The Case for Cloud Portfolio Management

Cloud computing has entered the early mainstream of adoption worldwide.  However, the rapid rise of Cloud computing has strained IT governance, security and oversight processes.  Cloud’s rapid rise to ascendancy has been astonishing, while management frameworks necessary to guide the Cloud adoption process have lagged behind.  This is normal.  As Cloud adoption has raced ahead of internal oversight and management processes, the subsequent gap has created a need to assert control over Cloud adoption. 

A critical missing discipline for Cloud adoption is a formal framework for Cloud portfolio management.  Cloud portfolio management provides a means by which an organization can control and govern existing services, new services, as well as the Cloud providers and the relationships with them. 

Increasingly, hybrid multi-Cloud deployments are the rule rather than the exception.  Hybrid multi-Cloud deployments require the appropriate processes and controls to manage this Cloud ecosystem.  Cloud portfolio management provides a framework to manage the Cloud service providers, as well as all the Cloud services, that will be available via a Cloud service catalog. 

Success with a hybrid Cloud deployment demands achieving the optimal Cloud provider mix.  Reliance on one of the hyperscale providers is a sub-optimal strategy, as you lose negotiating leverage by committing to a single provider.  In a Cloud portfolio management approach, the objective is to achieve an optimal Cloud provider and service mix. 

The Cloud provider mix is about partnering with the minimum number of Cloud service providers to achieve the optimal negotiated pricing structure.  An optimal Cloud provider mix would offer the following benefits:

• Foster price and service competition between providers
• Enhance negotiating position between the providers
• Achieve pricing leverage for ongoing negotiations

Many organizations begin their Cloud adoption with a preference toward Amazon, Google or Microsoft, the major hyperscale Cloud providers. However, the best position is to partner with at least two providers to ensure competition and strengthen negotiating posture.  An optimal provider mix might include two hyperscale providers and one or more smaller CSPs to help keep the hyperscale providers “honest.”

Along with Cloud provider mix is the Cloud services mix.  The Cloud services mix is the approach by which you maintain duplicate types of Cloud services from two or more CSPs such that you have a set of functionally equivalent services to use as alternatives based on pricing or performance metrics.   The following are the benefits of managing an optimal Cloud services mix:

• Creates competition for the most commonly-used Cloud services in your enterprise, typically IaaS services, across a range of Cloud use cases
• Provides service alternatives for applications in case there is an outage, or in case the contract with the CSP is terminated
• Ensure functionally-equivalent services for pricing optimization, which enables a form of Cloud service arbitrage based on the current pricing in your contract.  Not all services will have exact functional equivalents, but using price-performance data, you can develop a list of the common core Cloud services that are functionally equivalent for common needs.

The optimal Cloud service mix should seek to identify and manage functionally equivalent services for the most commonly used IaaS services across all use cases.  This approach will ensure you have service alternatives in case of outages or contract disputes, and also will help with pricing negotiations in the future.   Let’s explore the requirements of Cloud Portfolio management a bit deeper. 

The first requirement for Cloud portfolio management is to manage your Cloud providers, whether they are internal providers (via your private Cloud), or public providers such as Amazon, Google or Microsoft.   The following are reasons for managing a portfolio of Cloud service providers:

• Improve negotiating leverage by ensuring healthy competition between hyperscale providers, while leveraging smaller CSPs
• Ensure viable CSP alternatives in case of contractual breach
• Provide failover services as needed
• CSP and Service arbitrage is potentially viable
• Avoid vendor lock-in by ensuring choices between CSPs in your provider portfolio; do not commit to one strategic partnership.

Another key requirement is managing the many different Cloud services from your providers.  There will potentially be hundreds of Cloud services in your catalog, and these must be managed and provisioned to consumers seamlessly.  Portfolio management of Cloud services will involve the following requirements: 

• Manage service equivalents across CSPs for critical and heavily-used Cloud services, e.g. development and testing, storage, compute and others
• Provide cost effective service equivalents for redundancy
• Compare compute, storage and network performance, costs and value across CSPs to help evaluate the relative performance of service equivalents in your portfolio. 
• Manage the Aggregated Service Catalog using portfolio management disciplines

Cloud portfolio management is an essential discipline to support your Cloud strategy.  A Cloud portfolio management framework, supported by pricing and performance analytics, will ensure optimal cost management for Cloud services.  You should explore implementing CPM immediately.

About the Author: Eric Marks is Vice President of Cloud Consulting for Cloud Spectator, LLC. Previously, he was President and CEO of AgilePath Corporation, a leading vendor-independent IT consulting firm Mr. Marks founded in 2003 that focused on Technology Innovation (Cloud computing, Big Data, SOA/API, Integration), Lean Governance, Agile Transformation and Enterprise Architecture.  Mr. Marks is an internationally recognized entrepreneur and technology expert based on his pioneering work in Service-Oriented Architecture (SOA)/APIs, Cloud computing, and Lean Governance.   Mr. Marks is an Information Technology veteran with 25 years of experience with firms including PricewaterhouseCoopers, Cambridge Technology Partners, Novell, Electronic Data Systems, StreamServe, Ontos, and Square D/Schneider Electric. 

Edited by Mandi Nowitz