Tag Archive: IT

  1. Technology Debt – What Is It, Do You Have It, and Why You Need to Address It

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    Most, if not all, businesses today rely on IT systems of one type or another to operate.

    In an ideal world, these will be modern IT systems that require minimal and predictable effort to maintain and operate in the same capacity as when it was first commissioned.

    This does not mean there will be zero costs to maintain a well-operating system.

    • If updates are installed, hardware is kept in good working order, backups are regularly made, and performance is monitored, your system will function as expected, with costs related to these activities costs typically a solid / high return IT investment
    • If you have chosen the right IT system for your needs, configured it correctly, and have the right blend of in-house and external resourcing to maintain it (see above), it should perform as needed, cost effectively, for a sustained period of time.

    Combined, you should be empowered to focus on managing and growing your company, with your IT systems acting as enabling tools (versus constraints).

    Unfortunately, none of us live in an ideal world. Most of us must deal with some mix of old, aging, or outdated IT applications that are utilized for core business processes. Even those of us who have been able to migrate to Cloud and SaaS platforms often live in a world where, individually, these applications are great, but implementation was approached in a siloed way, meaning there is little to no integration between core systems, making seamless data sharing and automation an unrealized promise.

    Combine this with a lack of in-house IT resources to maintain or update system configurations (the people who implemented the system no longer work for you, you don’t have enough people who “know” or understand the systems well enough, or customizations and code bases have somehow become unmanageable, etc.) and you have “technology debt.”

    What this means is that, as technology, business needs, and your organization evolve over time, relative IT system performance degrades (e.g., the system gets slower or harder to use, benefits delivered decline, the system doesn’t have all the “features” etc. you want or now need, it is hard / slow / impossible to make changes, and issues with “capability fit” to current business needs and processes emerge) and / or the effort and cost required to operate, maintain, and enhance your IT systems grows.

    Does any of this sound familiar?

    Unfortunately, all too often, addressing technology debt (i.e., implementing modernized IT systems) is deferred until “pain” becomes too acute or unbearable to ignore, with IT system issues either hampering revenue growth, profitability, or operational efficiency and effectiveness, either as an organization, and / or relative to your competition.

    Letting technology debt get so bad that the rationale for modernization is “we have to” is a sorry state of affairs, based on misconceptions and fear over costs, difficulty to implement, and a general aversion to change. The reality is that, while IT system modernization is seldom “easy”, the goal is to enable performance improvement and the end result of IT modernization done well is typically a reduction in total cost of ownership / operation and meaningful returns on the investments made, both financially and operationally, with any change to business processes viewed as overwhelmingly positive over the medium to long term.

    Still, if you believe or suspect that aspects of your IT systems are holding your business back, it is still hard to know where to start: your IT department are probably well able to explain what the issues are, but less able to articulate how to solve them moving forward, because their focus and expertise is typically business continuity versus systems modernization.

    This is why Core Catalysts has developed a rapid and cost-effective IT assessment methodology that helps identify and diagnose IT issues, opportunities, and technology debt, and make recommendations on how to modernize systems cost effectively to deliver meaningful results.

    Over the course of hundreds of engagements, we have helped our clients reduce licensing and maintenance costs, update business processes, and improve profit margins, often leveraging modernized “Cloud” and “SaaS” solutions in targeted, thoughtful, and integrated ways to deliver enhanced business results.

    If you would like to find out more about our IT assessments and system modernization expertise, reach out to us today!

    Mark Jacobs, Client Service and Delivery

  2. Cost Control for CIOs and CTOs

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    Holding the Line and Doing More, With Less

    In today’s dynamic business environment and economy, Chief Information Officers (CIOs) and Chief Technology Officers (CTOs) are under increasing pressure to “hold the line” and “do more with less” … all at a time when baseline IT (Information Technology) operating costs are increasing based on a variety of factors outside their control (e.g., pay increases, benefits cost inflation, and technology licensing and maintenance price escalation).

    On top of this, many CIOs and CTOs are being asked to “hold the line” on enterprise IT costs, while at the same time being served with even greater and more diverse business demands for new capabilities (e.g., application upgrades and platform extensions) as well as a burning desire across all business functions to leverage transformative next-generation technology (e.g., Artificial Intelligence, Machine Learning, Advanced Automation, etc.).

