Economics of SAP HANA Adoption in the Cloud – one real customer example

It’s with a great honor that I write today, sharing another of my customer experiences on SAP HANA adoption.

And it’s with a great honor as I’ve just been named a “SAP HANA Distinguished Engineer” (you can read the nomination announcement at: http://www.hdespot.com/2016/06/24/antonio-freitas-sap-hana-distinguished-engineer-hacker-and-troublemaker/).

Feel truly humbled that the HDE community (http://www.hdespot.com) valued my contributions toward building and sharing knowledge on SAP HANA.

On the words of my friend Tomas Krojzl (http://www.hdespot.com/author/tomas_krojzlcz-ibm-com/), one of the greater expectations upon a SAP HANA Distinguished Engineer is to openly share knowledge on this area to help the product and the industry grow and advance.

So, to honor that principle, coming today with a very short note on a concrete customer example, that I was privileged to guide over the last 8 months from proposal to delivery.

Today my focus will be on the “economics of SAP HANA adoption in the Cloud”.

Without identifying the company these values relate to, I’ll provide relative values on this company’s costs when operating their SAP Systems on-prem with a legacy Risk/AnyDB config, in the Cloud with Windows/AnyDB, and finally in the cloud with Linux/HANA.

Setting the scene

I know that one of the biggest concerns of most companies evaluating adopting SAP HANA, is the economic impact in terms of infrastructure and managed services.

I’ve been writing about “SAP HANA openness” for 3 years now, and the key implication of the increased openness of SAP HANA has been allowing lower entry costs and lower operating costs of this infrastructure.

Although in the past most of my focus was on on-prem deployments of SAP HANA (look for example the following whitepapers I’ve contributed to: http://www.emc.com/collateral/emc-perspective/h14459-making-sap-hana-mainstream-datacenter-part1.pdf and http://www.emc.com/collateral/white-papers/making-sap-hana-mainstream-datacenter-part-2.pdf), today I have to agree with a lot of the reasoning I’ve seen from John Appleby (http://www.hdespot.com/author/john-applebybluefinsolutions-com/)  where he said that any customer today considering starting an SAP application implementation, if he did not chose to do it on HANA and on the CLOUD, he was not providing a good service to his company.

I struggled with that a bit at the beginning, as I had an idea of cloud built at the image of the first cloud providers, where there were a lot of concerns in regards to security and compliance (especially when thinking on non-US companies putting data in US datacenters), but also around service assurance (Application level SLAs for Performance and Availability), which led in many cases to see their operational costs go up due to the increased complexity of managing the cloud provider’s flaws.

You all know that I’m passionate about what I do, and that I struggle to do a job or work for a company I don’t believe in.

Well, having come to Virtustream I’ve found a company that merges the best of Cloud (agility, cost savings, flexibility) with the best of IT Outsourcing (security and control, managed services, application level SLAs).

So, over the last 9 months I’ve been, on one side “learning Virtustream”, and on the other presenting Virtustream to customers and then guiding them to migrate their systems to the Virtustream Enterprise Cloud.

It is necessary some months on the job for you to start to see results of your own work, and it with great gratitude that I’m seeing the first customers I’ve consulted with, going into production on the Virtustream cloud.

And this provides me a unique opportunity to do a “before and after” analysis, and that is what I’m coming to share here now.

I hope to get the specific customer I’m writing here about to become a public reference soon, but until that happens, here is a bit of their story and also some insights on the numbers behind the story.

               Looking for “The Right Cloud”

First of all I have to say that this is a very innovative company, as their operating model (being this company operating in a very traditional manufacturing area), already included a consumption based billing to their end customers.

So, for them, paying only for what you actually consume, was already embedded on their DNA.

15 years ago they were running their SAP systems on-prem, and being a very agile company with a very light IT department supporting their operations all the countries they operate (way over 50), it was clear for them that the internal IT needed to focus on activities that truly added relevant value to the business.

Then this led them to sign an infrastructure outsourcing contract with one of the big manufacturers, running all their SAP Systems on a Risk/AnyDB platform.

After 10 years with this provider, they felt that they kept lagging on the business expectations, in terms of response time, cost of change, and ability to experiment and innovate.

On their words “every single new request was painful to get”. It “took weeks to be able to schedule a meeting as the provider always come with large team to each meeting” and the simple factor of reconciling agendas was a nightmare. Then the costs associated with small changes plus the lead time necessary for any change to happen, sometimes just killed the business case, as the business units would have lost the window of opportunity.

So, coming to the end of this 10 years outsourcing contract, they decided to go back to the market, and hearing all these new things about cloud, asked for cloud offers from all the known players in the market.

Their conclusion was disappointing. The model all providers were presenting, resembled a lot the experience they already had with that IT Outsourcing over the last 10 years. Have to mention here that this being an European organization, hosting their most critical production systems in a US datacenter was out of the question, and that the requirements on security and compliance were very strict.

So, instead of confirming with the “least bad” option among the responses they got to their RFP, they hired the consulting services of one of the market analyst firms, which looking at their magic quadrants immediately pointed them out to a player they haven’t invited to the tender.

That player was Virtustream, and I was assigned to support that opportunity.

               Defining the right cloud: First impressions

Having this customer today already in production on the Virtustream cloud, gives me a chance to go back and ask them: when did you made up your mind that Virtustream was the right option? What made you decide?

And this customer has been kind enough to be open and transparent about this, as in his own words “we have not contracted a supplier, we have brought in a strategic business partner to our business”, and so open and transparent communication is a fundamental baseline for the collaboration their company expects from Virtustream.

First of all, would like to share the goals they have documented on the RFP they sent to all the respondents:

• Improvements in the agility and flexibility of the organization in a changing market
• Improved quality of service and reliability of business processes
• Improved relationship between business and IT
• Scalability of operations
• Significant cost savings through true consumption based billing
• Have a fully managed service and have internal IT as service managers, not IT engineering and operations

And their first impressions were like this:

• We wanted agility
• We wanted solutions out of the box
• We wanted solutions specifically designed to our problems
• We wanted fast turnaround times
• We wanted a knowledgeable business partner that was able to advise us on the best way for our company
• We wanted a simple consumption model
• We wanted to pay just for what we actually use, and not for what has been allocated to us
• We don’t want to over-size, but rather to right-size and grow as we go
• We wanted to have control and visibility on where our data resides
• We wanted s strategic innovative partner with capacity to support our own innovative ideas

And this is what they felt none of the providers that had responded could offer, and that they saw all through their interaction with Virtustream.

A key aspect here was that instead of responding to the RFP they had written, which of course was a reflection of the IT outsourcing they had been on for the last 10 years, Virtustream challenged most of those requirements, and instead proposed them a different approach:

• Some of the key benefits of cloud is agility and cost saving
• The only way to get these is to have “brutal standardization” both at the infrastructure level and in the processes
• So, let’s look at what we have to offer out of the pocket in our standard catalog, and then evaluate the real business requirements for the applications to be hosted on the cloud
• Whenever is acceptable for the business the standard SLAs offered by the standard offerings of the provider, let’s adjust the requirements on the RFP, so that instead we can just “pick from the menu” and build an order specific for you
• If there are some very unique business requirements that our standard offer and SLAs cannot cover, we’ll build a custom solution to you

Here I have to say that having the CIO in the discussion, and being a very senior person with a very deep understanding of the business, advised by a team of direct reports also very knowledgeable and pragmatic, and enabled to make the decision to adapt all requirements to the standards offered.

One of the biggest barriers I see for many customers to have a positive adoption of cloud for their enterprise mission critical SAP Systems like SAP ERP, is that they design RFPs that do not ask for what they truly need! I understand this, as one cannot ask for something they do not know. So, the reality is that most RFPs I have seen to host production mission critical systems on the cloud, either ask for a cloud model based on the first generation of cloud providers (read my blog on this at: http://sapinfrastructureintegration.blogspot.com/2016/05/sap-hana-adoption-in-cloud-made-simple.html) that are not suitable for this purpose, or have been written for an IT outsourcing model which has proven to under-deliver over many years.

So I have to say that this customer was truly innovative, by being available to open a blank sheet of paper, learn how Virtustream operates and delivers services, and then rebuild their requirements from a different starting point. This was a key success factor for the levels of satisfaction this customer is observing now.

The outcome was the presentation of a financial offer 1 week after the first meeting, signing a contract in 3 months after the first meeting, and having all systems migrated to the cloud less than  3 months after contract signature (migration included multiple system landscapes, being one of them a SAP ERP 6, and the other a SAP BW, core to the company's business).

And all of this with a very smooth migration process, and better performance, visibility and control on the cloud than they ever had with their IT outsourcer.

So, the first impressions on the engagement, and the way the whole process was handled, showed this very innovative customer that this company was the right choice for them.

Joking a bit, they said that “mentally” they decided to buy 1 week after the first meeting, and the rest of the time was just to confirm and validate that decision as what we were delivering was completely different from anything else they had seen so far, so they needed to learn more about us to be confident of their purchasing decision.

Also they mention that one of their bigger concerns was the fear of losing control, or not being able to get proper support and attention as the “the provider was all on the cloud”, including managed services, and so through this process only happened a hand full of face to face meetings.

He recognized that having not only the systems “on the cloud”, but also the “managed services on the cloud”, enabled them to get access to the best professionals in the world regardless of where they are located, and that the responsiveness and “presence” of the team throughout the complex migration project (this was the first OS/DB migration this customer had gone through) was better than anything they have experienced with their outsourcers over the last 10 years.

We had the pleasure of being invited by the CEO to a discussion, where he explained the importance of these systems for their operations, and that without them they would be completely stopped. This conversation was critical to build trust and a common understanding of the goals, as this was a strategic decision for that company, that could not be taken lightly.

               What about the economics?

So far it is all very nice, but what about the economics?

One of the key decision factors for this customer was also to get “significant cost savings” on IT infrastructure and managed services.

And here is where the story becomes interesting.

This customer had the strategic goal of implementing S/4, as they do understand the benefits of HANA in things like real-time treasury management, as they need to manage the cash balances across countries, and having to move money between countries with bad market conditions, can dramatically erode the company’s profitability.

Also they buy commodities as raw materials for their production processes, also a situation where operating in real time can make the difference between profit and losses.

Then the question was: how much will it cost me to migrate to HANA, consume an infrastructure for HANA, and operate HANA?

There was a whole lot of unknown, and a high risk perception, as their outsourcer had tried to upgrade them to EHP7 a number of times to get them ready for HANA, and it was a slow and painful process. It took them more than 6 months just to get a stable development system.

So here are the numbers:

1. Just by migrating from on-prem Risk/AnyDB to the cloud with Windows/AnyDB, this company saved about 40% in their monthly bill!!! This includes all infrastructure services (compute, network, storage, security, service desk) and managed services (OS, DB and SAP Basis management, including ITSM process handling and overall service management).
2. This project was executed in 2 phases: phase 1 was just migration from Risk/AnyDB to Windows/AnyDB; phase 2 was upgrade with DMO from Windows/AnyDB to LINUX/HANA.
3. The 1st phase of the migration project will have a payback time of less than 6 months (meaning, 6 months of savings on the monthly charges paid the migration project);
4. The project for the technical upgrade with DMO to migrate to HANA was also funded by 6 months of savings!
5. The total monthly costs of running on the cloud with Linux/HANA were 17% higher than running with Windows/AnyDB. Which means that still with some increased costs against running on the cloud on LINUX/HANA vs Windows/AnyDB, it was still a lot lower than the costs of the IT Outsourcing contract they had for the last 10 years (we are talking more than 20% savings every month).
6. This customer evaluates that the business benefits of adopting HANA for their business, will complete overshadow the costs of the infrastructure and managed services, by multiple dozens multipliers.

Have to say that some of these numbers are “projected savings”, as with the Virtustream patented microVM consumption model, we expect the real numbers to look even better.

When talking about the difference in cost between running those systems on the cloud with Windows/AnyDB versus LINUX/HANA, we wanted also to understand where the difference came from, and so here is a bit more detail:

• Compute: costs more 116% on HANA vs AnyDB, and represents 29% of the total monthly HANA costs;
• It is a fact that SAP Business Suit applications on HANA consumes more CPU and Memory than on AnyDB. This is a factor of much of the application code and data structures not having been yet optimized for HANA. So, the benefits we see in terms of data footprint reduction when implementing Simple Finance, isn't yet available for many of the other business areas (to understand more about this, read: http://sapinfrastructureintegration.blogspot.com.es/2015/04/will-sap-s4-hana-really-require-less.html).
• Note that this simulation does not account for the impact that Virtustream’s patented microVM based consumption model will have, which we expect to make these numbers look better, as the customer can for example shutdown non-productive systems through the night or weekends when they are not used, and they will not pay this item for those period. These optimizations have not been factored in. 
• Again here, the fact that we have more OS images due to the separation of the HANA DB and APP Servers on different OS instances also has some influence.
• OS Licensing: costs more 1305% on LINUX vs Windows, an represents 2% of the total monthly HANA costs;
• This is due to 1 factors: 1) the fact that Linux support costs a lot more than Windows subscription licensing, and 2) the fact that when running on HANA we have more OS images as we do not run any systems as “central servers” (DB+ASCS+PAS on the same server). The good thing here is that the weight of this cost on the overall costs is very low.
• Backup: costs less 70% on LINUX/HANA vs Windows/AnyDB, and represents 2% of the total monthly HANA costs;
• I believe here factors like HANA not having indexes, and the compression play a big part. We’ll need more time in production to be able to take more supported conclusions.
• Storage: costs more 3% on LINUX/HANA vs Windows/AnyDB, and represents 9% of the total monthly HANA costs;
• We believe the storage costs could be lower, but as customers get concerned with SAP’s recommendations for x-time multipliers on Memory to disk (to know more about this, read http://scn.sap.com/docs/DOC-62595), they end-up over-provisioning capacity they will never use. I expect that as I get more customers “from proposal to production”, with more experience to provide stronger advice to customers to start with less storage, as in the cloud, they can grow as they go.
• Managed Services (OS, DB, SAP Basis): costs more 3% on LINUX/HANA vs Windows/AnyDB, and represents 37% of the total monthly HANA costs.
• The difference is relatively small and is due to the fact that the customer when running Windows/AnyDB had some central servers, so less OS images to manage, and we are implementing all systems separating the SAP HANA DB into a different server from the ABAP Application Servers.

NOTE: these values are specific to this customer scenario, and are dependent on the mix of systems in the landscape, the size of those systems, etc. So these numbers intend only to show – on this specific example – where the higher cost of operating HANA actually came from. Also, on these vales are included all software and services necessary to operate a full infrastructure service, and not only the respective hardware components. On your specific reality these numbers may be different depending on your source system, target system, landscape size, data volume size, etc.

               Conclusions and looking into the future

So, even if there were no business benefits from running their business on HANA, the savings of migrating to HANA on the cloud would have paid the migration project in less than a year.

When factoring in the business benefits of HANA, there is simply no argument against.

And to this you have to add the strategic and operational benefits brought by the adoption of the
Virtustream cloud:

• Better performance
• Better responsiveness of the services team
• Lower cost to experiment, by being able to spin up a sandbox system to test new functionalities for a couple of days and then shut it down, only paying for the resources actually consumed on that period
• Better cost predictability and transparency

It is indeed a great pleasure to have seen this project develop, watch this customer unleash creativity, and getting their IT team already focused on the next step, and how else can they help their business be more efficient, more innovative and more competitive.

And the next step on this customer’s roadmap, after a small stabilization period for the systems we've just migrated, is to start evaluating IoT scenarios, as they see a lot of potential in streaming data from their manufacturing machines and cross analyze it in real time against their orders data, inventory data, commodity costs, etc.

So, I’m already thinking on how to enable them to start experimenting with HANA Vora, and build a lab environment to enable them to bring that innovation to their business faster… Stay tuned for news on this soon!

So, this is it. The conclusion is simple: running SAP HANA in the Cloud is a lot cheaper that running SAP applications on Risk/AnyDB. Running your SAP applications on HANA in the Virtustream cloud will also provide you a way better service than the one outsourcers have been providing. So, why wait? Get started on your SAP HANA adoption plans!

Would love to hear your own experiences, your challenges in building a business case for SAP HANA adoption, and know how the numbers worked on your specific scenario.

Looking forward to your feedback!

SAP HANA adoption in the cloud made simple with Virtustream

Cloud offerings have matured and today, with Virtustream, there is a reliable offer in the market to bring the benefits of cloud (cost savings through consumption based billing, agility and fast time to value) to business critical “client-server” applications like SAP Business Suite and SAP HANA.

 

To those customers that have evolved their IT department focus from being an Infrastructure engineering and operations group, towards becoming a service broker of IT services managing providers in alignment to business requirements, Virtustream provides a fully managed Infrastructure as a Service in the Cloud (Managed IaaS) for enterprise mission critical applications, providing the benefits of control, security and accountability of IT outsourcing together with the cost savings and agility of cloud.

 

As SAP customers plan to evolve their system landscapes to adopt SAP HANA, and suffer the challenges of defining the best architecture to support it, the best technical migration plan, and the best operational practices to sustain their business Service Level Agreements (SLAs), Virtustream presents the broadest experience in the market migrating and managing SAP HANA in the Cloud, and provides a one-stop-shop for all technical needs in regards to SAP HANA: architecture advisory, technical migration, upgrade services and application managed services.

 

In this blog post I’ll share my journey over the last 6 months since I joined Virtustream, through the discovery of the challenges customers experienced in adopting cloud and the value they saw in Virtustream, by enabling them to leverage the benefits of Cloud (unprecedented levels of cost saving and agility while containing risk) to the area that today consumes the majority of their IT budgets: critical IT systems of record.

 

 

               Setting the scene

 

Lots of friends keep asking me “what happened, as there’s a long time you haven’t blogged”?

 

Simple answer: have been working my head off! The demand for Virtustream services in Europe has been massive, and I haven’t had brain for anything else than responding to that demand and assist Virtustream in growing its presence in the European market.

 

The ride in Virtustream has been amazing! The traction its value proposition has in the market is unparalleled to anything I’ve experienced in my almost 20 years in the IT industry.

 

As my colleague Mohammad Zaman says, “its jaw dropping”.

 

One thing I have in excess at this time is topics to write about, and what I have in shortage is the “mind time” to write all about it on my blog.

 

So, as I fly to attend SAP’s premier conference in the US – SAPPHIRE Orlando 2016 – decided to put my blogging back to shape. Wanted to share with you some of the perspectives I’ve been fortunate to learn from customers all across Western Europe while I discussed with them the Virtustream value proposition in the context of SAP HANA adoption.

 

And the more customers I meet, the more I realize how amazing it’s the relevance of Virtustream value proposition towards simplify IT infrastructure consumption to support SAP HANA adoption scenarios.

 

Let me then step back for a minute and build some context for us more “techies” on IT strategy concepts which I believe are fundamental to fully realize the exceptional moment we are living in the life of SAP customers.

 

In this blog I will focus on covering “why Virtustream”, and will leave “the what” and “the how” to later blog posts.

 

 

Most Businesses want the services IT infrastructures provide, they don’t want to own those assets

 

I always insist on this as one fundamentally important variable forgotten by many of the technologists at “IT consumer organizations” and “IT supplier organizations” alike: what is the role businesses expect of their IT.

 

Many IT decisions are influenced or led by “technologists” members of the “IT consumer organization”, being them individual contributors or middle management in architecture, security & compliance, engineering or operations departments.

 

And it is a good thing that this happens, as most business users are not experts on technology, and can easily buy into something that, serving their business goals at a first sight, can bring hidden challenges that only later when those solutions are faced with the need to sustain SLAs and of change and evolution, are truly uncovered.

 

So, IT departments, have a chance today – more than ever – to be a key business partner within their organizations, by translating business requirements into IT specifications, and evaluating whether the proposed solutions by the multiple “IT supplier organizations” will respond to the expected needs of the organization across its expected lifecycle.

 

On the negative side I also see a lot of people in these organizations that completely lose sight of their organization’s business goals, and that IT is there to serve the business and not to serve itself becoming a resource eating monster with a purpose of its own that gains more importance than the basic principle of serving the needs of the businesses they support.

 

Examples here is when organizations over-engineer, over-specify, over-complicate requirements, to a point that no one else is capable of provide them, leading to a situation where that IT organization becomes a full breath IT engineering group (many times not bringing additional benefits to business by doing so). This problem is even bigger when many times these same organizations under-deliver against those same specifications.

 

One concrete example I have was an IT organization issuing an RFP demanding for near zero RTO and RPO, and when I meet with their CIO, found out that on the last DR test there was missing data, a number of failures to execute the DR test plan, and that the systems took more than 6 hours to come back online. Once I explained to this leader what Virtustream as a cloud provider could offer standard out of its catalog, and being way better than his reality, he overruled his IT organization and adopted our proposed standard.

 

Some of the biggest wastes in IT (as all of you experts in Lean IT know) is over-delivery: meaning, providing capabilities or services in excess of what is really needed. Also, fighting these wastes is a never ending story for Internal IT departments, as the simple fact of building your own instead of consuming what you need drives an additional set of wastes like inventory, waiting and non-utilized talent. Again, this is even more serious as reality then does not keep up with the defined specifications.

 

In the past this has happened a lot, as there weren’t providers in the market for many of the solutions those organizations needed, which lead to doing in-house – and talking about business critical systems – doing it safe. This is one of the reasons why many organizations challenged with the massive ERP adoption projects of the 90’s developed massive internal IT capabilities which today represent a significant cost burden and a source of lack of agility.

 

But is it still the case that there is no other way to sustain those business critical systems than to engineer every bit of IT infrastructure yourself, and run it 100 under your control of every single bit of technology component on the stack?

 

I would say: NO.

 

And insist on saying so based on a simple aspect of life: things evolve. They are not static and new possibilities have come to market in recent years that have changed this long time paradigm.

 

So, if you look at the asks organizations place on their CIOs, and you look at the offerings in the market today, once thing shouts out: things that organizations needed to build themselves as there were no reliable providers, have today a reliable and integrated offering in the market.

 

A basic principle in business management is: build and engineer things yourself if there is no reliable provider for what you need.

 

Bringing this to IT, what I hear from many business decision maker is that from their perspective, what is critical for them is the service that IT systems provide to the business.

 

Some go to the detail of mentioning that “application development” has become a core skill on the organization as that is what enables the organization to transform the data they have stored into relevant business insights.

 

But when asking whether they consider designing, building and operating the infrastructures where that data resides and is processed is a critical skill, most already admit clearly that it is not. It is a “necessary evil”.

 

And in simple terms, this is why cloud computing has shaken the market and it impact continues to grow.

 

 

               IT infrastructure departments are evolving from IT Systems Engineering to IT Service Brokerage

 

And we owe it to the increased maturity of the cloud offerings in the market this understanding that designing, engineering and operating IT systems infrastructures is not core, as many providers in the market have been able to make available infrastructure as a service, with a cost and agility unparalleled in internal IT departments.

 

This advent of cloud computing has built many clashes in internal IT departments.

 

For example, some business leaders and “early cloud enthusiasts” got so excited with the golden shine of cloud that they started to procure IT services in the cloud directly without any involvement of their “internal IT” departments.

 

This was due to the resistance of internal IT in transforming to service brokers and block all cloud initiatives with “over-engineered requirements”, not considering that business needs a “good enough” solution that balances cost, time to value with acceptable risks. This led to some starting to call internal IT as “Legacy IT”.

 

On the other side, the fact that many of those cloud offerings did not provide the security, compliance and reliability critical business applications need, led massive disruptions in business operations shadowing the early excitement with some antagonism.  Also, many found that some of those cloud offerings were not sustainable at scale, and represented significant management challenges as their services were provided fully unattended implying internal IT building additional scale to manage it.

 

Within all the instability we saw with cloud adoption, which I see as typical of every major structural change, a lot of new “buzz” topics and words were born, but one thing is a fact: internal IT had here a unique chance to leap into the future by affirming its role in being the IT experts and partners of the business, reasoning between real business requirements, and the offerings provided by the emerging cloud providers.

 

Some organizations started to do that transformation, but as in all structural changes, as important as the change in the organizational structure or the mission, the most important challenge is the evolution of the mindset of the professionals tasked with the execution of this new strategy. So, I would say that many of the organizations are still half way as many of the technical stakeholders still maintain the “over-engineering mentality” they had once they built everything themselves, still driving over-provisioning of cloud solutions to their businesses.

 

Regardless of these organizational challenges, there were also concrete technical challenges faced by the early adopters of cloud computing and that got settled in the mind of many professionals. These were indeed hard learnings from the first experiences, but again, the world evolves and changes, and new cloud providers are coming to market making a business out of the learnings from these experiences.

 

Some of the challenges felt then, that lead now to the appearance of companies like Virtustream to solve them, are:

• Data Integration Challenges: now that my data is in the cloud, as business applications need to interact and exchange business data, how can I ensure security of that data across borders?
• Process Integration Challenges: as most critical business processes span multiple applications, how can I avoid users needing to learn multiple interfaces with the impact that has on error occurrence and loss of efficiency?
• Migration assurance challenges: one of the news of cloud was the advent of what are “internet native apps” which are smart enough to manage the infrastructure underneath. But most organizations have done massive investments in applications that are not “that smart”, and when migrating them to the cloud, many simply haven’t been able to perform against the necessary business standards (when talking about business critical processes, application availability is as important as application performance). How do I migrate to the cloud?
• Vendor Lock in: now that my data is on the cloud, what chances do I have of changing supplier? Many organizations found out that some of their early choices led to the need of “heavy lifting reengineering and data migration” both to get into the cloud, and to “get out” of a certain cloud provider.
• Data availability challenges: what if my provider has an interruption in service, or if it goes out of business completely? Do I have a backup plan? Here aspects like vendor financial robustness have come to become front and center on cloud adoption decisions.
• Data security challenges: will my data be safe in the cloud? Does the cloud provider have strong security governance including a DR and Business Continuity plan? Here aspects like the cloud node architecture and operations standards have become a key question of concern especially when discussing hosting business critical systems in the cloud.

For many of these aspects there are technical responses enabling either simpler or harder solutions.

 

These aspects have made it evident that organizations needed IT to take a different role from the one it has taken over the last 20+ years.

 

As the most advanced stakeholders in “Internal IT” realized all the changes happening in the market, and understood that being called “legacy IT” was not a good thing, many organizations evolved into becoming truly business partners and being the Information Technology experts inside the organization, to which business users could rely on to assist them in making smart cloud choices without falling into the many traps of the past (being the ones I’ve just mentioned before a very small list of examples).

 

 

               Cloud has created a clash and a new amazing opportunity for Internal IT

 

But the functionalities of new cloud providers, enabling interfaces to which applications could connect to automatically manage resources and infrastructures were there to stay, and to many “consumer facing” applications like internet portals and many others were perfect to leverage these new capabilities.

 

As developers increased in importance in organization, as they were the ones enabling the collection of data, its analysis, processing and transformation into new ways of operating business, this new cloud reality could not be ignored anymore and there was no way back on its adoption, because it simply made sense.

 

The clash then came on how to manage the balance between the existing “legacy IT” that supported most of the critical business processes, and probably was not a good fit for this “DevOps” cloud reality, and the management of the new “web-scale” reality with new applications based on Big Data and Internet of Things.

 

Here emerged the concept of “Bi-modal IT”, that meant your IT department needed to work on 2 realities: the business critical / client server reality where most critical business processes were based upon (where your record of business was registered), and the new reality of DevOps with a new agile app development reality leveraging the automation and simplification offered by the first cloud providers.

 

And one parallel idea that has grown with this concept of Bi-Modal IT was that the critical systems, called in the SAP world as systems of record were not suitable for cloud and should remain on-premise operating in the model they always did: being architected, engineered and operated with internal capabilities.

 

This idea has settled as the early cloud experiences of CIOs based on the “most popular public cloud vendors”, sweetened their mouths for the cost efficiencies and flexibility, but did not respond to the requirements of these systems of record, that not having been designed for the new cloud reality, having a long life in organizations as those core business processes do not change every day, had some very hard learned experiences that made them more careful and put in place strong governance in regards to cloud adoption.

 

 

Within those learned experiences, when talking about cloud for business critical applications, the following aspects emerged as critical:

• Where will my data reside, and who may have access to my data? Here the “Snowden effect” has raised important levels of concern among European, and in general all non-US companies, as most early days public cloud providers were US-based companies operating out of the US, or with US based operations.
• Who is the provider, and how robust financially is he to ensure that I do not risk losing access to my systems? When talking about my critical applications, I cannot put any data in a provider that doesn’t demonstrate the financial robustness to ensure that shutting down their operations due to bankruptcy from one day to the other will not happen.
• How do my move my applications from current state to future state? With critical applications, performance is as important as availability, and organizations cannot afford to throw away all they have built over the last 20 years without blinking an eye.
• How so ensure interoperability of applications in the cloud with applications on-premise with security and performance? Understanding that no business application lives alone, but rather as a member of a networked and interdependent world of applications poses challenges on business process performance and data storage, processing, transmission and integration security that need to be tackled with.
• What guarantees will I have on application performance and availability? When talking about critical applications, it is not enough to say “trust me, I know what I’m doing”. Aside from having to provide contractual guarantees (and demonstrate having the financial robustness to honor those guarantees), you need to demonstrate how you do things, and enable full transparency on how “things are done”.  Who will operate my applications on the cloud? Being understood that application development and data modeling is increasingly critical for organizations, managing the data platform and data availability in the cloud world is a challenge, as many of these business critical apps are highly dependent on how the infrastructure is architected. So managing systems on which you have no visibility on the most of the layers under the data can reveal itself challenging, or even frustrating. So most organizations want increasingly a “managed cloud platform”, requiring the cloud provider to understand the applications to manage them and provide SLAs at the application level.

 

All of this challenged traditional cloud providers.

 

 

               The shift in cloud adoption happening right now: form on-demand infrastructure to managed cloud services

 

As mentioned above, the fact is that the early providers of cloud created an experience on IT buyers and key business stakeholders that is here to stay despite of some more challenging experiences, and that is now setting expectations for the rest of IT.

 

Then the new question most Business leaders are placing to their IT organizations is: why can’t I have the benefits of consumption based billing, agility and fast time to market, together with the control, security, compliance and robustness that IT Outsourcing once promised also for my systems of record where in fact I’m today spending the biggest slice of my budget?

 

As the UK based IT Analyst “451 Research” has found (image above credited to 415 research), there is indeed a shift happening right now in terms of customer focus for Cloud adoption, where they are evolving from the experiences gathered on the first phase of cloud adoption led by 1^st generation global cloud providers, to a second phase of adoption where customer are shifting their focus from just having on demand infrastructure, towards more sophisticated offerings reaching further into the core of the business.

 

In this new phase of cloud adoption, customers are asking for managed cloud environments, enabling them to truly evolve towards having their internal IT departments as service brokers specialized in IT, and are pushing the market towards providing them with offerings that respond to the needs of business critical applications in a way that the 1^st Phase cloud offerings have not.

 

This second phase of cloud adoption denotes both the emergence of a new type of cloud providers, and the increased maturity of consumer organizations which have navigated through the organizational and technical challenges discussed above to take the principle of consumption based IT to the next level.

 

 

               The birth of a new leader: Virtustream, the enterprise class cloud!

 

Here we need to give enormous credit to Virtustream co-founders for having started this business when no one else was thinking of it: Rodney Rodgers, Kevin Reid, Matt Theurer, Sean Jennings and Vince Lubsey.

 

 

No better way to understand why Virtustream is such an exciting company, than to listen both to the co-founders sharing their reasoning for creating this company in 2009, and to customers that have been early adopters on this new phase of cloud computing.

 

All of Virtustream co-founders coming from extensive consulting experience with Global 1000 companies, saw an opportunity of bringing all the benefits of cloud to core business enterprise applications that have not been built native on the cloud, but that consume the largest part of current IT budgets, and are in desperate need for cost savings, and greater flexibility of consumption and provisioning that the 1^st phase of cloud brought to businesses.

 

Being the background of some of the co-founders of Virtustream SAP Consulting, and being SAP the most critical business application in use with the large global organizations they consulted to, solving the engineering problem of running these IO intensive mission critical applications in a multi-tenant cloud environment, while ensuring performance, security and availability, would open the door to run almost any critical application in a cloud environment.

 

So, SAP was the first application Virtustream decided to tackle and run in a “next generation cloud architecture and service model”, designed and built for this new phase of cloud adoption.

 

And this is the equation Virtustream’s co-founders were able to crack:

• Running large scale-up enterprise critical applications on a multi-tenant cloud;
• While ensuring application performance;
• Complying with the highest security and compliance standards in the loud industry;
• With application level SLA’s for performance and availability;
• And a consumption based billing that drives significant cost saving to enterprises both on assets consumption, but also on managed services;
• Providing a one-stop shop to plan, migrate and operate critical applications in the Cloud.

 

If you isolate each of these aspects, you could say: no big deal others have done it before.

But try and put all these aspects in a single sentence, and you’ll realize that today no other provider can live up to them. At least, I do not know any other global provider that does it.

               Conclusion

Virtustream was created in the context of the shift of cloud adoption towards the second phase (Management of Cloud Environments), and targeted specifically to the needs and challenges of this second phase, where IT consumer organizations have already made their mind in becoming an IT services broker, and through the learnings gathered from the first phase of cloud adoption, are now looking to expand further into the core (and to business critical client-server applications) the adoption of a cloud consumption model.

What makes Virtustream unique is a combination of its cloud nodes architecture, its proprietary software (for cloud management and security&compliance), its billing model, and the range of specialized services it offers (from advisory and migration services to full managed services up to SAP Basis level).

With 7 years of life and a very successful track record of migrating SAP applications to HANA on the Cloud, Virtustream sees itself uniquely positioned to simplify the adoption of SAP HANA.

Already going to long, and my plane is about to land, so let me stop at this point, and leave you with this teaser. Looking forward to write further on “the what” that makes Virtustream special in a next blog post.

As a final word, you that have been following my blogs for some years have seen me in the past writing about running SAP HANA on internal IT. You can see that my reasoning have evolved, and it has evolved through the learnings of listening to the Line of Business leaders on some of the largest organizations in Europe and how they see Internal IT coping with the new challenges their business face. Already starting to gather some ideas around it. Stay tuned!

Disclaimer: my blog is a personal expression of my learnings and experiences, aimed to help others build ideas on their own in regards to the latest trends and realities in the SAP infrastructure market. Its contents have not been reviewed or approved by my employer, and so are not endorsed neither reflect it ideas at any given moment.