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Thought Leaders In Cloud Computing: Scott Martin, CIO Of Nonni’s Food Company (Part 4)

Posted on Saturday, Oct 30th 2010

By Sramana Mitra and guest author Shaloo Shalini

Sramana: Let’s say a vendor came along and said that they would provide you exactly what your consumer packaged goods (CPG) specific analytics vendors are offering, that the same functionality, all that vertical domain knowledge, but with respect to CPG on top of SAP data or Oracle data, whatever you are using. If they offer you a private cloud offering customized for your needs but based on SAP and Oracle, what would be your response to that?

Scott: I probably wouldn’t be interested just because the vendor we are buying the cloud offering from, they should have some good reasons for having that industry knowledge. What I would see is whether they have many other CPG customers that they are working with, I would get all those references and look at  whether they can replicate the business intelligence [that CPG companies have].

Sramana: I think that is not a correct statement. Entrepreneurs in every industry bring in different nuances. I think for you to make a blanket statement that no entrepreneur out there has the domain knowledge that this established company [does] – that is not a correct statement.

Scott: I hear what you are saying. Everything can be replicated.

Sramana: A company can go out and start another company and bring you that domain knowledge.

Scott: You are absolutely right. One can’t make a blanket statement like that to cover all different situations.

Sramana: Scott, what I am probing here is – is there enough incentive for an entrepreneur to go do that – go and put together a solution with that kind of vertical domain knowledge that a customer such as you would require and put it in the private cloud? Is there enough of a business model incentive to do that? Would it lower your costs if, say, you went from the public cloud solution to a private cloud solution for, let us say, a third or a fifth of the costs involved?

Scott: Yes, honestly, I think you are right, there is probably an incentive to do one of these things. However, it is a pretty tricky question. Think of me as a lot of the other CIOs. The CIOs whom I deal with also believe that making the switch can save a lot of money. There is nothing out there that is revolutionary that you have to stick with one vendor, and I try to show respect to all vendors. But at the end of the day, it comes down to how much a solution costs compared with another. Are there alternatives? Are there cost-saving alternatives, especially to bringing it in-house? There are such a lot of different industries out there that I feel CPG is pretty well known. There are a couple hundred companies that are in the CPG industry that are the main players, and everybody understands that business. I work with a lot of other CIOs in the oil and gas industry. It is just because of the amount of specific data that we have to pull that a lot of cloud solutions don’t really make sense to begin with. So, if there is something in the cloud, [my peers] would probably want to bring it in-house where they could tweak it and make it more specific to their business. I do think there is an opportunity to come in and offer custom software to businesses on a virtual cloud.

Sramana: This is a slightly new perspective. You are a mid-sized company, and you are implementing private clouds for cost-saving reasons. So far, I have talked to a number of large companies that are doing private clouds. That trend I have seen quite a bit. You are probably the first person I am interviewing who has given me a perspective into a private cloud implementation in a mid-sized company. It is opening up the possibilities of all vendors that are doing public cloud offerings for the mid market. It seems to me, based on the two cases we have discussed so far – the document management case and mid analyst case – that in each of these cases, there are opportunities. Opportunities to make software with that kind of vertical knowledge and offering it to even mid-market players to put in their private clouds and further drive down the cost of the solution. What do you think?

Scott: Yes, I do think [that opportunity is there].

Sramana: What is your situation in terms of integration when you make these decisions to move workloads to the cloud, the private cloud? How greatly are these decisions impacted by integration needs? Are integration costs a big risk for you? Is integration going to surpass your cost savings by your adopting cloud computing?

Scott: First of all, with every piece of software that is run by a third party, there is always some data that is flowing back and forth. We refer to those as the hooks going back and forth. At the beginning of the project, we try to figure out what kind of hooks are required, in which direction those hooks are flowing, and how hard it is to pull and manage those hooks of information. We try to consider all those. There is usually already some kind of process in place to deal with such situations. We have to figure out what the current cost of the current solution is and offset that through the different options that are available. We try to factor in how much time it is going to take to program all these different hooks, how much time it is going to take to maintain them in the future, and so forth. There are good calculations out there that present value, that can help to track down exactly which options make sense from a bottom-line perspective. At the end of the day, it is a question of whether there is a good business case for why we are choosing one over the other, and many times it comes down to the cost.

Sramana: When you are making these choices of integration vendors where there are integration needs, are these being supplied by your cloud vendors? Are these your own third-party integration relationships? How are you managing the integration resources?

Scott: There are three different ways we do it. First, if we are just talking to some CSB data that we have throw to an FTP site or something like that, then it is pretty simple to pass it back and forth. Whenever we are talking about sending data via EVI, then we are talking third-party vendors for that type of information integration. EVI requires getting the handshakes and all that sending back and forth and all kinds of fun stuff. We are definitely working with our third-party companies to make that work, going back and forth into our system.

This segment is part 4 in the series : Thought Leaders In Cloud Computing: Scott Martin, CIO Of Nonni’s Food Company
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