    How should a modern CIO / CTO “thread this needle,” successfully delivering innovative solutions and quality services to their organization, while at the same time responding to the pressure to control costs?

    Solving the Financial Jigsaw Puzzle

    Not all IT leaders have access to decipherable, let alone insightful, financial reports and analytics – what they have is more like a financial “jigsaw puzzle.”

    Typical complications include inaccurate categorization of IT costs, IT spend allocations distributed arbitrarily across functions and departments (or intricate formulas for calculating / allocating costs with inconsistent application of capitalization rules, and / or lack of year-over-year comparability while not reflecting reality), and difficulty in comparability due to frequent reorganizations and reclassifications.

    Fortunately, one of Core Catalysts “sweet spots” is helping “untangle” financial data to create clarity and support analysis. This means that we are frequently asked by CIOs and CTOs to work with them and their teams to establish a clear picture of spend, taking into account costs incurred centrally versus in departments, salary and non-salary trends, operating and capital differentiation, allocations, project accounting, and other areas of potential murkiness.

    Re-Baselining IT

    The Core Catalysts team includes c-level operators with decades of IT leadership experience. We have worked with hundreds of IT leaders to align their organizations with new realities and an eye towards cost control.

    We work side-by-side with CIOs / CTOs to re-baseline IT strategies and operations from the ground-up, considering both existing needs (i.e., “day-to-day” operations) and future requirements (e.g., major upgrades, implementation projects, etc.).

    Our experiences show that, although daunting on the surface, re-baselining serves multiple purposes and sets the stage for ongoing, shared fiscal accountability between IT and the rest of the business, that positively changes the dynamic of how the business sees and works with the IT function.

    Since re-baselining will inherently drive change, we are also often asked to outline a people-oriented roadmap and translate practical plans into resonant stories that support and communicate the organizational imperatives for change to all key stakeholders.

    And, having re-baselined, Core Catalysts frequently works with our clients to reforecast and develop projections to tell the IT story to stakeholders at the executive and board level, underpinned by comprehensive and compelling financial business cases to illustrate returns on investment (ROI), taking into account “total cost of ownership” (TCO).

    Initial Assessment | Key Focus Areas

    A well tested approach that can be used to assist with re-baselining includes:

    Appraisal of IT Services

    • What services does the organization require to thrive?
    • Are there services missing?
    • Are there services which are no longer required?
    • Are there services that do not belong in IT (that could be outsourced, etc.)?

    Assessment of Reference Architecture

    • Has IT made the most of next generation technology (e.g., SaaS, Cloud, etc.)?
    • Has the organization any duplicated (triplicated, etc.) technology solutions and services?
    • Is it time to rationalize past and future decisions?

    Sourcing Strategy Review

    • Are the costs of services in line with benchmarks?
    • What services should IT provide internally?
    • What services should IT provide externally?

    IT Governance

    • Are business owners collaborating with IT on projects and decisions (that impact IT)?
    • Are all the costs and associated organizational impacts considered when making IT investment decisions?
    • Does IT have a seat at the table on overall business goals, objectives, and strategy, and how they can support and enable them?

    IT Organization and Culture

    • Is the current IT organization structured for effectiveness?
    • Is IT culture focused on efficiency?
    • Is the CIO / CTO empowered to make organizational decisions?
    • Is there ‘shadow IT’ in business units or other non-IT parts of the business?

    Financial Impact of IT Operating Costs

    • Based on re-baselining, what are the revised financial projections for IT spending?
    • What financial impacts would this have on the organization (a) in the short term, (b) in the medium term, and (c) in the long term?
    • What are the key messages and “stories” that need to be communicated, and to whom?

    IT Cost Control is a Team Sport

    Our approach to IT cost-control depends on the adoption of an efficiency and effectiveness mindset for technology stakeholders across the organization … cost control is a “team sport.”

    To that end, we recommend that CIOs / CTOs engage their peers in their efforts to reduce IT operating costs: the Chief Financial Officer (CFO) and Chief Human Resources Officer (CHRO) are often key partners in these efforts and should co-sponsor any transformational work, with the Chief Executive Officer (CEO) supporting any drive for shared IT governance and decision-making.

