Cloud Native Enterprises - On-demand self-service

Which don't have a lot to do with Cloud Native Apps but everything with truely embracing the paradigm shifts the Cloud has brought IT within the realm of businesses.

Read the Introduction first.

After reading the introduction to these posts you know what a cloud infrastructure is and what cloud native applications are, what about cloud native enterprises. Well these are enterprises that adhere to these same 5 characteristics. These enterprises, or organisations in general, cannot be modelled according to traditional enterprise models because of their specific market, competition, growth-stage, etc. These enterprises need to be, for all accounts, be cloud native in order to grow, succeed and be sustainable. Interestingly, but not surprisingly they require The Cloud and Cloud Native Applications.
In coming posts I will address every essential characteristic of The Cloud as defined by NIST from a perspective of the Enterprise. Unlike most cases, I will post these within the next 7 days and I certainly do hope before coming weekend.

• Broad network access. When customers, partners and users are distinct groups treated equal.
• Resource pooling. When synergy across value chains makes the difference.
• Rapid elasticity. When business is extremely unpredictable.
• Measured services. When business resources are limited.

On-demand self-service. When online services and core systems really seamlessly integrate.

This is the post where I'll address the aspect of the On-demand Self-service. An aspect which for many organisations is rather challenging. Just like the aspect of Measured services, this aspect is addressing internal governance structures. Although the governance implications will touch on the financial governance of an enterprise, the challenge is more of an organisational nature and in fact  the financial parts are not always relevant.

In any case. When we talk about on-demand self-service within the context of Cloud Native Enterprises we talk about an enterprise where tools and technologies needed to explore or exploit business models can be obtained when needed, by the person that needs it. Often we talk about IT resources, software and or hardware. But think in terms of services, which are often IT services.

In a traditional environment, IT services are obtained by the IT department. This is where the IT experts are and this is where the required frameworks for 'proper IT' are defined and used. Business departments will request, based on functional specifications, certain IT solutions, experts within the IT department will make sure that the best solution for the lowest price will be procured, installed and configured. Hassle free operation for the business people as a result.

Traditionally the reason for an IT department is centralisation of these resources in order to make as efficient use of these experts as possible. Actually, what I most often see is that within IT departments there are separate teams for specific expertise, so called Competence Centres or Centres of Excellence. Efficiency has been a key objective for many years within organisations, often because IT resources (computers as well as personnel) were relative expensive compared to other resources.

As efficiency has been a key objective in these traditional environments, the scheme above played out nicely. Scarce personnel is being utilised optimally in terms of keeping them busy and in the meantime, their experience and knowledge ensured the best value for money possible. Time was not a factor until recently. Of course, it always took too long to provide the solutions to the business, but offset against costs, this has always been a small price to pay. Relatively speaking, and yes, pun intended.
But things have changed and the old timelines are no longer acceptable. Timing becomes more and more an issue. Business ideas can no longer wait to find their way into the hands of users. Not only because lean, agile and nimble Start-Ups will chip away the market shares of enterprises, but because enterprises between themselves are leveraging technology to get the competitive edge.
We see that the introduction of The Cloud in the IT departments of enterprises has resulted in extremely short timelines when it comes to delivering solutions to the business by their IT departments. Enterprises with an IT department that can't leverage the characteristics of The Cloud as defined by NIST will perish. You can't move fast enough? You're shark food. It's a dog-eat-dog-world nowadays.

The CIO v.s. the CDO

We see that CIO's are being complemented by CDO's, Chief Digital Officers, in those enterprises where the CIO has not been able to transform the IT department from a traditional silo'd business enabler into a heterogeneous multi-disciplinary flat business partner. CDO's are introduced to drive the digital transformation, a transformation that has been going on since the advent of computers in enterprises. But where it focused on efficiency and controlling cost in the past, now the transformation is focusing on effectiveness and creating value. Often the CIO hasn't been informed about this new direction as often the CIO is not in the boardroom. Understand that in many of the organisations I've been, the CIO reports to the Chief Financial Officer, instead of the CEO, COO or the Chief Marketing Officer. IT is associated with cost in these enterprises and not with revenue.

