In this blog I discuss the Business benefits of having Managed Cloud Services (MCS). Now in the context of this blog Managed Cloud Services Providers can be:

  • Internal IT departments (Cloud delivery back to Business departments)
  • External Cloud providers, Azure, AWS,
  • Independent Managed Services Providers (MSPs)
  • MSPs acting as brokers to Cloud partners
  • Or any combination of the above – blended approach

Cloud infrastructure is sited within external data centres, on-site within company owned data centres, and Cloud infrastructure is found in server rooms no bigger than broom cupboards. Or again, sited in any combination. Its the Business benefits and outcomes that are important. Location is just geography. And location is dependant of Business, data, and application needs. Therefore, Cloud is an operating model, and not a location. And Managed Cloud Service is not limited to the hyper-scalers, but open to all who have a Cloud service orientated mindset.

Managed Services – Some History

Founded by Ross Perot in 1962, Electronic Data Systems (EDS) was a pioneer of managed services delivery. As an IBM salesman Perot experienced how inefficiently IBM’s customers were using their rare and very expensive compute systems. Early success was realised matching unused IBM compute time at Southwestern Life Insurance with the expanding needs of Collins Radio. Multi-tenant, Cloud services was born.

EDS pioneered facilities management. And adding IT services, EDS became the IT department for many organisations. With multi-year contracts including Bank of America, Kraft Foods, and the US Navy, EDS grew internationally with over 136,000 employees with a revenue in excess of US$22.1 billion by the year 2007.

Back in the early 2000s while at EDS as Technical Architect I had my first exposure to managed data centre services. Working on the DWP and Rolls Royce accounts, my team worked to reduce the cost to serve through server consolidation using early VMware version 2.54. Getting a VM to physical server consolidation of 10:1 seemed like dark magic.

Leveraging the same principals of resource sharing (compute and human), and time slicing first pioneered by Perot, managed IT services has evolved to Managed Cloud Services (MCS). We now have a complex inter-connected ecosystem system of Cloud systems and compute modules.

Business Benefits

Regardless of the provider(s) used, (I’m don’t differentiate between internal IT Departments, external MSPs and Cloud hyper-scalers), several key Business benefits should be delivered for the service to be Cloud-like. So why would a Business need Managed Cloud Services? See below for some real benefits:

1.    IT Burden Relief

Business often looks to external MCS providers because internal IT has become just too complex to operate with escalating costs. In addition, due to organically grown legacy IT, technical debt prevents growth and infrastructure is unstable. Really, sweating the assets makes no sense. Core IT is seen as inefficient and an hindrance to Business success. The need to offload IT by leveraging external MCS provider expertise and resource, objectively results in reduced costs with a move to an OPEX model.

The external MCS provider will look to create a stable operating environment that can be efficiently managed at lower cost. Infrastructure will be transformed, and applications will be migrated to Cloud-like platforms. IT will then transition to Cloud-like services with shared delivery models using MCS shared resources and skilled expertise. Immediate Business benefits will include:

  • Ability to shift focus from IT management to core Business initiatives
  • Move to stable operating environment
  • Fill skills gaps and leverage expertise when required
  • Move to OPEX model with known monthly costs
  • Projected multi-year cost savings

If MCS are delivered using MCS provider owned infrastructure, Business takes advantage of infrastructure investments, and investments in people and processes. In turn the MCS provider will leverage the principal of economies of scale. The business model is simple, with many Businesses (tenants), taking shares of infrastructure and people costs, then cost effective services are delivered. And for the MCS provider? Well, management and support costs are spread across many tenants leading to delivery efficiencies not possible with dedicated solutions.

2.    Risk Reduction

Good business management is risk management. As Business has moved online, as manufacturing has become automated, as business processes are now digitized, and as new digital services accompany most physical products, downtime is not an option. Business is dependant on consistent application uptime,  24/7. For example, let’s take a SMB with £100,000,000 annual revenue. Here, £11,416 is generated every hour worked. Therefore, downtime can equate to (48hours x £11,416) = £550,000. Or put another way, 95% uptime will cost £10,000,000 in downtime. Whereas 99.999% will only cost £2,000 in downtime. And then there’s loss of sales, reputation, and customers. Digitally transformed Businesses have minimal downtime tolerance.

MCS providers can benefit Business tenants when hosting infrastructure that delivers continued application runtime in the event of local failures. Typically leveraging resilient infrastructure based on simplified software defined constructs, MCS providers deliver Service Level Agreements (SLAs) that guarantee uptime. Cloud-like infrastructure delivers resilient, highly available hosting solutions.

High Availability delivers tenant SLAs in the event of local:

  • Network failure
  • Server failure
  • Application failure
  • Storage failure
  • Power outage

Again, thinking about risk reduction, and the Business need to be 24/7…. Disaster Recovery is easier when delivered as part of a defined and tested MCS provider service. It can’t be helped, and it can’t be easily predicted. Site outages will happen. Even AWS has had outages. However, with MCS architecture we can better facilitate rapid recovery.

