Organizations optimize infrastructure spend when they focus on business outcomes first, and technology second. 

Infrastructure as a Service (IaaS) is just a delivery mechanism for technology—by itself, it’s no more likely to be optimized than on-premise infrastructure or hybrid solutions. To drive optimization, infrastructure and operations (I&O), teams need to limit IaaS to the business outcomes it’s most suited to support. Those limitations define the size of the IaaS footprint.

To achieve optimization goals, you have to focus on the business outcomes that you are looking to deliver. Here are four business outcomes that IaaS can support:

Business Outcome #1: Fund innovation

Tie IaaS to RTB and GTB spend categories

Through rationalization and consolidation, organizations reduce their run-the-business (RTB) spend to fund innovation. But some organizations build a technology-centric IaaS strategy (for example, pushing 30% of infrastructure spend to the public cloud by end-of-year) that blurs the distinction between RTB and grow-the-business (GTB) spend. Without these categories, IaaS RTB spend cannot be identified and reprioritized to fuel innovation.

 

Maximize infrastructure you are already paying for before expanding to IaaS

A poorly thought out push to IaaS leaves I&O with excess legacy infrastructure. On-premise infrastructure will always have excess capacity to cover peak-utilization needs—it’s an operational imperative. But that capacity will spike after a move to the public cloud and I&O needs to either use or decommission it.

Decommissioning fixed assets carries a financial liability that throttles innovation. I&O teams want to turn off unused hardware, but a server array decommissioned 12 months into a 48-month depreciation schedule immediately places all the remaining depreciation as an operating expense on the balance sheet. The benefit of the asset was realized in a year; the cost has to be recognized in that time too. There are scenarios where this is valid (a failing project with sunk costs), but this is bad news for organizations looking to fund innovation using IaaS. How can I justify IaaS when I’m still paying for decommissioned on-premise capacity? The better approach is to optimize on-premise assets you are already paying for before leveraging IaaS.

With Apptio Cost Transparency, organizations quantify on-premise infrastructure spend and identify consolidation and rationalization steps to maximize the efficiency of their existing infra footprint before expanding to IaaS.

 

Leverage IaaS to for cyclical innovation patterns

IaaS is not a one-size-fits all solution to deliver innovation. Application development work is a natural fit for IaaS: building up and tearing down fixed-cost, depreciating assets that you own is more expensive than using as-you-need-it IaaS. But innovation and experimentation may be so ingrained in an organization’s development culture that the concept of tearing anything down may seem ridiculous. If innovation is permanent, and the infrastructure is available, development work should stay on-premise; an innovation agenda with peaks and troughs (application development project portfolios) is most suited to IaaS. 

 

Identify RTB IaaS spend and clarify fixed cost commitments

Organizations looking to IaaS to fund innovation must also assess their fixed-cost commitments. On-premises infrastructure, with a locked depreciation schedule, needs to be used effectively before considering IaaS. Otherwise, IaaS will just add costs without any reduction in legacy on-premises costs.

With Apptio Cost Transparency, organizations quantify fixed spend (assets) to identify how much variable spend (IaaS) can be used to fund innovation.

>see also: Embracing a Hybrid IT Mindset

Business Outcome #2: Increase employee productivity

Understand a team’s attitude to adopting new solutions

All infrastructure platforms can deliver business value, but the winner in a bake-off between IaaS, on premises, or hybrid infrastructure is the solution with the best chance of adoption. For example, an application development team wants the agility of the cloud to spin up and down IaaS as they need it.  They don’t want corporate IT to provision an on-premises solution. The team’s culture is biased to IaaS, and I&O understands that any other solution faces a harder path to adoption. That’s not to say there aren’t other considerations (the application development team may have a workload better suited to an on-premise solution that is cheaper to run and support than IaaS), but team culture influences adoption and productivity.

Business Outcome #3: Mitigate change management risk

Evaluate an incremental approach to IaaS with a hybrid solution

Hybrid infrastructure, with a blend of on-premises and public-cloud offerings, can be a transitional step to IaaS. A large infrastructure change (for example, a reduction in infrastructure demand due to an Office 365 migration) doesn’t usually happen in just one switch—an incremental approach minimizes change management.  Hybrid infrastructure supports this incrementalism. Using a hybrid solution, an existing legacy email service is offered in parallel with the roll-out of Office 365. Eventually the roll-out is complete and freed-up infrastructure is repurposed. The hybrid environment serves a need and is then decommissioned.

>See also: Five reasons why every CIO needs Apptio

Business Outcome #4: Strengthen vendor relationships

Identify skill-set blind spots in brokering and managing vendor relationships

An I&O team needs to have the right skill set to optimize IaaS. The person with deep technical knowledge to run a datacenter may not have overlapping expertise in brokering and managing a cloud vendor relationship. They aren’t at fault for this blind spot, it just hasn’t been part of their job remit. Organizations need to commit to providing I&O with the skills to manage IaaS vendors. If they don’t, they are unable to optimize their IaaS spend.

With Apptio Vendor Insights, organizations can optimize and align vendor portfolio spend, performance, and contract terms to their IT strategy—and empower I&O teams to strengthen their vendor relationships.

To learn more about leveraging the cloud to capitalize on opportunities, download the executive brief Embracing a Hybrid IT Mindset