The CFOs Guide to Hybrid Cloud

Public clouds are becoming increasingly part of the conversation in today’s platform. For enterprises today, the sheer number of solutions is nearly overwhelming. New cloud platforms are hot news today and just as quickly yesterday’s news. The fundamental question is whether organizations are ready to label hybrid cloud, an application that spans a breath of on-premise and cloud based solutions, as the next enterprise platform.

With all mixed messaging surrounding hybrid cloud, it’s no wonder organizations find themselves nearly paralyzed with indecision as they struggle to make sense of this new environment. The key to unlocking this indecisive state is through a comprehensive short- and long-term strategic plan. However, much like trying to solve a complex murder mystery, one must create some level of order in all the clues before having any hope of solving the crime. Building an enterprise platform strategy with hybrid cloud components is no different.

What is hybrid cloud? From National Institutes for Standards in Technology (NIST):

Hybrid cloud infrastructure is a composition of two or more distinct cloud infrastructures (private, community, or public) that remain unique entities, but are bound together by standardized or proprietary technology that enables data and application portability.

So how does any organizational leader attempt to create order amongst all the chaos in cloud services?

There are broad application categories that hybrid solutions can be broken down into that help make sense of the landscape. The relative importance of these cloud solutions will vary greatly industry by industry and company by company. The objective is to find the right blend of solutions that creates the foundation of an overarching enterprise platform strategy plan.

In this guide you will learn how to:

• Understand the breakdown hybrid cloud into broad categories.
• Utilize this category approach as the baseline for developing an enterprise cloud strategy.

Bringing Order to Hybrid Cloud – Categorizing Cloud Applications

The objective here is to extend hybrid cloud thinking beyond a simple cost/benefit analysis and more into a business functional approach.  By taking this approach organizations can more easily narrow down where hybrid solutions have the best chance at positive returns.   PS Greetings, a greeting card manufacturer, tip toed their way into a hybrid cloud platform using infrastructure solutions first.  They started easy with a cloud backup solution after battling with an onsite solution for years.  “Honestly for years we monitored the press and our consulting staff’s call to the cloud.   The reality is moving to the cloud isn’t some simple flip of a switch.  There are business process, integration, and people issues to consider right off the bat.  And it’s definitely not less expensive.  Is there merit to cloud based solutions? Yes, but only in context to a comprehensive strategy” says Mark McCracken, president of PS Greetings.   Identifying an enterprise strategy first before considering cloud based solutions is sound advice, but how do organizational leaders attack this question?  It begins by creating some level of order in the cloud landscape.

While there are virtually unlimited ways one could attempt to categorize cloud solutions, the approach here is to look at it through the lenses of collaboration, human capital management, financial/accounting, customer relationship management, infrastructure, software development, data management, marketing, back office, supply chain and analytics and reporting. The examples in each of these functional areas are not intended to provide an exhaustive list of solutions or a specific recommendation, only give a flair for some of the more well-known solutions.

Collaboration

Today collaboration goes far beyond telephone calls, emails, and instant messaging between internal and external forces.   Collaborative offerings now include file storage, social network, project management, task management, and chat/messaging.  One of the most well-known examples are Google Workplace and Microsoft Teams.  They offers access to gmail, calendars, documents, and a cloud storage service called Drive.  Dropbox for business is an extension of the company’s Dropbox consumer service, with features designed to help companies with five or more employees working together.  The solutions in this category are designed to use cloud solutions to bring people together.

Is there merit to cloud based solutions? Yes, but only in context to a comprehensive strategy.

Other notable examples: Yammer, Slack

Human Capital Management

HCM is sometimes deployed as a component of an Enterprise Resource Planning system (ERP). However, it is increasingly becoming attractive to deploy as a separate solution suite for both employee record and talent management processes.  Employee record solutions enable managers to make decisions based on data, and talent management solutions are used for recruitment, performance management, learning & development, compensation management, and employee retention management.  The reality is the rapidly changing dynamics of the human resource landscape from a legal perspective alone makes it difficult for ERP systems that generally focus on other areas of business productivity to keep pace.  Ceridian’s flagship platform called Dayforce and Workday’s cloud platform provide comprehensive human capital management solutions for organizations of all sizes.