Product/Platform Paradigm

But in the Cloud Native Enterprise, it isn't the IT department that delivers IT solutions, not even when they can do this with the speed of The Cloud. In these enterprises, the business services it self.
When IT solutions are needed, the business will obtain them by themselves. Here the IT department is no longer delivering the solutions, but the platform onto which the solutions will run and integrate with the core IT systems. Systems like Identity and Access Management, Monitoring and Metering, Resilience and Disaster Recovery. Integration of solutions in the platform is what IT is about. Products and business solutions is what the business is about.
The IT departments in these enterprises are basically nothing more than in-house system integrators. But extremely sophisticated at that since integrations are subjected to profound automation.

It is with Cloud Native Enterprises where we see the true value of the Product/Platform paradigm. IT delivers the platform, the platform is its business product. Business delivers business products. This is where the concept shines as those that understand how to valuate the product from a business perspective are accountable for the product that creates the value to the business.

Concluding

And so the Cloud Native Enterprise is the enterprise where IT is part of the business when it comes to delivering business products. Allowing business solution to be created using IT on-demand, through self-service. This also means that the traditional IT department has become a business department as well, run as a revenue catalyst and not as a cost centre.

Thanks once again for reading my blog. Please don't be reluctant to Tweet about it, put a link on Facebook or recommend this blog to your network on LinkedIn. Heck, send the link of my blog to all your Whatsapp friends and everybody in your contact-list. But if you really want to show your appreciation, drop a comment with your opinion on the topic, your experiences or anything else that is relevant.

Arc-E-Tect


The text very explicitly communicates my own personal views, experiences and practices. Any similarities with the views, experiences and practices of any of my previous or current clients, customers or employers are strictly coincidental. This post is therefore my own, and I am the sole author of it and am the sole copyright holder of it.

Cloud Native Enterprises - Measured service

Which don't have a lot to do with Cloud Native Apps but everything with truely embracing the paradigm shifts the Cloud has brought IT within the realm of businesses.

Read the Introduction first.

After reading the introduction to these posts you know what a cloud infrastructure is and what cloud native applications are, what about cloud native enterprises. Well these are enterprises that adhere to these same 5 characteristics. These enterprises, or organisations in general, cannot be modelled according to traditional enterprise models because of their specific market, competition, growth-stage, etc. These enterprises need to be, for all accounts, be cloud native in order to grow, succeed and be sustainable. Interestingly, but not surprisingly they require The Cloud and Cloud Native Applications.
In coming posts I will address every essential characteristic of The Cloud as defined by NIST from a perspective of the Enterprise. Unlike most cases, I will post these within the next 7 days and I certainly do hope before coming weekend.

• On-demand self-service. When online services and core systems really seamlessly integrate.
• Broad network access. When customers, partners and users are distinct groups treated equal.
• Resource pooling. When synergy across value chains makes the difference.
• Rapid elasticity. When business is extremely unpredictable.

Measured service, when business resources are limited.

This is the post where I'll address the aspect of the Measured service. It is an interesting aspect of the cloud native enterprise because it addresses the financial governance model of the enterprise.
Let me first start with what I witness in most organisations regarding the financial governance model. Great and small, old and new. And even in start-ups. The model is in about all cases one in which there is an annual budget allocated for pretty much everything that costs money. Often times, the budget is based on past experiences. It's a copy of last years budget corrected, or extrapolated, based on last year's developments, revenue, target met or not, etc. What I often times see, and I'm actually pretty sure I have seen this in all but one or two cases, is that once a year there is a prediction as to what the business will look like in the coming year. This is not the strategic plan, but next year's plan. There's a project portfolio, or more recently a product portfolio, that covers the coming year. Predictions are made about next year's resource needs etc.
The most common thing here is that the more resources an organisation has at its disposal, the more anal the enterprise is about these plans.

Being ambitious as a business

What I hardly ever see is a prediction of what the enterprise's ambition is with respect to its market position. Its business ambition. Do not mistake this for a strategic ambition, or a mission statement. What I am talking about is an 'objectives portfolio', an overview of the enterprise's objectives. Each of it's value chains, lines of business, P&L areas, however the enterprise's business is divided should have objectives, and ideally a roadmap littered with objectives. This is the objective-portfolio.