    How is Core Catalysts Different?

    Unlike many larger firms, Core Catalysts is platform agnostic, meaning that we are neither tied nor beholden to any one solution provider and can recommend technological approaches and system selections that are exactly calibrated to our client’s needs (versus our own).

    Equally, while we have meaningful offshore resource capabilities for custom development, software implementation, and system integrations, we do not have the same pressure to “feed the beast” as larger firms, and our business model is also not predicated on tying our clients to long-term support contracts that are costly for them but profitable for us … we have no interest in building systems that only we understand and can maintain!

    Put bluntly … we put what is right for the client first and foremost.

    Finally, for every engagement, our aim is that the client realizes true and ongoing economic value from our services, measured as a multiple of our fees: our goal is to deliver a return at least ten times greater than the dollar value spent.

    To achieve these ROI levels, we approach all work by understanding expected business impacts first, and then planning our efforts accordingly, while challenging any assumption that prevents us from providing maximum value or lessens the business case for our efforts.

    In addition to bringing experienced teams and proven tools and methodologies to each engagement, we pride ourselves on our ability to bring a sense of urgency, combined with a pragmatic approach focused on delivering “dollars and cents” value to our clients … if it doesn’t make sense to you, it doesn’t make sense for us.

    Next Steps

    If you would like to find out more about our IT Cost Control assessments and IT system modernization business case generation expertise, reach out to us today!

    Mark Jacobs, Client Service and Delivery

  3. Our Approach to Application Development Consulting 

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    How Our High-Value, Purpose-Built Application Development Services Deliver Results Across the Board.

     

    When your organization requests IT consulting services from Core Catalysts, you can expect a highly intentional process that not only delivers results, but establishes a sustainable legacy and long-term success. 

    Core Catalysts knows that challenges such as application development require more than a consulting firm that “knows tech.” Taking many strategic steps alongside development gets you across the finish line, including:

    • Dynamic program and project management.
    • Effective business analysis and process mapping.
    • Key development resources.
    • Comprehensive application functionality.

    Core Catalysts provides significant expertise in IT implementation, but our robust services offerings turn application development into something larger: comprehensive process development. When we approach IT implementation, we also ensure that we make the best decisions on behalf of all stakeholders, while reducing costs and securing team member buy-in.

    A Core Catalysts Case Study In Application Development

    Our client is a globally recognized business that required our assistance with their goal to build a high-value, purpose-built application. This application modernization project would allow them to automatically allocate insurance premiums across their multiple properties. 

    Our initial assistance was focused on helping them to project manage the effort, which also included vendor management. In addition, this client needed a skilled resource that could aid them in gathering all the requirements necessary for the creation of this application. 

    Our Initial Recommendations: Project Management

    Core Catalysts assigned a seasoned project manager with significant experience in managing custom development projects. This individual quickly established a project timeline for the initial phases of the project, leading up to actual development. 

    Additionally, the project manager established the appropriate project governance that would help ensure the proper management of risk, issues, and changes. As part of this governance, and critical to the gathering of requirements, our project manager determined that a stakeholder analysis was necessary. This analysis identified all appropriate internal and external individuals and established their project needs (e.g., the creation of a RACI model to determine which team members were responsible, accountable, consulted, and informed).

    Implemented Business Analysis and Cost Reduction Solutions

    In addition, Core Catalysts assigned a highly skilled business analyst, who guided our client through the development of their application requirements. This individual leveraged the stakeholder analysis and initiated interviews and workshops that allowed the stakeholders to discuss their needs and expectations. 

    This business analyst carefully documented the requirements using a proprietary “traceability matrix” that helps to link business, functional, technical, and testing requirements together. After the business analyst reframed this data in a logical and consumable format, they validated the information with the appropriate stakeholders. 

    Application Development Consulting Begins

    Upon completion of these efforts, the requirements were provided to the application development vendor that the client selected. This vendor provided our client with a timeline and cost estimate to complete the application. Unfortunately, the timeline and cost associated with the development of this application was significantly longer and significantly higher in cost than our client had anticipated. 

    Intimately familiar with the application’s requirements, Core Catalysts took the opportunity to provide our own cost and timeline estimate to the client. Our estimates were significantly less than those of the other vendor. Because Core Catalysts had already established trusted working relationships with the stakeholders and had intimate familiarity with the requirements, the ramp up time to development was significantly reduced, thereby lowering costs as well.  

