Cloud Computing Impact on Business

Cloud computing impact on business: deciding to move your business to the cloud is not the end of the journey, but rather the beginning. While the focus tends to be on the period of migration, the Cloud Computing impact has ripple effects on internal business operations and processes. It’s important not to overlook these ongoing changes as you plan for the “end goal” of moving to the cloud.

As with any change to your organization, your business dynamics and processes will be affected in a number of ways you may not have seen coming. And as with any change, there are likely to be unexpected consequences that will affect how much internal effort an organization will need to devote to the transition. I’ll highlight some of those here, and go into more detail about this in our Cloud Academy course on the Internal Business Effects of the Cloud.

Cloud computing impact on human resources

With any internal business change, it’s necessary to consider not only the cloud computing impact on business but also on your most important resource: people. Although the move to the cloud is a technical one, it has a major human resources component to it. You need to consider whether your teams will have the skills necessary to run the new environment, and how you will manage those that aren’t. Transitions are always delicate, and this one is no exception, so making sure you can handle the changes with care will be an important component in your transition to the cloud.

Cloud computing financial implications

Then there are the financial implications of cloud computing. While there is definitely potential for cost savings, the cloud computing impact on the budget will be consistent, it will come with some unknowns, and can be more complex than just considering implementation and the ROI. Consider, for instance, what we just discussed, related to possible changes or training for personnel. Understanding the landscape of cloud costs, and how this will differ from managing your data centers on premises, the Cloud Computing impact will change how your organization sees the success of the migration in the mid-to-long-term.

You can’t make a change without taking on some level of risk, and being prepared to handle and mitigate the legal, strategic, and security risks inherent in migration to the cloud will be key to your success.  
To put some additional context around what I have discussed so far, let’s introduce a scenario where a fictional business ‘Telco-Corp-UK’ is looking to utilize the Cloud to host some of their customers’ services to see how this affects their internal operations.

A Cloud computing impact scenario

A large TelCo company, ‘Telco-Corp-UK,’ has made the strategic decision to migrate its customer managed services from on-premise to Amazon Web Services within 6 months.  This infrastructure is currently comprised of a number of networks, databases, applications and security services.  The team has skill sets primarily around Virtualisation, Microsoft applications, and minimal Linux and programming language scope. The team is now AWS certified or experienced with Cloud Technology, and some employees are reluctant to change their career direction.

Also, Telco-Corp-UK has recently landed a contract to manage a health care providers infrastructure which has to meet HIPPA compliance.  This level of governance has not been required with any other customer and is new territory for the supporting teams.

So let’s break this scenario down as to how this move would affect Telco-Corp-UK within this scenario.

Let’s start with some of the business dynamics.  The Sales team would be able to adopt a new approach, become increasingly diverse and target customers that were previously out of reach and scope due to the restricted amount of available resources on-premise to support the new customers.  Now that Telco-Corp-UK is hosting the customers within the Cloud, there is no longer this restriction, and so larger customers can be targeted all over the globe at an increased frequency.

Cloud Computing impact
Responsibilities internally will also change. For example, the Data Centre Manager will no longer have full visibility on the entire estate of infrastructure within Telco-Corp-UK.  This will now be a shared responsibility between the DC Manager and a Cloud Operations Manager (which is a role that will need to be defined, provisioned and recruited for).  

Telco-Corp-UK has essentially handed over a level of responsibility to the Cloud vendor who will now be responsible for the security, maintenance, power and cooling of the host hardware in the Cloud within the vendor’s Data Center.

Business processes and procedures will need to be modified for almost every department as a change of this scale is likely to affect Service Delivery, Finance, Support, Development & Testing, Storage & Backup, Networks, Sales, Risk, Operations and even Human Resources.  That is a lot of administration to take care of within each department.  However, this rework of process and procedure should refine the method and help optimize their daily operations.

Cloud Computing impact: where to start
Within this scenario, the deployment and operations team methods will be revolutionized compared to their current strategy on-premise.  This is the team on the ground deploying the new resources and infrastructure within the Cloud. The time frame alone to deploy new services, applications, and customers will dramatically reduce thank to on-demand resourcing playing a huge factor in this. If they then couple this with Cloud automation, auto-scaling, or even serverless Computing then Telco-Corp-UK could achieve some great optimization within their deployment process.

Next, if we look at some of the employee implications within this scenario we can safely assume that there will be many new opportunities for new cloud-based roles for those wishing to advance or change their career. An entirely new team will need to be created to manage this new architecture and environment, however, we also need to bear in mind there will still be local internal services that will continue to be managed on-premise.

We know that the skill set of the team has some huge gaps if it intends to achieve the end goal.  Training programs to upskill your existing workforce will be required, ideally as AWS Solution Architects, SysOps Administrators, and DevOps Administrators.  This will allow the team to design, architect, deploy and manage network segmentation, database migrations, application deployment, and security services within the Cloud.

