By guest authors Shaloo Shalini and Pablo Chacin
SM: Interesting. So the data warehousing and the analytics on top of that happens in-house at BMC?
MS: Well not really, I don’t mean that. Each of these SaaS tools has their own reporting capabilities, and we definitely use them. But for some of the more complex analytical or SQL queries that you want to make, such as if you want to link customer characteristics to sales patterns to revenue streams to renewal rates to all the piece parts, we find that easier to report it out of our warehouse.
SM: I see.
MS: I think that SaaS is the first step of the three components of cloud adoption I mentioned earlier. The next step is to focus on our data center. That includes virtualizing the server storage and network assets that we have in order to drive up the returns on working capital that we are invested in already. We can talk about the success scenario there. The third step is leveraging some of the public providers such as Amazon and Terremark.
SM: We will talk about the public providers at length once we complete the adoption segment. What is your assessment from an industry direction point of view? Expensive IT infrastructure has been a differentiating factor or a barrier to business growth for companies. Do you think cloud computing is democratizing the IT infrastructure availability?
MS: Yes. It provides a lower cost of entry for smaller companies or startup companies. I don’t think it’s a panacea for Fortune 500 companies to figure that as a way to avoid using working capital.
I think the paradigm is – you look at the assets that you own in-house on your data center floor. Let’s say you want to be driving maximum utilization of your assets, and you are seeing spikes in demand that require additional capacity. But you don’t want to buy incremental capacity to address those spikes because this incremental capacity would sit idle during certain periods governed by lower demand in the cycle. For such requirements, you would be able to burst out to one of these public providers and kind of use that capability more on an on-demand basis.
SM: In your company, what are some of the key factors that you consider when you are thinking about cloud adoption and deployment? Are there specific issues that you look at through a cloud adoption lens?
MS: Looking at the public clouds, the use case that is more appealing for us is scalability testing. Most of BMC’s products are used by 95% of Fortune 100 companies, and we know that many our products will be deployed in tens of thousands of servers in some of these large financial services institutions. We issue updates of our products semiannually. A major release might come up every year. We like to scale test those things across as many as 2000, 3000, or 5000 servers. The public cloud is the perfect case for us so that we can grab resources as test devices, instrument those, run a test, and then release them. Well tests could be conducted over a period of several days to several weeks.
SM: What criteria do you use to determine your adoption strategy?
MS: For one, it is more cost effective to cover the surge in demand that we have using operating expense dollars and purchase that capacity on temporary basis rather than investing in hardware that sits on a floor, consumes electricity, generates heat, and needs to be served by operators.
SM: In terms of your adoption strategy, you have the SaaS applications, and you deploy those based on whatever makes sense from the application and business point of view. In addition, you are trying to look at IaaS as something that helps you supplement your capex with opex.
MS: That’s right. Backing up to where I talked about the three components of our adoption strategy, those are first, virtualizing the applications with SaaS tools; second, virtualizing the in-house data center assets to reduce costs and improve efficiency and utilization; and third, IaaS. These are the kinds of things that every CIO needs to figure out in terms of cloud computing adoption – which combination of these three components is the right one to support the needs of the business?
SM: You mentioned a few vendors in this conversation already. I would like to know whether these vendors who are servicing your cloud computing needs, be it SaaS or IaaS – are they meeting your requirements? Do they listen and respond to your feedback? What is your assessment of the vendor situation in cloud computing?
MS: In general, I would differentiate the two. On the SaaS side, my general answer would be yes. They are reliable and take steps to secure the environment. They are obviously very concerned about security and probably have superior engineering capabilities than a lot of IT shops. There aren’t any security lapses. When we give functionality feedback to these SaaS vendors, they act on it with the same sense of urgency as the licensed software that we would purchase. One thing that is noticeable about the SaaS vendors is that they typically push upgrades to functionality on a much more frequent basis than licensed software. Sometimes it can be as many as two or three times the usual frequency.
SM: So you are saying that the release cycles with SaaS vendors are not as stringent?
MS: Yes, that’s right. I think that a lot of CIOs, me included, really look at the conventional way of licensing software. We bring it in and then inevitably customize it because IT doesn’t have the muscle to allow us to do a push back to business and say, “No, we have to adapt our process to what our technology wants us to do in terms of changes.” We find ourselves paying maintenance fees for functionalities which are impossible to implement because the customizations are like a boat anchor that is holding you back three versions ago. On the other hand, on the SaaS side, although you can configure the tool to basically accept or not accept some of the new functionality, you are actually getting a better payoff on your dollars. With SaaS solutions you are just spending on your subscription fees.
SM: What you are saying is that with the SaaS model you are not necessarily paying for upgrades; you are paying only for usage?
MS: Correct, but the vendor is giving you upgrades along the way.