Why cloud is crucial for a sustainable business, and how to choose the best option.
The Covid-19 outbreak has reinforced two lessons for businesses – the importance of cloud-based services and the need to ensure their model is sustainable. Cloud platforms have really come into their own, providing accessibility for remote workers and customers, while providing the ultimate scalability for businesses facing an uncertain future. But in a world where both the economy and environment are facing unprecedented challenges, it is more vital than ever for business owners and CFOs to make informed business decisions.
Choosing the right cloud option can be daunting, and a truly sustainable business needs a clear understanding of the financial and business case drivers to help make the right decisions.
Review the business model
Changes are happening at a rapid pace in today’s business environment, with many companies looking at downsizing and improving their remote working capabilities. Even beyond the extremes of a pandemic, acquisitions, new ventures, upturns and downturns all provide daily challenges for senior managers.
Nothing illustrates how quickly the business environment can change as the infographic below.
The infographic shows the vast drop in consumption of electricity since Covid-19 hit New Zealand. Many businesses were unable to operate from their normal offices and stores. While most have adapted to working from home, the shutdown had a huge impact on commercial electricity consumption.
While major industry consumes a third of all our energy, the wider commercial sectors consume a further quarter of New Zealand’s electricity demand. It is this quarter that we can reasonably assume to have almost completely evaporated when the lights went off.
Although the future is opening up and consumption is starting to rebound, businesses are now focused on new ways of consuming energy or delivering services.
Many CFOs and CIOs are trying to figure out this new way of working and how it affects their own businesses. The days of the road warrior salesperson may be coming to an end. How we engage with, incentivise and add value to our clients will look very different, as some may prefer a call from the office or a virtual meeting to a corporate lunch. Customers too will be feeling the impact, with online engagement becoming the predominant form of communication, and Microsoft Teams, Zoom, and Hangouts becoming an integrated part of working culture.
In addition, Covid-19 has caused a large shift in the global economy and supply chain. Secure production and supply are increasingly of greater importance than the cheapest or most efficient options, which has led to a greater focus on in-house production, multiple suppliers or regional stockpiling.
The result of all this is we can no longer trust the stability of the surrounding environment. While we may see some return to the old ways of working, some business processes will never be the same again. Business managers therefore need to be prepared to constantly review business models and consider whether their technology needs are still being met by their current system. This will help ensure their business remains sustainable in a world that can change drastically in what seems like a second.
Plan for the rebound
Kiwifruit producer Zespri is a classic example of how to approach this kind of situation. In 2010, it was dealing with the PSA Virus, which caused entire crops of kiwifruit to fail. The popular gold kiwifruit was the most affected variety, spurring Zespri scientists to research a resistant strain.
They knew the situation could have gone either way – with the opportunity to double production if the new strain was successful or ultimately halve if the research failed. Zespri was concerned about having enough computing power to cover existing demand while preparing for both the best- and worst-case scenarios.
With support from Total Utilities to assess its existing IT costs and consumption, Zespri was given a list of options that projected the business outcomes and costs for each. It could either continue managing and maintaining its own data centre, outsource its data to another local vendor, or switch to the public cloud so it could replicate the same platforms around the world. Zespri chose the latter, moving its infrastructure and associated platforms onto the Microsoft Azure Cloud.
This decision helped Zespri cover a multitude of potential problems by removing the financial risk of investing in its own tech infrastructure, allowing rapid expansion of a global supply chain and delivering detailed cost control mechanisms. Providing Zespri with financial operations toolsets allowed it to efficiently manage costs and consumption, which was repaid as Zespri’s research gamble paid off and the business grew in scale. Measures such as “cost per tray of kiwifruit shipped” have become an important way of tracking success. Zespri has used subscription cloud services as an effective way to manage, analyse and contain its costs ever since.
Not only does that mean Zespri is able to adapt its model to any scenario, not having a data centre on site reduces both energy consumption and space. The business is therefore more sustainable in every sense of the word – something consumers around the world increasingly expect. Microsoft itself has committed to removing all carbon it has ever emitted directly or by energy consumption from the environment by 2050, reinforced by its pledge to support New Zealand’s sustainability goals through its new datacentre investment. As every organisation on the planet is challenged to review its impact on the environment, choosing greener IT options is a great way to minimise your footprint.
As the adage goes, the only certainty in life is change. While an upfront investment during downturns can be daunting, the best way for any business to safeguard its sustainability long-term is to invest in an IT system that doesn’t become obsolete, that meets modern expectations around environmental impacts and which allows workers the greatest accessibility in an era when many of us are now working remotely. And that means embracing the cloud.
Ensure resilience
A resilient network and good technical support are essential to every modern business. There is an expectation for email, purchasing or sales automation to be working around the clock. Software updates, testing or hardware failures are no longer an excuse for disrupted services, which can instantly see customers go elsewhere.
