Application Management Services out of the Cloud?

Is cloud computing the next step in IT operations services?

You might remember the story of Mr. Meyer, Head of IT of a medium-sized logistics company, who was searching for a solution providing a flexible, reliable and high-quality approach to manage the IT operations of the company’s SAP landscape. He was happy about the Application Management solution giving him on the one hand much more transparency, predictability, cost efficiency and safety with regard to his responsibility for the company’s IT and on the other hand more room for enhancing the position of IT within the company by contributing to the business value. Unfortunately the business world doesn’t allow resting on one’s laurels and the demand for changing and adjusting the concepts, processes and structures has continuously accelerated during the last few years. Now it’s one year later and summer vacation is just around the corner. But there are some new challenges preventing him from looking forward to this normally relaxing time.

Better prepared for the possibility of a new Global Financial Crisis

How can he keep pace with this dynamic transformation in the economic and hence in the IT world, too? This question is getting even more important right now considering the current world economic situation. He can still remember the situation at the end of 2008, when the global financial crisis hit and caused overhasty reactions, including extreme budget cuts. This time he wants to be better prepared in case of a similar situation. But nobody is really able to precisely forecast the impact of the upcoming market situation on IT. Thus it is essential that IT operations are flexible enough to allow rapid changes to the framework with minimal impact on the core business processes.

Panacea in the Cloud?

He remembers the corresponding cloud discussions with colleagues. Do we find the panacea in the cloud? As the name already points out, this topic is quite fuzzy and there are still a lot of different models and interpretations in the market. The blog, “What cloud computing really means” provides a comprehensive overview of the overall approach and the different cloud models. But having a look into the related comments highlights the diversity and sensitivity of that topic.

Critical aspects such as data security and privacy, commercial and functional dependency, loss of skills and own IP or anonymity are even more debatable in the cloud compared to conventional Application Management and/or Hosting, not least in the mid-market. Hence the cloud and its corresponding part SaaS (Software as a service) cannot be the one-and-only solution for all IT services needs. Nevertheless the option to flexibly adapt the number and even the type of services to changing demands is a tremendous advantage.

The coming months will perhaps require alternate periods of rapid increase and decrease of the service volume. And the corresponding costs should of course not remain high once the service volume needs to be decreased due to reduced budget and/or shrinking business volume (pay-per-use). Furthermore, the last crisis has shown that a company must always be prepared to leverage opportunities flexibly and quickly when they arise.

What is the right solution?

Mr. Meyer decides to implement a hybrid model by outsourcing the non-business-critical applications such as HR and CRM to the cloud. Some people will, of course, argue that neither application is business-critical. By using the cloud service for these both applications he not only relieves himself and his team of the responsibility for the support, but for the entire application. He directly benefits from functional enhancements without the need of an upgrade, including related downtime. Additionally, he does not need to direct Hosting and Application Management engagements and is able to use and pay for the corresponding application on demand.

Public or Private Cloud

Of course he needs to consider the issue of data security carefully since the data itself is critical to the business. If he doesn’t have the necessary confidence in the data security within the public cloud he can think about a private cloud approach as alternative option (dedicated for his company or company-internal).

For the core-business processes he relies on the proven Application Management model with all the pros and cons described in the last blog (see above). On second thought this Application Management service is actually also a kind of private cloud computing.

By implementing this hybrid operations services model he has further increased the flexibility and scalability, is even more able to directly leverage functional enhancements and technological progress, and has increased cost efficiency. And he still has sufficient control of the IT applications to support the core business processes of the company in the right manner. Put simply, he is well prepared – at least from this perspective – for all upcoming changes in the business world as obscure and unpredictable as they might be.  Having found this solution he is now able to look forward to his vacation with his family in the new camper in California.

Nobody cares about the everyday use of cloud services such as Google or weather apps anymore. The advantages of this model will also find their way into the world of the business applications more and more. The Generation Z (the internet generation) will use those services much more open mindedly and consider them with fresh eyes.

Or do you have still real doubts and considers cloud computing as just a transient cloud? Tell me!

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