The intangibles of picking a public cloud: the board of directors' viewpoint

While cloud costs are crucial to a healthy EBITDA, these costs will be insignificant if topline growth is stalled or a future funding event is impacted

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Beyond the cost equation is a composite set of variables to consider when choosing what public cloud platform to launch/relocate an organization’s next venture. In “The intangibles of picking a public cloud,” I covered some intangibles for a CIO or CTO to consider, such as a cloud vendor’s comparative capabilities and operational requirements, as well as artificial intelligence prowess. But additional factors exist to force strategic discussions at the board of directors’ (BOD) sphere of influence. While cloud costs are crucial to a healthy EBITDA, these costs will be insignificant if topline growth is stalled or a future funding event is impacted.

Time to market

Whether the project involves the company’s next internal efficiency bump or represents a revolutionary new product in the market, delivering before the competition in the near-term must be balanced with the long-term viability for future innovation. Having some basic notions of how the service will operate within the cloud environment as well an aspirational roadmap are must-have items before making a big decision. Everything from managed/unmanaged services all the way to in-house skills can radically change the timelines as your development and operations teams uncover strengths and weakness in each cloud vendor.

For oversight purposes, technical leadership should exhibit comparison matrices outlining differences in key cloud services to be used. Everything from SLAs per service to service-to-service integration should be considered in the context of meeting targets both six months and 24-plus months away. While it may be tempting to discount the analysis due to the rapid evolution of cloud offerings, the process will force the team to work through tough questions, resulting in an obvious winner. In short, it’s a substantial executive mistake to assume using any one of the top three or four vendors will all result in similar outcomes.

Customer adoption and data gravity

Depending on what customer domain the service will attract, many organizations are finding that end users do have preferences about how and where the business operations are housed. At first, technical leaders may be tempted to argue a reliable service is all the user should be concerned about; however, more users are becoming savvy on this topic as certain intangibles beyond cost and reliability affect their bottom lines as well. For instance, many retailers are in direct competition with one of the gorillas providing cloud services, and while a cutting-edge cloud app might attract a decent audience, no company wants to be feeding their rivals. This is especially relevant in the enterprise space, where six- and seven-figure deals require executive signoff on the customer side of the equation, and where corporate strategy is often considered during the purchase process.

Data gravity also plays a key role in adoption of a new service, and essentially, this means there is a natural attraction (both technically and psychologically) to locate closer to the where the bulk of an application’s data resides. On the technical side, moving large amounts of data takes time and transferring data from one cloud vendor to another will become an appreciable expense. In addition, various technical hurdles can arise as data is extracted from one format to another, since not all public cloud vendors cater to open source APIs. To counter psychological misunderstandings, data types and their respective boundary crossings should be mapped out to dissolve any fears, since proximity may be effectively irrelevant if exchanges involve small amounts of metadata.

M&A

Most nonpublic companies operate with the mantra of building a prosperous company without focusing on an IPO or future acquisition in mind, and every up-and-coming CEO on CNBC has been trained to say exactly that. However, the reality is the board of directors and chief officers have to consider the real possibilities of how a public cloud partnership might affect future investment outcomes. For example, a few private equity firms have been systematically gobbling up companies with similar cloud-based backends with the possible intent of merging or combining synergies to create more effective entities.

In addition, some sizeable corporations are creating their own public clouds, either in a niche area or in a futile attempt to compete with the top three or four public cloud vendors. Regardless of their relative success in the public cloud space, these corporations are often hungry acquirers and may harbor certain biases about the competition or in their technical analysis of a potential asset. To be blunt, trying to predict an acquisition event has similar odds as betting at the track (of your choice); however, this factor cannot go unaccounted in the decision-making phase.

There can be only one?!

In many cases, the desire to stick with one public cloud vendor for everything seems like an obvious answer to fulfilling imminent cloud aspirations, and for smaller organizations, this option may be a necessity due to resource constraints. Larger and/or more ambitious organizations must consider a multicloud approach based on what platform best matches the needs. Snap is a great example of a company doubling down on GCP and AWS with $2 billion of GCP and $1 billion of AWS over five years. Snap, like many others, has taken the best-of-breed route by mapping needs to the vendor with the best fit.

Alternatively, making a truly cross-cloud application is likely a much more expensive venture than it sounds, and in fact, a truly abstracted application will miss the advantages of serverless and semi-serverless specialties associated with a cloud vendor. Simply put, making a cross-cloud platform will take way more resources to build and maintain than leveraging the exclusive features each cloud vendor affords. In the real world of limited budgets and extreme time-to-market pressure, implementation and expansion in one public cloud will likely be necessary before tackling a second vendor. This is precisely why the initial foray into the world of public cloud must be carefully considered beyond just the cloud costs.

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