My talk on strategic considerations around cloud businesses, specifically around migration and pricing to product managers of a software major

1. CloudBusinesses:
StrategicConsiderations
Tathagat Varma
http://thoughtleadership.in

2. Docker's Registry Hub, Trello, Travis CI,
GitHub and GitLab, Quora, Medium,
Signal, Slack, Imgur, Twitch.tv, Razer,
Adobe's cloud, Zendesk, Heroku,
Coursera, Bitbucket, Autodesk's cloud,
Twilio, Mailchimp, Citrix, Expedia,
Flipboard, Yahoo! Mail …
What’s Common Among…

4. Typical IT Infrastructure
Real Estate
Utilities (Power, AC, Fire, Security,…)
Networking Infrastructure
Hardware (Servers, Storage, N/W,…)
Virtualization Layer
App-Specific S/W (Database, …)
Application Data
Middleware
System Software (OS,…)
Application Software

5. Your “Costs”
Acquisition
Rentals
Usage
Licenses
Storage
Backup
Idle
Fixed
Manpower
Performance
Recovery
Delays
Lead TimeExpertise Upgrades
EOL
Stagnation
Limited Opportunities
Revenue Erosion

6. Forget Cloud For Now,
Let’s Talk Something
Else…

7. Traditional
• Cultivation:
• Fixed Location (River)
• Fixed Time (Monsoon)
• Consumption:
• Immediate (Perishable)
• Sameplace (Limited)
• Self (Farmer family)
Farming
Modern
• Cultivation:
• Any Location (Canals)
• Multiple Times (Dams)
• Consumption:
• Anytime (Processing)
• Anywhere (Transport)
• Anyone (Trade)

8. 19th Century
• Power
• Private Gensets
• Costly
• Capex
• Opex
• Manpower
• Pollution
• Proximity
Factories
20th Century
• Power
• Utility Company
Supply
• Anytime
• Anywhere
• Reliable
• Metered
• Cheaper

9. • Production: Automobile, Manufacturing
• Utilities: Power, Water, Gas, Heating
• Entertainment: Concerts, Streaming
• Professional Services: Legal,
Accounting, PR, HR, IT/ITES,…
• Information: Research, WWW,…
• Services: Transport, Leasing,
Restaurants, Rental Housing,
And Many More…

10. Common Pattern?
Creation Consumption
Creation Consumption
AnyTime
AnyWhere
AnyOne
AnyTime
AnyWhere
AnyOne
SameOne. SameTime. SameWhere
Disaggregation.
Unbundling

11. What Can We Do Here?
Acquisition
Rentals
Usage
Licenses
Storage
Backup
Idle
Fixed
Manpower
Performance
Recovery
Delays
Lead TimeExpertise Upgrades
EOL
Stagnation
Limited Opportunities
Revenue Erosion

12. Pizza As A Service!

13. Outsource Infra
Real Estate
Utilities (Power, AC, Fire, Security,…)
Networking Infrastructure
Hardware (Servers, Storage, N/W,…)
Virtualization Layer
App-Specific S/W (Database, …)
Application Data
Middleware
System Software (OS,…)
Application Software

14. Outsource Platform
Real Estate
Utilities (Power, AC, Fire, Security,…)
Networking Infrastructure
Hardware (Servers, Storage, N/W,…)
Virtualization Layer
App-Specific S/W (Database, …)
Application Data
Middleware
System Software (OS,…)
Application Software

15. Outsource Service
Real Estate
Utilities (Power, AC, Fire, Security,…)
Networking Infrastructure
Hardware (Servers, Storage, N/W,…)
Virtualization Layer
App-Specific S/W (Database, …)
Application Data
Middleware
System Software (OS,…)
Application Software

16. What’s Happening
Here…?

17. Cloud computing, often referred to as simply “the
cloud,” is the delivery of on-demand computing
resources—everything from applications to data
centers—over the internet on a pay-for-use basis.
• Elastic resources—Scale up or down quickly
and easily to meet demand
• Metered service—so you only pay for what
you use
• Self service—All the IT resources you need
with self-service access
The Cloud
https://www.ibm.com/cloud-computing/learn-more/what-is-cloud-computing/

18. • Traditional IT Infrastructure is
• Capex-Heavy
• Time-Intensive
• Resource-Intensive
• Inefficient
• Stagnant / dated
• Not Agile Enough
Why Cloud?