    A Highly Efficient Timeline 

    Our client selected our proposal to build this high-value purpose-built application, including development work on the initial phase and an MVP (minimum viable product). Our work commenced immediately.

    Because our client valued our ability to respond quickly to their needs, they requested that Core Catalysts not only host the application, but also provide ongoing maintenance and support.

    Within three months our client was able to interact with the initial build of the application. Within six months, our client was able to start using some of the initial functionality within the new application. At the nine-month mark, our client had a complete and operational MVP that provided them with the foundational elements necessary to properly allocate insurance premiums across all their properties.  

    Successful Application and Process Development 

    As the MVP phase came to a close, the trusted relationship that Core Catalysts established with our client was still flourishing. Our ability to execute and deliver on their requested product gave them the confidence to move forward with phases two and three of the project. 

    Core Catalysts is currently working on phase three, continuing to provide additional application modernization and functionality for our client. We provided immediate results and value for both individual users of the application and our client’s entire organization.

    4 Reasons to Partner With Core Catalysts For Application Development Consulting

    This case study illustrates our application and process development success. This success can be broken down into four essential qualities that separate us from other business consulting firms. 

    • Seasoned program and project management talent: Our team’s experience ensures we honor project timelines, reduce costs where possible, and expediently and efficiently deliver application functionality.
    • Effective business analysis and process mapping: We provide highly-skilled resources to gather business and functional requirements, and fully map the application development process. We offer a deep understanding of technology, allowing us to initiate technical requirements, as well as associated testing requirements, such as quality assurance. 
    • Robust development resources: Core Catalysts provides clients with a blend of onshore and offshore resources for the development of the application. This ensures that communication, critical in the development of a custom application, is effective and consistent. We also provide clients with balanced cost models, allowing applications to be built in a cost-effective manner.  
    • Exceptional application functionality: We ensure that your application meets all your functionality requirements, including application modernization. Ultimately, with Core Catalysts’ help, your application will meet or exceed your requirements, so you can use this new resource efficiently and sustainably. 

    Core Catalysts exists to resolve your challenges and deliver results that are yours for the taking. If your team requires application development to modernize your processes, improve organizational efficiency, or deliver any other key metrics, contact our team

     

  4. A Pragmatic, Phased Approach to System Modernization

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    Find Out How We Reduce Technology Debt For Our Clients:

     

    Core Catalysts consults for a wide range of clients in several critical industries, including financial services, healthcare, insurance, telecommunications, and more. In today’s technology-forward business world, we find that many clients cite system modernization as one of the major business challenges they need our help to solve.

    However, they may not express their challenges in these terms. Our clients’ requests more frequently sound like this:

    “We have aging applications that our vendors no longer support. Our IT and BU teams are coming near retirement ages, and they are the only ones that can make changes and understand our systems.”

    “We can’t roll out new products or services very easily because of the time it takes our IT teams to react, and this is affecting our ability to grow our business.”

    “We just acquired a new company with aging systems, and we want to move to new platforms for the good of both businesses.”

    In each of these cases, and many more, what companies identify as a challenge can be summarized as “technology debt,” the result of aging systems.

    What Is Technology Debt?

    Technology debt refers to the costs that businesses incur as a result of outdated technology. It stems from the cumulative cost of cutting corners in system design, implementation, and maintenance over time.

    • Forbes presented striking statistics in a recent article on the subject: companies that had the least technology debt posted annual revenue growth of at least 20% more than companies that had the highest technology debt.
    • Studies from CodeScene, CIO, Gartner, and Stripe all cite that the organizations waste 23 to 42% of their annual development time and expenses on technology debt.

    No business should let technology debt increase over time so that it severely impacts an organization’s agility, efficiency, and financial health.

    A Solution Is System Modernization

    System modernization can comprehensively solve technology debt through a phased, prioritized, and pragmatic approach:

    1. Clarifying challenges
    2. Assessment, prioritization, and planning
    3. Implementation

    This approach can positively impact the reduction of technology debt without excessive investment. It also provides a way to emphasize quick wins and incremental improvements, which contributes to essential organizational buy-in.

