Tag Archive: cloud

  1. Communication: Finance and IT Groups

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    We have been supporting clients across many industries and sizes for as many years. Our group’s collective experience is estimated at over 150 years, in fact. Our team has worked at notable consulting companies including Ernst & Young, Deloitte, Alvarez and Marsal, Cognizant, and Cap Gemini to name just a few. This coupled with team members that have worked in multiple industries and companies such as FIS, Jack Henry, BNSF, Electronic Data Systems, Lloyds of London, and the like provides us a strong base of knowledge and many lessons learned that can be shared. We support both the IT needs of the company and the finance and accounting needs, which allows us to understand both sides of the situation.

    This post draws upon that experience base to offer up ways to bridge the gaps identified with the end goal of improving business performance.

    Trends Impacting Communication

    The trends we have seen that have been causing the gaps to arise include:

    • The sheer pace of technology changes – where new options exist for business applications like CRM, ERP and BI, networks, and computing. With Artificial Intelligence tools hitting the mainstream – we are experiencing an even faster pace of change.
    • The rapid increase of Cyber Security related issues – the proliferation of ransomware, sophisticated phishing attempts, and the availability of Cyber Security insurance to help companies mitigate risk.
    • The CFO’s role in many companies has been emerging – and extending to covering the Information Technology group as well as traditional finance, accounting, and treasury functions.
    • CFOs have not typically been trained in technology topics through their education and work experience – and computer science majors have not been classically trained on finance and accounting topics.
    • The building technology debt in the company – due to under investment over the years in key applications typically expressed as, “the third-party vendor finally says it will ‘no longer support application x no matter what the price,’” and other examples.
    • The changing roles in IT with the importance placed on Chief Technology Officers (CTOs) versus the Chief Information Officers (CIOs) the various shades of CIOs.
    • The emergence of cloud computing – where companies are now ‘renting’ their compute capacity versus having a fixed asset approach with internal data center and servers. Companies like AWS and Microsoft have been experts at providing these services while providing a complex set of pricing and terms that can challenge the brightest CFO and CIO.

    Challenges: The Root of Communication Problems

    The problems we typically encounter can be broken down into several categories:

    1. Communications mismatch – the finance and accounting terminology does not match up with the technology terminology.
    2. IT groups not viewed as strategic to the business – CIOs/CTOs not having a seat at the executive table shield them from knowing the strategic direction the company is taking.
    3. CFOs uncomfortable with understanding the technology terms – and how to ask intelligent questions.
    4. IT leader talks in terms that only another tech person would understand – causing confusion and frustration. Just trying to explain Agile software development process to anyone not involved or trained on the technique!

    How to Bridge the Communication Gap

    Now for the payoff: ways to bridge the gaps we have collected over the years. No one size fits all so take the ones that meet the needs of the organization and jettison the rest.

    1. Give the IT leader a seat at the strategic table – this allows the vision to be more closely mapped to the current technology footprint. This doesn’t always require an organizational change, i.e., IT leader reporting to CEO. Just invite them into the strategic planning discussions.
    2. CFO needs to invest some time in understanding IT trends, terms and how it affects the current IT portfolio at the company. This can come from attending periodic third-party sessions on technology trends, reading magazines like CIO Magazine, Wired, etc. It can also come from understanding the current IT portfolio for the company and associated ‘road map’ if available.
    3. The CFO and CIO/CTO (or IT leader) need to invest time educating each other on their perspectives. Maybe use some outside facilitation to help enable and hold each person accountable. Take baby steps in defining some key metrics that have both IT and Financial metrics. Have each person share and explain the reporting they use to communicate to the organization.
    4. CIO/CTO (IT leader) needs to invest some time understanding the financials for the company, and how things like forecasting are performed at the cursory level. This may include taking an external class on accounting, finance, and/or the like. It could also include attending third-party presentations on economic forecasts or things like merger & acquisition classes (how companies are valued).

    How can we help you?

    If any of these ideas strike a chord with you, you are not alone. We have tools and examples of how to bridge the gaps that we are more than happy to share with you and your teams. It would be nice if there was just one book to read or one website to review that has all the answers you need. Unfortunately, that is rarely the case. Core Catalysts can certainly give you a healthy head start, however.

    All the problem areas can be overcome in our experience, and this always leads to business improvement results. We stake our reputation on it. Just ask our clients.

  2. Solving Cloud Sprawl: What Does It Mean?

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    Solving Cloud Sprawl is the term we have been using to describe the growing complexity of managing cloud access and spend. Before you solve it, you have to know what it is. Cloud services come from companies and services like Amazon Web Services and Microsoft Azure, and if you have these services then you know that the invoices are increasing and becoming more complex. The jargon from the IT groups explaining this is similarly becoming more complex and harder to understand. Cloud sprawl is the growing use of ‘easy to turn on’ cloud services while having no idea how these services are being justified, versus the old paradigms of capital investments in computer systems and data centers.

    A recent Wall Street Journal article explains some of the drivers of cloud sprawl, and further validates what we hear from our clients every day.