Why this is so important is that an enterprise should be working to meet these objectives in any way it can. And the reason why this is so important, is that these objectives are in fact the key drivers for business sustainability. From a strategy perspective, the business objectives should be completely in line to support the strategy. By working towards these objectives, the strategy is implemented, which in turn will increase sustainability.
An important key take-away is that objectives can be met in any number of ways. There is hardly ever only one way to do so. But in general, out of all the different ways to achieve an objective, there are only one or two that are the best. The best within the context of the enterprise at a specific moment. Which means that what is the best way now, might not be the best way in the next quarter. There could be a missed opportunity, new regulation, or a shortage of resources. So re-evaluating the the proper course of action continuously, should be a given.

For enterprises resources in terms of money are often not considered a bottleneck, instead I see often that the availability of the right people to do the job to be a problem and in even more cases the precious resource we call time is a problem of its own magnitude.
For smaller companies I see that often money is the issue and people and time not so much. Reason being that smaller companies tend to focus more on a limited amount of business solutions. Where enterprises are straying all over the place, small companies are equipped with laser sharp focus.

"Now where's the Measured service coming into play?", you ask.

Measuring achievements not performance

Working with a roadmap based on objectives, with a portfolio of objectives, allows for embracing the concept of validated learning, and metered funding.
Like I stated earlier, objectives are met by choosing one of many implementations, where the choice is based on the context of the moment the choice is made. For example the timing to introduce a new consumer product just ahead of the holidays. Or the introduction of a key competitor's product that will pave to way to broad market acceptance of something controversial. Or the abundance of developers that can code in specific programming language. By consciously choosing the seemingly best implementation to meet the objective, you know what to look for in order to re-evaluate that decision. Staying on track with the calendar to meet the holiday boom, monitoring market acceptance of that product, keeping an eye on Craigslist for job postings for those coders, etc.
Obviously this requires monitoring of the results of your efforts, but that is exactly what it means to apply the concept of 'validated learning'. You determine based on what your efforts are contributing to the bottom-line (whatever that is to you) or not or is even counter productive, this is your hypothesis. You undertake whatever action you've got up your sleeve and once you're done, you check your hypothesis and determine what your next move should do. It's actually pretty close to just being agile.

Turning variable into fixed

Now the trick is, and this is where it becomes extremely complicated for enterprises, to allocated resources in such a way that you can continuously work on meeting the objectives, but change the way you do so, throughout the year. From a financial planning perspective, this is rather different from most enterprises I've seen over the years. Like I stated earlier, budgets are allocated annually, based on plans. The the bigger the budget request, the more assurances need to be given to get the budgets allocated. Business Cases are written, plans are drafted, dreams are... well often the most realistic and accurate of these three.
The way I often see it addressed is by introducing pre-funded teams. Which basically means that one of the larger portions in the budget is fixed, namely human resources. In fact, this only addresses the problem when an enterprises HR strategy is relying heavily on out-sourcing, contractors or a combination of these two. When most of the work is done by own staff, HR costs are already fixed, and working with pre-funded teams is merely an HR-planning issue. I would prefer this situation, but it is often just not feasible. With pre-funded teams, a large part of the budget is fixed, which is an accountant's dream, or so I've been told on various occasions. How to fix all other variable costs? That's a challenge, but this is where a cloud environment helps, as it will not fix IT costs, but it will allow these to be limited to the bare minimum as needed, so costs are not fixed, but risk is contained and limited. Another dream coming true.
Your measured service at play here is now that for one a large chunk in the budget is no longer variable, so planning is straight forward, no measuring is really needed as the teams are based on objectives to be met and not work to be done. I understand this is the first time I phrase it this way but it is crucial to understand the different. I leave you to think about it for a second.

Concluding

Measuring is needed for the remaining chunks in the budget. Although still variable, this chunk, the IT resources costs are contained and limited and investments are only needed when the IT is required. And more importantly, revenue is generated shortly after investments are done, or else further investments are stopped. So we measure the revenue, off-setting it to the limited costs.