There will also be a requirement to develop the level of programming capabilities within the team.

Languages such as Python, Chef, and Puppet would be great to have within Telco-Corp-UK to make use of powerful API infrastructure across the AWS services all aiding towards improvements of application deployment services.

Cloud Computing impact on training

Due to time constraints, there will be a need to bring in additional external expertise to kick off the project.
However, once operational and going forward, additional personnel could be recruited from almost anywhere across the globe to manage the Cloud environment as it can all be accessed remotely.

The requirement to be HIPAA compliant for the new Health Care provider will definitely require a Cloud security specialist and will need to source outside of the organization.  They will require a deep understanding of Cloud Security at all levels and a solid awareness of security governance and compliance programs.  

Adopting the Cloud allows Telco-Corp-UK to refine their existing procedures, processes, deployment methods and administration maintenance.  This refinement and optimization result in a cost saving when compared to how the same services were delivered on-premise.

Being a large Telco company they are bound by many different Service Level Agreements (SLAs) by different customers. Moving their infrastructure to the Cloud Telco-Corp-UK will need to ensure the AWS SLAs for all the required Services in each Region they need to align with their existing customer SLAs.  Any gaps found in the SLA of AWS and the customer will need to be defined and a solution as to how to close that gap will need to be implemented.  This could perhaps mean negotiation with AWS or by implementing additional resiliency into the service.  This level of contractual obligation can be a difficult step to overcome for some organizations.

All of this training and recruitment can be expensive and must be catered for within your cloud budgets.

For those employees who do not wish to change career and develop their skills within the Cloud environment then Telco-Corp-UK could offer additional training within their current area of expertise to help improve and maintain any existing on-premise architecture that will need to remain.

This will help to maintain morale levels and demonstrate that you still have all employees interests in mind.
Moving onto how some of the financial impacts change, we can already see that there will be some HR costs associated to training, new positions, and any potential redundancies.

One major change for Telco-Corp-UK would be the amount of Capex required going forward, they will see a sudden drop as they will no longer be purchasing as much hardware for on-premise.  Instead, they will see a steady rise in the Opex costs for maintaining the Cloud infrastructure.

Billing of services to customers will be greatly enhanced and easier to manage in a more streamlined fashion.  Telco-Corp-UK will be able to easily identify exactly which customers have consumed which resource, this allows them to potentially increase their margins, or at the same time pass on additional cost savings to their existing customers which will help with customer retention.  The Finance team could have direct access to the AWS Console allowing them to pull out billing reports for each customer independently and help refine where additional savings could be made.

Within our Scenario, Telco-Corp-UK needs to pay particular attention to the HIPPA Compliance which is required by their new customer.  All services relating to this healthcare provider will need to meet strict regulations and must be audited to confirm its readiness.  This may result in different deployment methods or storage services for this one customer.  AWS is HIPPA Compliant already, but there are additional steps that Telco-Corp-UK would need to administer to be fully compliant with regards to their data they are storing.  They can’t be too complacent assuming that AWS is compliant that all their data and services being used are compliant too, that’s not how it works.

Let’s take a quick look at some of the risk Telco-Corp-UK are facing by moving to the Cloud.  They are becoming reliant on a 3rd and by doing so they are losing some control of their business.  Some key questions need to be answered, including how will AWS handle outages? What if there are failures within AWS that take down an entire region? Has Telco-Corp-UK architected their infrastructure across a multi-region design to allow for high availability?

There is a risk that the decision to migrate to the Cloud may not have been the right strategy. After 6 months of operations, Telco-Corp-UK may find that the cost savings and optimization are not aligning to the figures that were initially expected and as a result, they are now losing revenue.   How did this failure occur and what should be their next step?

The Cloud technology itself could also be an issue, perhaps it’s too new for some legacy applications to operate and run effectively on.  The applications might not be cloud-ready and therefore will fail to make use of the key characteristics of the Cloud such as scalability and flexibility.  Major development could be required to decouple the application and resolve any issues.

Within this simple and short scenario, you can see that there are many points to consider, and I have only touched on a few within each area.  For further information and in-depth answers to some of these questions surrounding these topics, take a look and my latest course ‘Internal Business Effects of the Cloud’.  Throughout this course we analyze numerous effects going into depth in different areas and how you can use these to benefit the business, and how you can mitigate unwanted risks.

If you are not in a position to understanding if the Cloud is right for your business or not, then take a look at the course ‘Should Your Business Move to the Cloud’ where we look at additional business challenges, benefits and constraints.  This course has been followed up by a Webinar where we also discussed ‘Can the Cloud be Right for Your Business as a Strategy?
These courses focus on Cloud Computing impact from the business perspective rather than the technical capabilities that many of our other courses provide.

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