By Daryl Szebesta
Complexity is said to be the enemy of execution. So why do so many organizations stand for it, even embrace it as proof of their intellectual superiority?
The justification I heard when I was a CIO, and one I continue to hear as a cloud computing vendor working with customers in multiple industries, is that system complexity is a requirement for companies that are “different” and operate in complex, highly regulated markets. This thinking infests businesses at all levels, but it seems particularly prevalent within IT—from system procurement to implementation through ongoing management.
But the opposite should be the goal. IT organizations whose companies operate in highly competitive, complex environments (and which companies don’t these days?) must keep things as simple as possible to be able to anticipate and respond to constant changes, providing the lowest costs coupled with the highest degrees of agility. Think of the many public examples of systems designed and built for something very specific, only to become obsolete as soon as they’re finished.
Rethink Some ‘Best Practices’
Companies that adopt single-vendor, “cloud first” strategies are in a position to keep their IT procurement processes and technology architectures as simple as possible—and thus outperform their competitors.
For starters, it’s time to dispense with the IT procurement “best practice” of pitting multiple vendors against one another. While heroically squeezing vendors to slash their prices may reduce margins, doing so inevitably eats into the value and goodwill of what’s on offer. The costs of problems down the line are rarely correlated back to how the deal was negotiated up front. The flip side of the saying “people buy from people” is that they also sell to them—the buyer-seller relationship is a two-way street that must be cultivated, not taken for granted or abused.
Meantime, from the perspective of architectural and operational simplicity, it’s important to work with a vendor that has a broad set of integrated (or easily integrable) cloud services, as well as a set of processes easily consumed out of the box. Each time a company must jury-rig an integration, it costs money, adds complexity, and erodes the return on investment and quality of service. Organizations that standardize on out-of-the-box solutions incur about half the total cost of ownership of customized solutions.
Working with multiple providers also adds operational and vendor management complexity. Some 81% of respondents to a recent Morgan Stanley survey reported that more than two or three strategic vendors is too many to manage.
There’s also evidence that the highest-performing companies are cloud computing enthusiasts. In a recent Economist Intelligence Unit survey, for example, 40% of respondents who identified their companies as “heavy” cloud users said their companies’ revenues are growing much faster than their competitors’, as compared with only 13% of “light” users. Similarly, 34% of heavy cloud users are more profitable than their competitors, while only 11% of light users are.
Of course, this out-performance may not be due only to their use of cloud services—it may also reflect the culture of innovation common at heavy cloud users. But the findings are compelling nonetheless.
Choose the Right Vendor
While it may fly in the face of procurement and IT architectural traditionalists, choosing single-vendor cloud solutions (or as close to single-vendor as possible) can maximize ROI while optimizing agility. Competitive tendering at the outset is still important, but that shouldn’t bleed into the subsequent stages.
The choice of vendor, therefore, becomes important on several levels:
1 - Is the vendor’s cloud offering broad and deep enough to cover most, if not all, of the functionality your company requires? Does the vendor show a commitment to a clear product roadmap?
2 - Does the vendor have the breadth and depth of skills, or the established partnerships, to deliver on its promises?
3 - There are many niche cloud vendors, but will the vendor you select be around for the long haul?
4 - Finally, does the vendor understand, and have the operational “empathy” to support your business? Enforced upgrades at a given point in the year are nice for the cloud vendor, but not always so nice for the business consuming them. Is your vendor flexible?
Complexity costs—whether it’s the cost of implementation, change, operations, or second-order effects such as crimped agility, all of which ultimately reduce profitability and productivity. It’s incumbent on us all, therefore, to relentlessly seek to make things as simple as possible, not just simpler.
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Daryl Szebesta is Oracle’s vice president for cloud transformation.