I hope you understand the paradigm shift in the financial governance from a mainly cost driven concept where revenue is mainly a matter of wishful thinking, educated guessing at best, to mainly realised revenue based.

Re-iterating. Measured services relate to the fact that the in the cloud native enterprise, the enterprise is governed such that costs are considered investments. But only concerning those costs that can't be fixed. In other words, variable costs are considered investments. Investments are related to business objectives to be met and not work to be done. This eliminates in a large part the risk that the focus is on work already done instead of objectives still to be met when it comes to new investments.




Thanks once again for reading my blog. Please don't be reluctant to Tweet about it, put a link on Facebook or recommend this blog to your network on LinkedIn. Heck, send the link of my blog to all your Whatsapp friends and everybody in your contact-list. But if you really want to show your appreciation, drop a comment with your opinion on the topic, your experiences or anything else that is relevant.

Arc-E-Tect


The text very explicitly communicates my own personal views, experiences and practices. Any similarities with the views, experiences and practices of any of my previous or current clients, customers or employers are strictly coincidental. This post is therefore my own, and I am the sole author of it and am the sole copyright holder of it.

Cloud Native Enterprises - Introduction

Which don't have a lot to do with Cloud Native Apps but everything with truely embracing the paradigm shifts the Cloud has brought IT within the realm of businesses.

A couple of weeks ago I was asked to do a presentation to a number of mainly (project) managers on the topic of "The Cloud". I think one of the reasons I was asked had to do with the fact that I usually tend to be (a bit) iconoclastic and another reason might be that I have been a huge proponent of The Cloud. Look at previous posts of Arc-E-Tect and you should be able to find a number of posts on the topic. In any case, I obliged.

While preparing the slides, digging into my archive of presentations as I remembered a presentation I did on the topic a couple of years ago to a group of mainly lawyers and auditors I decided that it was the perfect time to not talk about The Cloud as an IT phenomenon but as a business phenomenon. As you might have gathered when reading my posts on this blog, I do tend to see IT from a business perspective. Pure simple logic dictates that we apply IT in organisations to strengthen our businesses. The decision was made, I was going to talk about Cloud Native Enterprises.

The Cloud According to NIST

What are Cloud Native Enterprises? First of all you need to know what The Cloud is, and I always use the NIST definition of Cloud. NIST made it easy to define The Cloud by naming 5 essential characteristics of cloud:

• On-demand self-service. A consumer can unilaterally provision computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction with each service provider.
• Broad network access. Capabilities are available over the network and accessed through standard mechanisms that promote use by heterogeneous thin or thick client platforms (e.g., mobile phones, tablets, laptops, and workstations). 
• Resource pooling. The provider’s computing resources are pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand. There is a sense of location independence in that the customer generally has no control or knowledge over the exact location of the provided resources but may be able to specify location at a higher level of abstraction (e.g., country, state, or datacenter). Examples of resources include storage, processing, memory, and network bandwidth.
• Rapid elasticity. Capabilities can be elastically provisioned and released, in some cases automatically, to scale rapidly outward and inward commensurate with demand. To the consumer, the capabilities available for provisioning often appear to be unlimited and can be appropriated in any quantity at any time.
• Measured service. Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (e.g., storage, processing, bandwidth, and active user accounts). Resource usage can be monitored, controlled, and reported, providing transparency for both the provider and consumer of the utilized service.

(source: The NIST Definition of Cloud Computing)

There's not really an order in these characteristics, but they are essential. You have to keep in mind that these are related to IT systems, typically infrastructure hosting services.
I'm not going to re-iterate these characteristics and explain what The Cloud is, instead I'll go over these essential characteristics to explain what a Cloud Native Enterprise is.

Cloud Native Applications

But before I do this, let me explain what a cloud native application is, because it is important to understand this. First of all; Every cloud native application can run in a traditional data center. Second of all; From a NIST characteristics perspective there is no difference between public and private and hybrid clouds. As long as all 5 essential characteristics are met, we can talk about a cloud environment.

Back to the cloud native application. This is an application that thrives on the cloud. It is one that uses the 5 characteristics to the fullest and doesn't compromise. Let me go over them one by one.