    Clarifying Challenges for System Modernization

    Most technology-debt-related challenges share certain characteristics with each other. Although our services and solutions are highly customized based on a business’s individual needs, identifying common threads inspires confidence and leverages our experience solving modernization issues across many industries.

    These are some of the most common challenges our clients face:

    • The issues they are facing are complex and interdependent. There isn’t a single out-of-the-box solution that will meet all of our clients’ needs.
    • The client’s current efforts to modernize are time-consuming and involve many parts of the organization, thereby detracting from current business priorities.
    • The decision makers for these efforts cross the entire organization, and each person has a different risk tolerance.
    • A major driver has recently appeared to give steam to making the changes now.

    Core Catalysts recommends starting the system modernization process by clarifying these common challenges as they relate to a specific business. This helps our team fully understand what resources, personnel, and approach we should implement.

    Assessment and Prioritization

    The next step is a straightforward evaluation to determine whether system modernization is a viable solution and what approaches to take to ensure success. The following evaluative questions prove useful to our clients at the beginning of their modernization journey.

    • Is there an obvious business case for making the changes?
    • How many resources will be required to help with the modernization?
    • How much will it cost?
    • What are the risks associated with modernization?
    • Who will make the major decisions on modernization efforts (governance structure)?
    • Will we need external assistance from consultants?
    • Do we search for off-the-shelf solutions versus custom development?
    • Do we have the right team to make major modernization decisions?
    • Do we have the right teams to implement changes?

    Strategic Planning for System Modernization

    After a client has concluded that they are ready for modernization, our management consulting firm recommends following these specific, practical paths to get started:

    • Document the current state of business processes, IT support systems, back-office systems, like billing and collections, and more.
    • Document the future state needs of the organization (business units representing end clients and all supporting organizations) and tying these to the overall corporate strategy.
    • Identify the priorities for modernization and high-level timing (i.e., the wish list).
    • Determine what solutions will be needed (third party software, new platforms, and more).
    • Develop overall budget needs and clear with executive leadership and the board if needed.
    • Research third-party solution providers.
    • Develop procurement processes for soliciting and deciding on third party providers and solutions.
    • Plan for organizational readiness and change management.
    • Structure the overall implementation resources required.
    • Form a strong governance and program management structure.

    Proven IT Implementation Approaches for System Modernization

    This phase requires a heavy dose of patience, many “reality checks,” and disciplined execution to achieve sustained success. From an approach standpoint, we’ve had success with the four approaches listed below, each of which offer their own unique benefits:

    1. Microservices architecture: A modern, modular approach to software development and deployment, microservices architecture allows clients to lower costs and reduce technology debt in a manner that “layers” into the organization with minimal disruption.
    2. Cloud migration: This approach reduces reliance on an unreliable vendor, lowers licensing costs, and taps the skills of current staff. Phasing the migration strategy removes on-premises, insecure environments and replaces them with a cloud-based solution.
    3. Core consolidation: Core Catalysts has used this method to consolidate all portfolio companies on an enterprise accounting platform to prepare for sale. This delivered best-in-class reporting, and the data uncovered new revenue streams.
    4. Open-source solutions: Although open source was traditionally considered a threat to corporate security, every name-brand technology leader uses this approach at the sponsor, creator, consumer, or community level. Not without risk, open-source solutions may provide a significant benefit for businesses looking to modernize.

    Connect With Core Catalysts to Learn More About System Modernization

    We’ve learned many lessons about how to effectively and efficiently serve our clients as they move into the implementation phase of their modernization project. We look forward to an opportunity to share them with you.

    Contact Core Catalysts today to learn more about every phase of system modernization and how to partner with our team to resolve technology debt.

    About Core Catalysts:

    Based in Kansas City, Core Catalysts is a leading business consulting firm, helping clients nationwide resolve challenges related to process improvement, IT implementation, product and service commercialization, revenue enhancement, financial modeling, program and project management, and much more. Well-known as a high-quality solutions-delivery firm, we are on time and on budget every time, offering results that meet, and often exceed, your expectations.

    References:

    Kupper, Jeffrey and Richards, Doug. “System Modernization & Managing Your Technology Debt.” Presentation, 11th Annual FEI Kansas City Professional Development Day, Embassy Suites Olathe, Olathe, KS, November 13, 2023.