Just five years ago, businesses were put off moving their platforms and operations to the cloud because they weren’t sure about achieving the level of compliance and technical competence they needed to operate the systems. Every business we consulted felt the skills to manage cloud migration were a barrier to digitising their operations, and that only in-house experts could provide the support needed. That figure is now just 40 per cent. Trust in the cloud and cloud providers to manage their businesses and tailor their services to their needs has skyrocketed.
Likewise, secure and reliable connections are more available than ever. While some thought the demand put on the internet during this period of working from home wouldn’t hold up, the Covid-19 lockdown has proven how resilient the internet can be. It is a credit to our network providers, whether fibre, copper or mobile data-based, that these services have remained largely in place as millions of people have suddenly put tremendous demand on capacity.
This shows that network availability is no longer a constraint holding back businesses from placing their operations and services in the cloud. Those organisations using public cloud services are also better placed to combat the predatory players who sought to take advantage of the situation via scams and cyber-attacks, with regular security upgrades not available to those using an outdated server in the back office.
No longer can you place your trust in simply ‘doing it yourself’. Instead, managed cloud-based services can prove more secure and reliable. Security and connectivity is complex to establish and even more challenging to maintain, especially when scarce, skilled resources are in high demand.
Establish good financial governance
Whichever cloud service you use, make sure to choose a partner or platform that can provide real-time analysis and reporting so you can see exactly how it’s working for your business and change your plan if you need to.
Governance, cost control and resource efficiency have always been top priorities for businesses. Now more than ever, businesses are focused on getting the best value for money from their technological solutions while growing a sustainable business. One thing cloud-based platforms do very well, thanks to their sheer accessibility and ease of use, is enable workers to use a huge range of resources and implement their own changes and updates. However, if unconstrained, this can result in wastage and bill-shock.
While governance and budget setting have provided the framework for cost control and planning for decades, moving to the cloud requires a new level of collaboration between Finance and IT. Ensuring these two teams remain communicative through the cloud integration process is vital to ensuring it runs smoothly and efficiently, that the right functionality is baked in from the beginning and there are no budget surprises.
As well as close co-operation, the key to ensuring total visibility and that cloud services are providing the best value, is using a monitoring service to provide real-time data on how cloud is being consumed across the business. The best services can illustrate exactly how resources are being used – either energy or data – and enable CFOs and other decision-makers to rapidly change to new plans that are better for the environment and the bottom line. Clear and regular reporting is essential and takes a great deal of time and effort out of maintaining good governance.
Cloud is the future of many businesses and in a time of so much change and uncertainty, it is important to know your business has a model it can rely on to save costs and make governance far less onerous. To know that your business is making most of out your cloud service, make sure you have reporting in place so you can accurately reflect usage in real time, limit your expenses and energy consumption and create a business model that’s truly sustainable for many years to come.
The -aaS consumption model is nothing new when it comes down to brass tacks – it’s exactly how we’ve been consuming electricity ever since Edison and Tesla were squabbling.
Over the last 130 or so years, electricity consumption has risen and with it, the cost.
This is why Total Utilities stepped in to help businesses in New Zealand ensure that their power costs were being thoughtfully managed through analysis of quantitative and qualitative data.
Now, the team at Total Utilities have brought their years of experience and the array of tools at their disposal to help enterprises transition to the cloud in the most cost-effective and outcome-focused way possible.
Total Utilities strategy and transformation director David Spratt explained that as a company that specialises in the analysis of data, migration to the cloud is a no-brainer.
“The intellectual battle over the cloud is done,” Spratt says.
“if you haven’t heard about the multitude of advantages that public cloud can bring to any organisation, then you haven’t been listening. To be competitive from our corner of the world, you need to be using world-class technology and today, that means public cloud.”
Every day, more enterprises move onto the cloud. Every day, another startup is born there, ready to displace their predecessors. And every day, you have someone else tell you that if you don’t move now, you’re done for.
Total Utilities is not interested in this kind of manic hyperbole. In fact, the team’s knowledge and expertise in the cloud was inspired not just by their love of the tech, but more importantly by their passion for saving money for their clients.
“As a completely vendor-agnostic consultancy, we aren’t trying to convince anyone to spend more or upsell to products they don’t need,” Spratt explains.
“If your company has brand new servers that are fully functional and ticking along happily, you probably aren’t interested in migrating everything right now. We understand that and want to guide both IT specialists and C-level executives to make the right decisions about what should be moved, how it should be moved, and when to move it.”
Total Utilities helps organisations bridge the communication gap between IT and the C-suite, speaking both languages, and suggesting clear, evidence-based options that are all about making life easy for the techies, and making money for the execs.
This is not some upstart company aiming to build their experience – for the last five years, they have worked with New Zealand’s major kiwifruit exporter and agricultural giant Zespri, providing financial insights and ongoing evidence of the value that migrating to Azure has brought.
