Cloud Buyers' Decision Tree : Solution Considerations

 

Differentiating, IT Based

Custom or Specialized HW & OS, Tailored Application

Potential good fit:

  • Shared data center, IT management, BPM, content, governance, middleware, functional test bed, storage
  • Out-task/outsource application management if can use standard application development platform (SOA, mash-ups)
  • Appliance with custom add-ons

Not a good fit:

  • Not SaaS, IaaS, BPO, infrastructure outsourcing, private infrastructure, or platform Cloud

Custom (or Specialized) HW & OS and Application

Potential good fit:

  • Outsourcing: shared data center, IT management, BPM, content, governance, storage
  • Appliance with custom add-ons

Not a good fit:

  • Public Cloud: SaaS, PaaS, or IaaS
  • Private Cloud: private infrastructure or platform Cloud (unless there are a number of business processes in the overall business portfolio which have complementary resource consumption profiles to this process, can be enabled with the same IT resources, and which cannot be enabled significantly more effectively with alternatives)
  • Outsourcing: infrastructure outsourcing, application outsourcing, or BPO
  • Out-tasking: (depends on cost-sensitivity)

Standard HW & OS, and Custom Application

Potential good fit:

  • Shared data center, IT management, BPM, content, governance, functional test bed, storage
  • Could be hardware appliance, IaaS, PaaS, infrastructure outsourcing

Not a good fit:

  • Not SaaS, application outsourcing, or BPO

Differentiating, IT Supported

SaaS Tests

Is business process definition abstracted from application? If yes, then consider SaaS; if no, then is it time to overhaul the business process, and could the definition be abstracted during that overhaul? If yes, then consider SaaS, if no then not SaaS.

Standard Application

Using standard applications? With or without customizations (such as Advanced Business Application Programming (ABAP) scripts)? Same application suite as other business processes?

Examples

  • A SaaS or IaaS solution could be appropriate for a differentiating, IT-supported – or possibly even IT-based – business process if the differentiation is commoditization. For example, there is a well-known PC supplier whose supply chain processes differentiate it from other suppliers. That differentiation is primarily due to the leverage that it has over its suppliers due to the size and frequency of its purchases rather than due to a proprietary supply chain process and/or IT configuration. Even with the ability to replicate that company's SCM processes and IT enablement, potential entrants to its market face formidable barriers to entry. So theoretically a SaaS solution and perhaps even a BPaaS or BPO solution would be an appropriate choice for enabling that company's SCM processes.
  • Online universities in India are proliferating. Should the Indian government force the market to be more efficient by requiring the use of a government-subsidized SaaS or IaaS solution? While consolidation on to a Cloud solution might be more efficient from a government standpoint, it might not be attractive to the participating universities. If a university is differentiating its online courses on the basis of content alone, if the course’s resource consumption profile is not complementary to the rest of the university's IT portfolio, and if the government subsidized solution meets that university's QoS and financial requirements – including relief for switching costs; then consolidation would likely be very attractive. So the government needs to decide if the consolidation benefits outweigh the costs – including the set-up costs and the unallocated fixed costs prior to reaching breakeven – and the risks (including the risk that fewer than the breakeven number of universities will make use of the Cloud solution).

Other Considerations

Other considerations include:

  • Risk (of various types, including trust, information risk, financial risk)
  • Regulation, including privacy laws
  • Labor contracts
  • Enterprise licenses
  • Leasing agreements and depreciation schedules
  • Volume discounts
  • Commonality of the problem and requirements (i.e., are the requirements too unique to allow a seller to make a buck?)
  • Customer intimacy

 

 

 

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