Other notable examples: SAP Successfactors, Oracle HCM Cloud

Financial/Accounting

Financial and accounting functionality in the cloud probably is one of the more challenging for organizations to embrace.  First, the historical norm of core financial information being kept strictly on-site must be broken. Over the last few decades, finance and accounting has fallen within the realm of ERP.  Today there is a deconstruction of suite-centric, on-premise ERP solutions in favor of more loosely coupled applications.  Second, it is difficult to draw clear lines of where this functionality begins and ends within an organization.  Financial and accounting touches everything within an organization.  The overall scope of what can neatly fit in a financial/accounting category can be difficult to define and there are literally hundreds of examples.   Intacct was one of the first vendors to develop multi-tenant SaaS business applications that provides a core financial management, expense management, inventory management, contract subscription billing and revenue management.  Netsuite is the world’s #1 cloud finance/ERP solution used by more than 40,000 organizations worldwide.  Netsuite financial management is a comprehensive financial management suite with functionality that extends beyond financial/Accounting.

Other notable examples: FinancialForce, SAPS/4 Hana, D365

Customer Relationship Management (CRM)/Sales

At the most basic level CRM software consolidates customer information and documents into a single database.  Today the reach of CRM into the sales process is far more extensive.  Workflow processes guide teams though the sales life cycle.  Artificial intelligence technologies, such as Salesforce Einstein, have been built to automate repetitive tasks, and use predictive analytics to understand future customer behaviors.  Salesforce started as a software as a service (SaaS) company in this marketspace and has since grown into the fifth-largest software company in the world.  In many ways, CRM offers a very compelling solution to put in the cloud for most organizations.   It eliminates the time and expense of having this functionality hosted on premise.  In addition, cloud solutions are well positioned to handle the growing range media in the marketplace like smartphones, iPad, etc.

Other notable examples: SAP CRM, Oracle CRM, Microsoft Dynamics CRM

Infrastructure

The information technology groups within organizations have limited IT staff, data center space, hardware, and budgets.  Cloud providers are offering are wide array of products that provide solutions to these problems.

• Cloud Management represents software designed to allow users to centrally manage both on-premises and public cloud infrastructure and applications.   A single portal can be used to spin up virtual machines, storage, applications, and databases.  Red Hat CloudForms offers unified management for hybrid environments.  Hewlett-Packard Enterprise, Cisco, Dell and IBM have similar solutions.
• IT service management (ITSM) is a general term that encompasses the IT services within an organization.  This includes but is not listed to incident management, asset management, release management, event management, and knowledge management.   ServiceNow is a software platform that supports IT service management and automates common business processes.  Amazon Connect allows organizations to create cloud-based contact centers that provide personalized experiences for callers.  Supporting this is a service called Lex that allows creation of intelligent conversational chatbots.
• Infrastructure-as-a-Service (IaaS) is the foundation of every cloud deployment and incorporates the bare minimum hardware and software needed to deploy within a cloud including network, storage, services, and virtualization.  IaaS is roughly equivalent is leasing a car.  You can choose the car you want and drive it wherever, but you don’t own the car.   In IaaS the organization owns everything else like operating systems and applications, but not the hardware running in the IaaS environment.    Microsoft Azure and Amazon Web Services are leading players in this space.
• Content Delivery Networks multiple servers in many geographic locations that improve deliveries of static and streaming content.  A common use of this technology is for website content where split-second response time can be the difference between capturing or loosing customer’s attention.   Cloudflare and Limelight have solutions dedicated to accelerating internet applications.
• Platform-as-a-Service (PaaS) is a cloud-based platform on which software can be developed and deployed, by providing all the hardware and software that IaaS manages, along with the operating system, middleware, and runtime environment.  PaaS is roughly equivalent to taking a taxi.    You don’t drive the taxi yourself but tell the driver where you want to go.  Again, Microsoft Azure and Amazon Web Services are leading players in this space.
• Managed DNS Services outsource critical networking functionality to a third party.   Domain Name service (DNS) is the part of the internet that lets users access websites using easy to remember words and phrases called hostnames.   A managed solution offers simplicity, performance, availability, and host of advanced features that can be a challenge for an organization to maintain in house.  CSC is global DNS solution provider for customers.
• Cloud storage refers to online space used to store data.  Server hosting is the physical move of server equipment to high security co-location facilities build to environmental redundancies. Amazon S3 and Azure Storage is built to store and retrieve any amount of data from a wide variety of data sources. This kind of solution is ideal for when a massive amount of highly scalable storage space is required.

Cloud Software Development

Cloud software development tools move customized software development from local on-premises machines to cloud based platforms.  Salesforce’s Force.com is a product designed to simplify the development and deployment of cloud-based applications and websites.  Developers can create apps and websites through an integrated development environment.  Github is a web-based Git repository hosting service that offers distributed revision control and source code management functionality.  Another area that has gotten a lot of interest in past few years is machine learning.   Amazon machine learning provides visualization tools and wizards that guide the user through the process of creating models for many applications uses like predictive analytics or chatbots

Other notable examples: Microsoft Azure Developer Tools, Azure Machine learning

Data Management

Data management provides the solution to represent data consistently across the organization through synchronization, data cleansing, and data accuracy.  Informatica Cloud MDM is a Software-as-a-Solution (SaaS) application built on Force.com used to cleanse, standardize and update customer information.