19. • Infrastructure As A Service (IaaS)
• Computing, Networking, Storage
• Platform As A Service (PaaS)
• Development Environment
• Software As A Service (SaaS)
• Business Applications
Delivery Models

21. • Depending on who you are
and what you do, there could
be several migration scenarios
• While technology is important,
even more important to
understand business context
• Let’s see some examples…
Cloud Migration

22. • Drivers:
• Stagnant Business with Perpetual Licensing
• Raising Prices Was’t Sustainable Approach
• 18-25month Release Cycles
• Low Recurring Revenue 19% (2011)
• Approach:
• 2012: Started Offering Both
• 2013: Only Add Features to Subscription
• Agile Model Of Development
• Changes in Sales Process, Compensation, etc.
• Communication Internally, Wall St
• Move from ARPU to ARR
• Once Downloaded, Cloud is only for Update and Storage, But No
Processing
• Business Impact:
• Stock Price 3x
• Double-Digit Revenue Growth, More Predictable Revenue Stream
• Recurring Revenue up to 70%
Adobe
http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/reborn-in-the-cloud

23. • Drivers:
• Problems with on-prem infra
• Tough to keep pace with digital demands /
innovate
• Approach
• Start small, quick wins, demonstrate benefits
• 2015: From zero cloud usage to BAU in just
8months
• Results
• 3,500 GBP / 3mon => 66 GBP a month / 1wk
• Cost of hosting a page 13p/month
TESCO Bank

24. • Drivers:
• Big enough to have own
infra!
• Perhaps move from SaaS
to PaaS???
• 2016: Moved 90% of files
from Amazon to own cloud
Dropbox

25. • Drivers:
• Old, outdated systems
• Approach:
• 2014: Moved 65 apps and NASA.gov to
AWS cloud in 22wks with no downtime
• Results:
• Web update from 20min => 2min
• CPU utilisation only 1% even at peak
levels, resulting in 25-30% cost savings
• Able to avoid data silos
NASA

26. • Why: The Purpose
• What: The Goal
• How: The Plan
Migration Strategy

27. • Why are you undertaking
migration to cloud?
• Cost Reduction?
• New Markets?
• Faster Innovation?
• …
• Build a Business Case
Why: The Purpose

28. • Security 93%
• Performance 85%
• Scalability 74%
• Support 65%
Top Considerations

29. • What would the success
look like?
• Capex DOWN 60%
• Headcount DOWN 40%
• Release UP 1000%
• …
• Establish Success Criteria
What: The Goal

31. • How would the migration be
performed?
• Public / Private / Hybrid Cloud?
• IaaS / Paas/ Saas?
• Cloud Provider / Own DC?
• Rearchitecture apps?
• …
• Plan migration strategy and execute
How: The Plan

32. http://ecsnamagazine.arrow.com/how-to-stay-calm-when-migrating-software-apps-to-cloud/

33. https://www.slideshare.net/newrelic/cloud-migration-cookbook-webinar

34. https://www.slideshare.net/newrelic/cloud-migration-cookbook-webinar

36. • Consumption Based
• Subscription Based
• Advertising Based
• Market-Based
• Value-based
• …
Pricing Models

37. • Pay What You Consume,
And As You Go
• Ex: Disk, CPU, Network
Traffic
• Common for IaaS
Consumption Based

41. • Pay for Time, Irrespective
of Usage
• Common For SaaS
Subscription Based

43. • Free or Low-Priced But
Must Accept Ads
Advertising Based

44. • Fluctuates Based on
Demand / Supply
• You can Buy on Current
Price and Use Rightaway, Or
• Bid for Lower Price and If
Market Reaches That Price,
You Get It
Market Based

48. • Cloud is Business: It’s not just about
IT infrastructure but the TCO of
Business!
• Identify the key drivers: why are you
migrating to cloud?
• Establish the success criteria: what
will success look like?
• Evaluate your migration strategy:
your context is unique to you!
Recap

49. • IaaS vs. PaaS vs. SaaS, https://youtu.be/KgL3BfAc9Cs
• The Present And Future Of Cloud Pricing Models, https://www.ibm.com/
blogs/cloud-computing/2013/06/present-future-cloud-pricing-models/
• Cloud Computing Pricing Models: A Survey, http://www.sersc.org/
journals/IJGDC/vol6_no5/9.pdf
• https://www.engadget.com/2013/05/09/adobe-creative-or-cloudy/
• http://nvlpubs.nist.gov/nistpubs/Legacy/SP/
nistspecialpublication800-145.pdf
• http://www.computerworlduk.com/cloud-computing/how-tesco-bank-has-
adopted-aws-cloud-as-business-as-usual-in-eight-months-3629767/
• https://www.wired.com/2016/03/epic-story-dropboxs-exodus-amazon-
cloud-empire/
• https://www.g2techgroup.com/nasa-migrates-to-aws-cloud/
• https://aws.amazon.com/solutions/case-studies/all/
References