“We said to Zespri, ‘Are you really in the business of owning and operating IT?’ And of course they’re not,” Spratt elaborates.
“But certain key services they have to deliver. So how do you get out of the business of owning and operating tin boxes that go ping, and into the business of providing all the services that give a business strategic advantages?”
Total Utilities performed assessments in every area to see what the cloud could offer. They looked at the obvious benefits like the ability to copy/paste their systems for deployment in any country, simplified disaster recovery and backup, and the ability to scale up or down based on crop yield.
Scalability ended up being a key driver for Zespri as this transformation occurred at the same time as the much-publicised Psa disease that threatened to wipe out their gold kiwifruit stock.
Zespri wasn’t sure if it would end up with shipping numbers dropping from 80 million to 40 million, or if a new strain of fruit would take successfully and end up yielding 140 million. Total Utilities showed them how being in the cloud would mean they were ready for any eventuality.
But then they even dug deeper, looking at the cost per square metre of housing private servers, power costs, and the depreciation of hardware over time.
Today, Zespri still sits on Azure and continues to work with Total Utilities to ensure that it is always in the best position to achieve its goals as one of New Zealand’s biggest organisations.
Now, Total Utilities wants to help your organisation be as profitable and streamlined as it can possibly be – get in touch today to find out how.
Last week the IT industry was shocked to find that the Intel chipsets that drive many of our phones, smartphones, laptops, desktops and our servers, have an architectural flaw that exposes them to hacking. The other two major chipset manufacturers AMD and ARM appear to be much less affected.
By patching their operating systems to address this design flaw in the Intel chipset the OS providers have been forced to sacrifice the thing that impacts us most, performance. The numbers aren’t out yet but we could be seeing reductions in performance of between 5% and 30%.
For the average user, even a 30% reduction in performance on their laptop or smartphone might not have any discernible impact. Most of us don’t use even a fraction of the capability of our machines and with the consumption of cloud software services such as Office 365 the compute power is in the cloud anyway. But herein lies the problem…
Cloud Service Providers (CSP’s) like Microsoft, Google and Amazon are massive consumers of high-intensity computing power. Every day they wrestle with optimising the cost and performance of their infrastructure environments to deliver to their own and their customers’ needs.
CSP’s have been the first to implement the security patches on their servers, as you would expect from responsible global providers. This is where a 30% performance reduction really hurts. My guess is that their systems architects have been in a right state of panic about how to address the possibility of significant performance degradation unless loads of new equipment is installed in a hurry.
What does this mean to you, the business user of cloud services?
The future performance, and thus the relative cost, of chipsets, will also likely change for the worse in the short to medium term. The security flaw I mentioned earlier was based on the need for manufacturers to make chipsets run faster. This design is now no longer acceptable from a security perspective and will have to change somehow. It will take time for them to come up with a new solution. In the meantime, all those performance/price gains we have come to expect in the past will be very hard won indeed. Expect increases in prices for Intel-based computers and some smartphones.
Expect to see cloud services prices rise as CSP’s move to recover their increased infrastructure overheads both current and into the future
There is little we can do in New Zealand to force a better deal from the big multinationals. Local providers like Datacom and Revera are subject to price/performance challenges as much as the next company and are unlikely to welcome requests for better pricing.
What you can do, though, is to manage cloud computing costs by addressing the issue of consumption through closely monitoring when and how you use cloud computing infrastructure. Microsoft and Amazon both now provide options for paying a lower price for guaranteed future consumption. There is also the option available to purchase services on the spot market. Discounts in this market can be as high as 90% but you must know what you are doing because spot markets go up and down based on demand.
Monitoring and then actively managing cloud consumption requires experience and skill. Rather than trying to do it yourself, you should consider using the services of a utility analytics firm. This will help inform the decisions you make, directly tie cloud computing cost savings to the activity and will allow you to focus on the business at hand rather than on what can be a rapidly changing and complex computing marketplace. Total Utilities has the tools and expertise to deliver real insights and recommendations to help optimise your cloud consumption and cost. For more info click here or contact us today.
In 2013, Zespri, one of the world’s leading horticultural companies, and the recognised category leader in kiwifruit, was facing many significant challenges. The Psa virus which attacked their main gold kiwifruit crop, had the potential to devastate the company and its grower shareholders. In addition, they were facing significant capital outlays associated with their existing ICT systems and the need to upgrade their computer hardware.
Zespri had to ask questions like, “Could the new variety of crop, Sun Gold, be more robust and become another bestseller?”, or, “Would our outputs dramatically reduce?” At the same time, Zespri’s Board were concerned about identifying and mitigating the risks of a natural disaster like the tsunami in Japan or the earthquakes in Christchurch. Their data centres were located in Mount Maunganui and backup services in Tauranga. They wanted to understand the impact these types of events could have on their onsite server and storage infrastructure.