Other notable examples: Boomi

Cloud Marketing

Cloud marketing tools designed to connect customer experiences through various digital formats.   For example, Salesforce’s Marketing Cloud has a tool called journey builder that attempts to provide connections between email, mobile, advertising, and the web into one seamless customer experience.

Other notable examples: Adobe Marketing Cloud

Cloud Back Office Solutions

Cloud Back office solutions have come a long way.  Corporate adoption of Microsoft Office365 grew slowly after the initial release in 2011, but it has since become a best practice to move everyday use applications like excel and outlook to a cloud format.  While the subscription model creates a monthly operating expense to the business it is easily justified in comparison to managing these applications with local IT staff.

Other notable examples: Google Apps

Cloud Supply Chain Solutions

Cloud Supply Chain solutions offer a wide variety of functionality including standardized order fulfillment, centralized order status monitoring, distribution and freight routing, and reporting. These solutions attempt to handle the full “quote to cash” order process.  Oracle SCM cloud is designed to provide visibility and insights to all vendors in the organizations supply chain.

Other notable examples: Logility

Analytics and Reporting

Analytics and reporting are applications hosted on cloud environment designed to access to business intelligence related functions like dashboards, KPIs, and other analytics.   Microsoft’s PowerBI is probably one of the better-known applications in this space.  It provides a vast set of tools that end users can take advantage of to integrate and cleanse data and provides an easy use dashboarding tool to make sense of that data in an actionable way (ideally!).

Hybrid cloud categories, the building blocks for an enterprise platform strategic plan.

The end-to-end development of a comprehensive enterprise platform strategy with hybrid cloud components is complicated and beyond the scope of can be outlined here.   However, the categorization of hybrid cloud provides a foundation for a three-step process that can become building blocks of a strategic plan.

STEP 1 – Review each hybrid cloud category individually.

Rather than try to access cloud solutions on a case by case basis it is easier to assess the categorizes of cloud solutions first.  The business then needs to look at categories from different lenses to see if further diligence is warranted.

• Is this category of solutions outside the core competency?
• Are the solutions in the category necessary to the business but difficult for the business to excel in?
• Do the solutions in this category give me immediate access to opportunities that would be difficult to get otherwise? For example, a mid-market manufacturing looking to entering the business to consumer market space via an ecommerce platform would find tremendous advantage to working with a cloud vendor with an ecommerce platform already in place.
• Are there aspects of the industry or the organization that make cloud solutions attractive (or difficult to use)?
• Do the solutions in this category address areas where the business is expected to experience exponential growth? The scalability of cloud environments can be attractive in this environment.

STEP 2 – Review what sub categories and applications might make sense to the organization.

Take a closer look at the subcategories of solutions. For example, for many organizations putting human capital management functions in the cloud makes sense.   For certain organizations implementing a full human resource information system (HRIS) may not be fully required because an enterprise planning system already meets business objectives. However, moving a specific function of HR like payroll may make sense.

STEP 3 – Extensive fit assessment, cost justification, and business process integration planning.

This step is the most time consuming and important.  It starts with extensive requirements gathering and comparing requirements against potential solutions. On the assumption a cloud solution fits the organization’s needs, other considerations include the capital expenditures to implement the solution, along with ongoing operational expenses.  Finally, the organization must build a plan to integrate the solution into existing business processes including, training, ongoing support, change management.

Final Steps. Bringing all together.

Bringing a combination of on-premises and cloud solutions promises to bring scalability to an organization.  This new flexibility brings challenges of complexity that can ultimately affect productivity.  Hybrid cloud solutions offer great promise for the enterprise platform, but it does create a burden on organizational leadership to define it within the context of a comprehensive 3-5-year IT plan.   Without a plan the results of hybrid cloud integration will often be mixed and show inconsistent levels of success that difficult to measure.   The business will need to think carefully about a strategic plan that sets a specific direction on what should be on-premises and what should be in the cloud.   Any deviations from that plan would need to be well defined and justified.  The business plan would need to create a unified view of the all IT resources that includes the flow of data across on-premise and off-premise locations.

Enterprise platform strategy is a complicated process that is many levels deep and extensive input from a variety of individuals within an organization.

Additional Cloud Resources

IDG Findings: Modernization & Cloud Technology Keys to Post-Pandemic Business Success

How Controllers Can Get Familiar with the Cloud

Accounting Technology Concepts Extending Far beyond the Cloud