Disaster Recovery not only means having reliable backups, but it also means using cloud infrastructure that can replicate application resources to an additional unaffected location. This benefit facilitates business continuity in the event of site failure. MCS providers leverage software defined, virtual servers that can be asynchronously or synchronously replicated between sites. In addition, applications can be load-balanced between sites, including stretched clustered solutions that present MCS resources to applications as if logically running in a single data centre. Clustered and load-balanced solutions have to most rapid failover, including automated failover.

High Availability and Disaster Recovery reduces Business risk by reducing the % probability of critical application failure over time.

3.    Business Agility

Business agility is the ability to change fast and move fast. Internal IT has been called, “The department of No”, “Siloed”, and “Slow”. No wonder shadow IT moved to external Cloud providers. But given the right infrastructure constructs, and service delivery, MCS providers (internal IT and external MSPs), return Business agility.

Foundation to agile Cloud service is the Software Defined Data Centre (SDDC). Agile service delivery is not possible using traditional infrastructure shown left. But when using SDDC several operational benefits are realised.

Moving to the Software Defined Data Centre

MCS provider operational benefits include:

  • Simplistic node-based architecture: Ability to scale-out easily by adding nodes.
  • Infrastructure consolidation: Compute, storage and networking all defined in software.
  • Reduced operational effort: Less moving parts, less to manage, less to host.
  • Improved security: Reduced surface area of attack, ability to deploy many more virtual networks, firewalls. And other logically separated solutions including virtual private data centres (vPDCs).
  • Improved uptime: As more is defined in software, we have fewer moving parts to physically fail. Consolidation through software defined equals a reduction in inter-dependent hardware.
  • Multi-Cloud capable: Ability to logically join software defined data centres together. For example, on-premise edge-Cloud with data centre core-Cloud. Or link with Azure and AWS clouds.
  • Automation: Automated failover, automated life-cycle management, automated IT operations. Results in minimal operational cost with reduced operational risk.

4.    Reporting

You can’t manage what you can’t report. MCS providers using the SDDC more easily leverage integrated monitoring, threshold alerts and automated reporting. Business benefits include:

  • Improved uptime due to predictive maintenance – fix before it breaks
  • Known capacity and performance metrics
  • Known utilisation
  • Known costs per utilisation

With the SDDC administrators no longer need to “pull off reports” and compile monthly report packs made up of numerous CSV files downloaded from individual physical infrastructure components. This is very time consuming, I know, I’ve done it. And as soon as a report has been compiled its outdated. But MCS providers now save operational time and money through automated monitoring and aggregated reporting. Usually reports are shown within a graphical dashboard as an aid to interpretation.

5.    Financial

Traditionally, Business buys IT infrastructure assets using capital expenditure (CAPEX). And then the assets are kept until return on investment (ROI), is realised. ROI can take several years. So now the investment must last several years. So, when buying the asset, it must be sized to include several years growth. I’ve spent many hours sizing solutions inclusive of 3 – 7yrs growth. Seems crazy when I think about it now because the Business is paying for capacity that’ll not be used until a far future date.

Another problem with CAPEX is how the Business has money tied up in assets. This is money that can’t be used to grow the business. This is money that can’t be used to invest in new products or services that’ll deliver Business growth.

And then we have “sweating the asset”. In today’s rapidly changing technology driven world sweating the asset makes no sense. But I still see organisations doing just that. Recently the following came to my attention….

Company X was running a 5yr old storage array made up of 500 spinning disks with 30 flash drives. The request was for more capacity. After analysis I could see the array was running at 80% utilisation, so adding more capacity would send it over the edge. The array spanned 4 data centre racks and consumed 11KW/hr of power. When checking the serial number, I discovered the array’s support contract was about to expire.

Given the facts I calculated sweating this legacy asset was costing over £5,500 per month in hosting, power and administration costs. And then 3rd party maintenance would cost an additional £200,000 over 36 months. Therefore, sweating the asset would cost up to £400,000 over the next 3 years. And all this for an asset that can’t be expanded to meet the data needs of the Business.

Clearly, sweating the asset makes no sense. So, I proposed a replacement solution inclusive of an extra 150TBe capacity. Company X benefited from:

  • OPEX model paid monthly
  • 30% lower costs over 36mths
  • Inclusive capacity upgrade
  • Ability to scale-up and scale-out on demand – 1 disk at a time
  • Inclusive vendor support
  • NVMe based, solution that leverages smart software enabling minimal data centre space and minimal administration.
  • Lower hosting costs, from 4 racks down to ½ rack and 0.75KW/hr power utilisation
  • Application performance improvements
  • Lower administration costs

Moving to operating expenditure (OPEX) benefits Business. Expenses are now tracked month-by-month. So, it’s much easier to adjust expenses based on need. Therefore, OPEX leads to consumption models where Business pays for what’s used, and when used. Payments adjust allowing Business to pay for computing resources required. This approach frees up Business cash to be used for other business initiatives.

Conclusion

In this blog I’ve discussed 5 Business benefits delivered from Managed Cloud Service Providers, (MCS providers). And being an MCS provider is no longer limited to the hyper-scalers. With a service orientated mindset leveraging SDDC solutions, internal IT departments can deliver managed cloud services back to their own business. Also, if being an MSP/MCS provider is your business, then SDDC solutions will lower your cost to serve, improve uptime and deliver economic benefits that can be passed on to your tenants.

Leave a Reply