- On Tuesday March 13th, 2018
I am sure there are many articles written that talk about the reasons organizations should choose a cloud vendor like AWS. I have read a few and they mostly focus on the Capex versus Opex discussion. A very valid discussion but just one of many and, in my humble opinion, not the highest… These are not in any order of priority as some will be more valid depending on your business model.
Mergers and Acquisitions
In the last 20 years, we have seen mergers and acquisitions become a standard strategic initiative. It could be to scale up and become a significant player in the global market to compete better, to add a product, service or technology that would take time to create organically, to increase customer base or even to eliminate a possible new competitor. The reasons are many. While the number of merger and acquisitions are cyclical, 2017 was the biggest year in Canada. (See the Institute of Mergers and Acquisitions stats for Canada.)
Mergers and acquisitions can be messy and difficult. The faster they are achieved the better; There are just so many challenges that need to be managed from internal staff challenges to ensuring customers are kept on board. In looking at merger and acquisition success factors, an imaa study shows that 94% of North American organizations said they used technology to streamline the integration process.
If you are using a cloud infrastructure, this makes the ability to streamline your technology easier. Cloud is hardware agnostic. IT staff are not trying to integrate different hardware and software platforms in order to connect applications. It is easier to ‘port’ any applications or recreate the application and data in your existing cloud infrastructure than work out how to integrate into a single useful capability. Especially if consolidation of buildings and data centres are part of that equation.
Small Tech (Savvy) businesses
The fastest growing sector in Canada is high tech. Not surprising given the great historical record of tech in Canada. While we have seen the demise of companies like Nortel and RIM, these companies have created tech hubs in places like Ottawa, Waterloo as well as Toronto, Vancouver and Montreal.
The tech sector in Canada accounts for 7.1% of Canada’s GDP, which equates to about $117B, it is growing at a fast clip. Breaking this down further almost 70% are in what is called Information and Communications Technology (ICT) with 95% of these businesses under 50 employees. In fact, 80% have less than 10 employees.
These small businesses focus on software and internet-based applications and services. What is important is the speed of development, bringing the product or service to market as fast as possible. With such a small employee base the idea of taking resources to buy, deploy and manage hardware doesn’t make sense. Especially if the final product is successful and needs to scale up quickly. What better than using an elastic, pay as you go platform that minimizes the burden on your team. More time and investment dollars can be spent on the product or service and less on building out a sophisticated, hardware-based infrastructure. The only way to go is the cloud.
When we seasonal business, the tendency will be to think of businesses like fishing, landscaping that literally align to the seasons. But there are different forms of ‘seasonality.’ Unlike a fast growing business, seasonal businesses by nature will have periods where they will need more resources or capacity and then times of lower capacity needs. No matter what type of seasonality, it is generally about the best management of your costs in the time where you have lower revenues. That is always the trick to surviving and thriving.
For example, I was once on the board of a community college in Ontario. At the time, there were fewer programs running in the summer. The program fees would primarily come in two batches, one larger one in late summer/early fall and the second batch winter/spring. Some leasing companies would leverage leases that would modify the payments to map to the college or university income.
With premise-based systems there is a limit to which you can reduce costs during the time of lower needs. Even using virtualization or data centres with limited ability to exactly scale resources down, there are some fixed costs that cannot be minimized during the down periods.
Cloud computing solutions like AWS are completely pay-as-you-go. On top of that, AWS offers options like spot pricing, where an organization can buy compute resources at discounts over the pay-as-you-go price, when they need more capacity. The AWS pricing model could have been built just for seasonal business it maps that well.
About to consider a tech refresh
Probably a bit of a no-brainer. But let’s just leave it that there have been many organizations that have completed compute tech refreshes in the last 10 years. Clearly this is a big project. Aside from the fact that hardware (and software) technology are innovating and changing at a huge clip, there are many other factors to consider. The physical facility housing the equipment, networking, network access, backing up the site, access remotely and more.
