In the last several months, interest in the concept of cloud brokerage has been growing and was recently punctuated by Accenture’s announced intention to be the IT industry “cloud broker” as part of a larger $400 million cloud R&D investment. While the concept of a cloud brokerage has been around awhile, enterprise adoption is finally catching up and creating the operational pain points that drive the need for brokerage capabilities. Given the rising interest, we wanted to highlight three areas where cloud brokerage is bringing about practical benefits today:
1. Bringing Shadow IT into the Light
While many enterprise IT organizations believe they have limited public cloud spend today, Gartner has estimated that by 2014 up to 35% of IT spending will occur outside of the central IT budget on public cloud services. For the average company with $5 billion in revenue, that extra IT spend could be north of $25 million.
To respond to their business users’ need for IT services that are more cloud-like, most large enterprise IT organizations have embarked on some sort of private cloud initiative. But until that initiative is complete, end users will happily continue to use public cloud services – with the business taking on the consequences of higher overall IT costs as well as security and compliance holes and risks.
A cloud services brokerage enables end-users to continue to use public cloud services, but allows the IT organization to offer value-added services for the business such as spend consolidation, alternative sourcing to multiple public clouds, solution architecture guidance to ensure that the proper security services like VPNs are in place and consolidated billing management. Once a private cloud has been completed, it can be added to a brokerage similar to a public cloud services provider and with the added benefit of a public cloud-like experience.
2. Filling the Gaps in Hybrid Cloud Management
Most private cloud management software has morphed over time to hybrid cloud management solutions. Virtually all of these platforms provide end-user benefit through self-service portal catalogs offering fixed VM/workload configurations as well as automation on the back end to speed up the deployment of the VM/workload on either private or public clouds. However, gaps still exist for an IT organization looking to deploy a true hybrid cloud experience.
Today’s public cloud services landscape is highly fragmented from an offering standpoint. Each provider has different capabilities, packaging and pricing models. Thus, many public cloud users end up defaulting to a single public cloud provider, setting themselves up for the cardinal sin of long-term lock-in.
A brokerage capability can help the end-user navigate this complexity by allowing collaboration with IT to design the proper application infrastructure solution using either private or public cloud infrastructure, and includes additional services like security or backup. A brokerage can also provide an estimated bill of IT for that application infrastructure solution across different providers, internal and external, that is reflective of the latest pricing. It can enable true chargeback to the business for the actual IT services that have been consumed while automating and consolidating the complex billing process across multiple providers on the backend.
3. Rationalizing IT Outsourcing
While IT outsourcing contracts specify minimum spend levels, the reality is that the actual spend is higher as additional services are requested of the ITO provider. Thus, the savings that businesses hope to realize from ITO are diminished. In fact, 38% of customers cite lack of innovation or continuous improvement as the greatest challenge with their ITO vendor.
One way to reduce ITO spend is to leverage public clouds to reduce infrastructure spend. The Everest Group has highlighted a case study of a leading global power generation company that found that usage of public cloud models for only 25% of workloads would drive greater than 30% reduction in overall infrastructure costs.
However, the challenge is to preserve these estimated public cloud savings. As with every new technology, hidden costs of adoption appear after the fact. The Texas Cloud Offering (PTCO) has documented 10 lessons learned from using public clouds to reduce infrastructure costs. Some key sources of cloud cost leakage include the need to re-architecture infrastructure solutions to maximize the benefits of public cloud, the risk of lock-in, billing complexity and cloud VM sprawl. By implementing a cloud brokerage capability to mitigate these cost leakages, the State of Texas enjoyed a 41% savings by moving a web services application to a public cloud.
Given the operational complexity created by multi-cloud environments, over time new use cases will certainly emerge for cloud brokerage. What do you think about using a cloud brokerage model as a bridge to the cloud? What other use cases come to mind? We’d love to hear your perspectives.
Mohammed Farooq is a guest contributor to Leverhawk.