    Managing cloud sprawl means maintaining control over everything, from users to cloud services to the data itself. As organizations grow their cloud commitment, a new set of concerns is surfacing including cost spikes, misallocations, overruns, security concerns, and breaks in compliance. Moving forward is critical. Total visibility of your cloud operational expenses, such as which teams are using more or less resources, compliance, and security is only the first step. Organizations need a window into their cloud operations to identify opportunities for improved cloud management. This includes waste, policy infractions, and security lapses.

    We use a tool that analyzes your cloud (AWS or Azure) to provide a Cloud Check-Up. The output is a customized report that highlights your opportunities to save valuable cloud budget, fix over-spending, and identify security and compliance breaks. The Cloud Check-Up is 100% managed, with no interruption of service, performance strains, or security vulnerabilities.

    This typically saves an organization up to 30% of its monthly spend on cloud services. Our other services dig into root causes to help minimize future occurrences of Cloud Sprawl.

    Want to hear more about saving money while further protecting your assets? Give our team a call.

    —Jim Wadella, Owner/Founder

  3. Solving Cloud Sprawl: Hidden Costs of Cloud Operations

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    In the very forgettable 1993 movie “Point of No Return,” Harvey Keitel delivered three minutes of screen genius in his role as Victor the Cleaner. By the time Victor shows up, our heroine, Bridget Fonda, has made a mess of her assignment to (spoiler alert) assassinate her target. With her partner shot, they must call the boss – something Fonda clearly does not want to do.

    Opening the door to Victor, Fonda says, “Listen, the job’s gone a little bit bad, but I think I can finish it.”

    “Your part of the job is over,” Victor replies. “I’m the Cleaner.”

    I have thought about that scene many times during my years as a consultant because, in many ways, a good consultant is like a cleaner. When we arrive, we anticipate cleaning unattended areas of the organization. The type of mess varies by company: broken processes, outmoded systems, non-compliance, personality conflicts, lack of focus and, most often – sprawling budgets.

    Last week Smart Factory announced a partnership with Core Catalysts to launch a new service line targeting Solving Cloud Sprawl. Cloud Sprawl is an easy way for us to describe how quickly technology budgets can explode as companies virtualize their operations.

    451 Research estimates that 90% of US companies are now using some level of Cloud services. Cisco has boldly predicted that by the end of 2021 94% of workloads will be processed in the Cloud. Those statistics are exciting, but they are hiding the larger issue companies are only now coming to realize – operating in the Cloud can be surprisingly expensive.

    When companies first began to move operations to the cloud a few years ago the initiative was led by IT. At first, it was just an experiment – spin up a test server and monitor performance, maybe try out hosted data – all of which was priced at pennies to use. For example, EC2 – Amazon Web Services (AWS) most popular product – is priced at $0.13 an hour or, $9.50 per month. This cost was easy to approve since it amounted to a few hundred dollars a month for an entire IT department. Developers and Administrators that had previously relied on internal purchasing requests were now able to ‘add to cart’ subscription services that could instantly modernize their teams. In the span of a few short months, IT was on a self-led mission to move everything to the cloud, all powered by the explanation that it was only a few bucks a month.

    And then the invoices came due.

    Sure, EC2 is only $9.50 a month but when you add Auto-scaling infrastructure, load balancers, dedicated hosts, EBS volumes, snapshots, Elastic IPs – that single EC2 instance sprawls to quite a bit more than just a few dollars a month. Large companies are now regularly budgeting anywhere from $50,000 to more than a few million dollars annually for their cloud services.

    Now, that is not to say that the return on value is not worth the investment. It absolutely is. Owned data centers are costly to build, costly to maintain, and can never rival the intelligent designs of a commercial cloud. A 2019 report by OpsRamp revealed that large companies are seeing a 15% drop in overall IT spending as a result of migrating to the Cloud. For Small and Medium companies that savings is averaging 36%.

    Despite nearly unanimous agreement that operations should be in the cloud, companies are increasingly faced with managing budgets that seem to break traditional forecasting models. Invoices for metered services vary widely from month-to-month. Forecasting tools and budget controls are available in the four major cloud hosts – AWS, Azure, Google and, IBM – but they have proved to be so difficult to use that an entirely new industry of experts, FinOPs , emerged in 2019 specifically to address financial accountability in the variable spend model of cloud. But, let’s be honest, those tools provided by companies like AWS are more focused on reporting than reducing costs. It’s not like they want you to spend less money.

    There is hope. New tools and platforms that reside outside of the cloud are designed to provide clarity and regain control. Our team is using software and best practice to help companies reduce their cloud costs by 25% in the first month with annual reductions on track to reduce costs by as much as 50%. Our Cloud Consultants are unifying FinOps and DevOps goals that enable companies to make qualified decisions, balancing the needs of the organization to manage cost, without restricting the needs of IT to deliver speed and quality.

    Cloud services are expanding at an alarming speed. In 2019 AWS added 29 new services. It is not surprising how many companies are faced with solving cloud sprawl. When your organization is trying to balance growth and efficiencies yet still manage to reduce spend, the job can get pretty messy.

    Might be a good time to call in a cleaner.

    —Doug Richards, Client Service and Delivery