave ACME management to implement their decisions and talk about how we can work with you in getting your decisions made. What do you think?