  5. Questions for 2022 Pt. 3: Cost Structure and Expenses

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    This week, we’ll further explore the pressing need to review cost structures and all major business expenses in light of how business has changed (and will never go back to how it was pre-pandemic).

    What we already know:

    Once again, let’s take what we know about 2022, and then apply it to the question:

    • Some jobs and activities will always be in-person, and some organizations now feel confident enough to mandate returns to the office. However, remote-working has become a fact of life during the pandemic, and many organizations and people may choose not to return to their old in-person, in-office schedules and ways of working.
    • Business travel expenditures are still radically below pre-pandemic levels. And yet, most organizations have found ways to overcome travel limitations to their business development, operational management, and delivery activities in the short to mid-term.
    • It’s too early to fully know what the future of the office and the commercial real estate market is, but it’s likely that many organizations’ future office space and design needs will be different (both during and after the pandemic). Warehousing and other real estate needs may also be different moving forward.

    Great, but so what?

    First off, have you re-evaluated your real-estate needs versus your current real-estate footprint, given how business has changed and how future requirements may be different in the future?

    Real estate costs (including rent, utilities, facilities, and maintenance) can be a significant expense in many businesses. If future needs translate to the need for less office space, what are you doing to realize these potential cost savings? Equally, if your real estate needs will be different, are you budgeting for any required capital investment, such as for physical updates to office spaces?

    Another outcome of the pandemic is a record demand for warehousing and fulfillment center properties, and other logistics related real estate. So, even if your office space needs haven’t changed, what about these kinds of needs? Rather than offering an expense reduction opportunity, this might even be another area of rapidly increasing (potentially spiraling) business expense that deserves further analysis and action to bring it under greater control.

    Secondly, have you adequately and effectively reallocated budgets previously allocated to business travel? Moreover, have you considered whether your organization will return to previous levels of spending after the pandemic?

    Reduced business travel has not reduced the need for facetime with customers, colleagues, and vendors. However, the fact that most organizations have managed so well despite less travel does suggest that returning to previous spending levels may not be necessary. Equally, even if spend can’t (or shouldn’t) be reduced, how is it going to be reallocated to ensure business results and ROI if old travel activities (conferences, junkets, etc.) are going to be less prevalent?

    Thirdly, collaboration tools such as Zoom, Microsoft Teams, and Google Meetings have improved significantly in the last few years, as has their utilization by many organizations. Gaps and opportunities still exist, however. Has your organization fully accounted for the likely hardware, software, and other financial and capital investment implications of the increased usage of IT collaboration tools?

    Some of these incremental costs may already be obvious and/or known, but some may be less so. As examples:

    • Giving employees regular home office “stipends” for equipment costs is becoming more common. Should you be doing this, and how should you reduce corporate office expenses to offset?
    • Providing the same hands-on hardware and technology support employees are used to in a corporate setting is harder and more expensive in a remote work setting.
    • Will a prolonged increase in remote working have subsequent bandwidth, licensing, hardware, and infrastructure implications (and if so, what are the financial implications)?

    If you haven’t already, now is the time to more deeply review the longer-term impact of the pandemic on your IT organization and infrastructure, and how this could translate to your financial bottom line.

    Finally, we’ve mentioned in previous posts that worker shortages (translating into higher labor costs) have been another consequence of the pandemic’s impact on cost structures. Reviewing labor costs should be another priority for most businesses, but this topic deserves its own deep dive and will be the topic of the next post in this series.

    Conclusions

    Changes in how many organizations do business, including the increase in remote work and reductions in business travel, offer opportunities to re-evaluate cost structures and business expenses. These changes also highlight the need to identify and evaluate future financial implications. Core Catalysts regularly helps clients assess financial and operational efficiency and effectiveness to understand and optimize business operations and cost structure. We’ve also helped multiple customers optimize their IT strategies and infrastructure to match today’s changing environment. If you believe we could help your organization with this, why not reach out to us and schedule a call?

    Thanks once again for reading and please share any thoughts or comments you have. We’ll see you again in two weeks for the final post in the series, which will cover the question of business automation during and after the pandemic.

    Mark Jacobs, Client Service & Delivery

  6. 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