Measured Baseline Informs Strategy
Undertaking the initial analysis of Zespri’s current position, we established a baseline ICT cost. This baseline was used as a benchmark to inform financial decision-making and monitor ongoing expenditure.
With assistance from the team at Total Utilities, Zespri evaluated its ICT data centres and infrastructure services and platforms. The objective was to determine whether they could manage the range of potential outcomes that they faced. These systems would have to be flexible enough to adapt to both the best case and the worst-case scenarios.
Zespri sought Total Utilities’ independent advice to identify and assess out how they could best respond to these risks and opportunities. They ultimately saw the need to inform vital decisions around how they consumed computer services with a scalable and cost-effective model that was aligned with their overall financial and business strategy.
Undertaking the initial analysis of Zespri’s current position, we established a baseline ICT cost. This baseline was used as a benchmark to inform financial decision-making and monitor ongoing expenditure. Using this measure, we demonstrated to the CIO and CFO and subsequently their executive and board, significant savings could be made by moving to a monthly subscription model based on public cloud services.
In the future increases above the baseline, increased spending in ICT, would be indicative of Zespri’s growth. The baseline is a very useful comparative tool, both for supporting financial decisions and controlling monthly spend.
After conducting a thorough analysis of the needs and opportunities available to Zespri, we provided the quantitative data that underpinned the business case presented to their board. Total Utilities subsequently supported Zespri through our independent Request for Proposal process to choose a candidate for the migration to, supply and support of a comprehensive cloud-based infrastructure running over the Microsoft Azure Platform.
Moving ICT operations to Microsoft’s Azure cloud computing platform has many advantages including access to data from anywhere and at any time, an IT environment that is quick and easy to replicate as new offices open and new services become available, and it can effectively respond to the increased competitiveness that occurs when other global players enter the market.
In addition, moving to Azure mitigated the risk of natural disasters crippling the closely located physical data centres.
Ongoing Insights and Cloud Analytics
Our commitment to providing Zespri with a dynamic and meaningful experience meant that our relationship continued past the selection phase. With our expertise in financial analytics we continue to provide them with forever evolving insights. Steve Wichman, Zespri’s Procurement and Commercial Manager, outlines how Zespri is moving into an ICT maturity phase. With this the board is always looking for ways to optimise their systems. The regular technical and financial input from Total Utilities is very useful in this regard, Steve describes us as a sounding board and an independent voice.
Zespri utilise the Total Utilities cloud management service based on our analytics, reporting capability and the Cloudyn tool. Providing these reports and monthly insights we can help ensure that expenditure is aligned, appropriate, and adaptable to Zespri’s financial strategy. We also help them manage and mitigate the risks associated with an OPEX approach, bill shock, by providing them with real-time alerts of consumption. Steve states that these reports provide insights on how Zespri can best optimise their systems, analyse exceptions, and determine how they can improve their current and future operating state while reducing overall expenditure.
Customer-Centric and Flexible Reporting
The board is always looking for ways to optimise their systems. The regular technical and financial input from Total Utilities is very useful in this regard.
The dynamic nature of our service to Zespri means that, as well as providing clear and understandable reports, our analytics extend to creating what-if scenarios. For example, we can analyse what might happen if Zespri consolidated or expanded some of its ICT services. This approach means we can project future cost savings or increases accurately.
Total Utilities insights, financial analysis and recommendations have become more meaningful as more data is gathered and more avenues explored. We can now calculate ICT costs on a “per service” basis. This allows Zespri to identify the true cost of financial, operations, marketing or any other system that requires ICT resources. Our benchmarking and cash projection approach extends to three-yearly reviews of the business case. These reviews are vital to ensure that the case remains relevant to Zespri’s situation and consistent with the parameters set by the board. Regular reviews, along with ongoing monthly, quarterly and annual reporting, are at the heart of Zespri’s ongoing drive to extract the maximum, identified and projected value available from the Microsoft Azure platform of services.
Understanding Key Business Drivers to Leverage Competitiveness
Other ICT consulting companies might focus on the technology or hardware, we take a financial analytics approach that sees ICT as a consumable and adjustable utility. This means consumption and costs are transparent, flexible and optimised. We believe ICT should be financially appropriate for a company, aligned with their goals, and be able to adapt to real-world factors. We do all this by establishing a baseline of costs, creating a detailed business value analysis in support of a business case and then deliver regular monitoring. This approach informs understanding of the company’s consumption, costs and benefit realisation from their Azure based ICT systems. This is the multi-faceted and valuable service that we continue to provide to Zespri.
Finally, would Steve at Zespri recommend us to other companies? A resounding yes. Our strong and dependable relationship, the way we deliver on a job both in quality and in timeliness, and our independent and trusted advice, is hard to find elsewhere.