• On-demand self-service. A cloud native application is accessible by a user, which could be another application, but often it is a person. But it is not only accessible by a user, but everything pertaining that user can be done by the user, whenever the user pleases. So the user can sign-up herself, configure her environments herself and do whatever she needs to do, all by herself. Irrespective of the role of the user. So an administrator of the application can do whatever needs to be done, as can a business user. This is hugely different from traditional applications, where you would need to request an account at some service-desk in order to gain access.
• Broad network access. Cloud native applications are network accessible and not only that, they're accessible through standard mechanisms and through common devices. Typically we see that these applications are accessible via the internet, or at least through internet protocols. Often we use http or https to access the applications. Originally through a browser, but with the advent of mobile devices we see that the generic web-browser is replaced by a specialised browser, the client application, that accesses the application's logic via web- and internet-protocols and presents a user experience fully embracing the client device's capabilities.
• Resource pooling. This for applications means that the applications are multi-user applications and the users are not aware nor impacted by each other, unless of course, business logic demands interaction.
• Rapid elasticity. Probably the most unique selling point of the cloud is elasticity. The amount of resources needed to perform a specific task consistently independent of the load on the systems is expanding or retracting as needed. Elastic. No wonder Amazon calls their virtual server environment Elastic Cloud Compute (EC2). For cloud native applications the same goes. The application scales up and down as needed by the load on it. Typically this is done using the underlying infrastructure's elasticity, but mind that the cloud 'nativeness' of the application is that we're talking about functional elasticity. The responsiveness of the application is consistent across many workloads. This can mean that the application's functionality scales down when load increases (e.g. loading only the first 3 review comments for an item in a web-shop instead of 10) and scales up when the load decreases.
• Measured service. Here we run into the situation where the usage of the application is metered. At any time it is known what the application's utilisation is. Which user is using what functionality at what time with which guarantees. The idea here is, obviously, that the user will be billed based on her usage (of resources) of the application in contrast to some flat fee or a compute-power based fee. An example is that a free-tier account can access a certain function only once every two seconds, where a pro-tier account can access the function 5 times a second. The key here is metering and billing.

Every time I use the word 'user' above, I want to reiterate, it can be a person, but also another system. Especially in the current API economy, the user mentioned will very likely be another application.

Applications that are cloud native adhere to these 5 characteristics, and they do this from a business functional perspective. There are all kinds of technical implications like a transition from ACID transactions we typically see in traditional applications, towards BASE transactions we see in cloud native applications. Same goes for in depth security in the cloud and more of a focus on perimeter security in traditional data center hosted applications.

Cloud Native Enterprises

Now that you know what a cloud infrastructure is and what cloud native applications are, what about cloud native enterprises. Well these are enterprises that adhere to these same 5 characteristics. These enterprises, or organisations in general, cannot be modelled according to traditional enterprise models because of their specific market, competition, growth-stage, etc. These enterprises need to be, for all accounts, be cloud native in order to grow, succeed and be sustainable. Interestingly, but not surprisingly they require The Cloud and Cloud Native Applications.

In coming posts I will address every essential characteristic of The Cloud as defined by NIST from a perspective of the Enterprise. Unlike most cases, I will post these within the next 7 days and I certainly do hope before coming weekend.

• On-demand self-service. When online services and core systems really seamlessly integrate.
• Broad network access. When customers, partners and users are distinct groups treated equal.
• Resource pooling. When synergy across value chains makes the difference.
• Rapid elasticity. When business is extremely unpredictable.
• Measured service. When business resources are limited.

Thanks once again for reading my blog. Please don't be reluctant to Tweet about it, put a link on Facebook or recommend this blog to your network on LinkedIn. Heck, send the link of my blog to all your Whatsapp friends and everybody in your contact-list. But if you really want to show your appreciation, drop a comment with your opinion on the topic, your experiences or anything else that is relevant.

Arc-E-Tect


The text very explicitly communicates my own personal views, experiences and practices. Any similarities with the views, experiences and practices of any of my previous or current clients, customers or employers are strictly coincidental. This post is therefore my own, and I am the sole author of it and am the sole copyright holder of it.