The biggest challenge is probably the load on an organization’s IT resources. Every CIO and analyst study of the last 3 years has pointed out that CIOs are expected to do more with lower budgets and less people. Doing the same things and expecting a different outcome is simply not going to work.
What would be doing things differently? Rather than wait for the refresh cycle, which has likely been put into a regular budget that is under pressure, organizations should be testing discrete applications in the cloud. Archiving data, migrating the website, mobile applications, new web applications are all the kinds of capabilities that could be tried now.
Even better, testing a ‘hybrid’ approach. Integrating or supplementing premise-based compute and applications with the cloud. Rather than refresh for faster, higher capacity premise-based hardware perhaps offloading those resources with a cloud approach would be more cost effective. Especially given that much premise computing hardware is still woefully under-utilized. Even with virtualization. Some very large enterprises have created an incredibly sophisticated management and monitoring scheme to optimize their facilities, but it is unlikely that the average business is ever going to be able to reach the efficiency of a cloud service like AWS. They use virtualization too. Yes. But it is hidden under the hood, so to speak. They have scale that any single business cannot reach, and they use that scale to offer the cost paradigm they can. Even VMware, the leading virtualization player has gone with AWS.
Companies who have large website traffic
Perhaps not surprising but many businesses with huge web traffic today didn’t have that traffic when they started out. But beyond simply managing for scale, there are other considerations. If those websites are the whole business or are a key face to your customer – which is probably every B2C company, all public sector organizations and any business working across continents – cloud makes sense.
It is hard to create a fully redundant system. We often hear the term disaster-recovery but in today’s world, today’s ultra-fast world, recovering may not be enough. Your systems need to be resilient enough to continue operating under the most adverse conditions. World class data centres offer redundant hardware – computing, storage, networking, network egress, power, HVAC, etc. Being able to set this up simply and perhaps even across geographic regions starts to get harder. Doing that in a way that reduces latency, no matter where your customer is located, now that is getting extremely hard. How to balance between a centralized and redundant facility versus a centrally managed but distributed cloud architecture.
There used to be a business term in the 90’s called glocal – a contraction of Global and Local. Cloud services like AWS offer the ability to centrally manage web capabilities and push your services out to locations around the world. They allow organizations to build out in local languages, optimizing the service to their local customer through Edge services.
Any and every business can benefit from Cloud
The article was intended to highlight specific business models that have a greater benefit for considering migrating to a cloud platform. One only has to look at the constant logos of companies that have already migrated to AWS to see the incredible variety and span of verticals, segments and more. Public, private, financial, government, tech, low-tech, small and very large.
What is clear is that these organizations push AWS to create new services and products. Need a pay-as-you-go database? No problem, Amazon Web Services comes out with Amazon Aurora. Need a database that better handles regional requirements? No problem, AWS comes out with DynamoDB Global Tables. The point is, by simply listening to customers now AWS can innovate with new and customer demanded services.
While there may be some arcane or difficult requirement that can’t quite be handled today, you know it won’t be long in being solved.
The imaa Canada Study: https://imaa-institute.org/m-and-a-canada/
imaa Key M&A Success Factors: https://imaa-institute.org/post-merger-integration-key-successful-ma/
Top Tech hubs in Canada: https://www.expertmarket.ca/focus/top-tech-hubs-canada
Top 50 Starts up in Canada: http://www.planetweb.ca/news/top-50-canadian-tech-companies-watch-2018-according-deloitte/
Brookfield Institute Report on Canada Tech Sector 2016: http://brookfieldinstitute.ca/wp-content/uploads/2016/07/The-State-of-Canadas-Tech-Sector-2016.pdf
AWS on Hybrid Cloud: https://aws.amazon.com/enterprise/hybrid/
VMware chooses AWS announcement: https://virtualizationreview.com/articles/2017/09/01/vmware-chooses-aws-over-azure.aspx
Forbes article on – Demystifying Cloud Edge: