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How Private Clouds can Transform IT in Midsize Companies
Dick Csaplar
MAR 19, 2013 08:00 AM
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Aberdeen has been following the adoption of Cloud computing for many years. In May 2012, Aberdeen surveyed 123 organizations to learn how they use Cloud computing as part of their IT infrastructure. The adoption of Cloud computing technologies by midsize organizations — companies with between 100 and 1,000 employees — has allowed them to become more flexible, increase end-user involvement in managing their own infrastructure, and reduce the overall cost of IT services. However, according to the Aberdeen research report "How Private Clouds can Transform IT in Midsize Companies" midsize organizations have not taken this technology as far as it can go to fully transform the way their IT organization supports the lines of business.

Deployments of Private Cloud

Private Cloud is the internal use of management tools originally designed for use in the Public Cloud. With a Public Cloud applications are deployed on remote infrastructure hosted by a third party. Users need to make changes to those apps, reallocate computing resources for peak performance, and manage expenses by remotely changing or turning off apps that are no longer used.

With a Private Cloud, IT extends those capabilities to their end users. Instead of filling out a form to request a new development and test platform, for instance, Private Cloud allows the engineers to enter the infrastructure, provision the servers the way they want them, and allocate just the right amount of CPU and memory. Their need is met immediately and IT people are freed from performing these routine tasks. The Private Cloud features listed in Table 1 enable greater end-user involvement and control of both their IT infrastructure and the resulting costs.

Table1: Private Cloud Features

Source: Aberdeen Group, May 2012

As you can see, midsize organizations have the lowest rates of end user self-provisioning deployment, the capability described in the paragraph above. They also have the lowest use-rates of a Cloud feature called lease-time, which is software that will set time limits on the life of any virtual machine (VM) deployed by an end user. Lease-time is a service to the end user as the software will not automatically shut off a VM, but will alert the end user that the VM they created is still running, perhaps past its useful life, and accruing unneeded expenses. The end-user or their management can then decide to terminate the VM.

Chargeback / showback is a feature that allocates IT expenses based on usage. This software tracks who requested IT services and either charges (chargeback) them an agreed upon expense or merely shows them (showback) what expenses they would be accruing if the company allocated its expenses based on user.

These tools demonstrate a management philosophy of enabling end users to do more of their own IT infrastructure management. Midsize organizations have deployed Private Cloud less than their larger or smaller cousins, and therefore are not reaping the greatest possible benefits.

The Benefits of Cloud Computing

Cloud computing has brought users benefits in two major areas — operations and finance. Operational benefits come from performing IT tasks more quickly or using fewer resources, while financial benefits are gained from reducing the IT budget without reducing services to the organization.

As shown in Figure 1, organizations that have deployed Cloud computing show great gains from their technology investment. Far and away the largest benefit, as reported by companies of all sizes, is a reduction in the number of servers (and therefore the amount of power consumed, the amount of management required, the space used in the datacenter, and the amount of maintenance services needed). This benefit has both operational and financial aspects to it.

The second most cited benefit is primarily operational. Fifty-two percent (52%) of midsize companies reported they are able to deploy new applications (not cloning an existing application to a new server) faster after deploying cloud capabilities. The improvement is shown in Table 3 — a reduction from an average of 14.7 days to just 4.2 days is a 71% improvement. There is also some financial benefit here, as organizations experience a 10-day faster application "time to value."

In addition 48% of midsize organizations reported reducing their application downtime as a result of Cloud computing. Midsize companies reported their cost of downtime to be just over $100,000 per hour, so any decrease will have great positive benefit.

Figure 1 Benefits of Cloud Computing

Source: Aberdeen Group, May 2012

Finally another 48% of midsize companies reported being able to reduce their overall IT expenses as a result of deploying Cloud computing. Surveyed companies reported being able to reduce their server and application management spending by 13% over the last 12 months and their IT headcount dedicated to the same by 4.4%. It is important to note that Cloud computing has led to a greater percentage of spending reduction versus headcount reduction. This is a trend that Aberdeen has found consistently: the Cloud does not lead to IT employees losing their jobs, but rather they are re-directed to more business critical projects. Cloud computing eliminates many of the mundane and repetitive tasks, freeing people to do more interesting work.

Table 1: Quantification of Cloud Computing Benefits

Source: Aberdeen Group, May 2012

Key Takeaways

Midsize organizations have widely deployed Cloud computing and are gaining both operational and financial benefits. All organizations, not just midsize ones, would gain from fully deploying a Private Cloud to continue reaping the gains begun with just server virtualization. Allowing end users to play more of a role in deploying and managing their own infrastructure requires giving them an easy and intuitive tool. At the same time, IT needs to have a single pane of glass to manage an environment that is rapidly changing. The Cloud management tool is key to enabling the financial and operational benefits of a Private Cloud.

The old IT model just won’t cut it anymore. Private Cloud is the new way to get IT done and to bring the power of the computing infrastructure close to the lines of business. The transformation of IT is well underway and everyone benefits from a Private Cloud.

Dick Csaplar
Senior Research Analyst, Virtualization and the Cloud
IT Infrastructure Group
Aberdeen Group

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