Tag: leadership

Cloud Economics: Empowering Organizations for Success

Cloud economics is crucial for an organization to make the most out of their cloud solutions, and business leaders need to prioritize shifting their company culture to embrace accountability and trackability.

When leaders hear the phrase “cloud economics,” they think about budgeting and controlling costs. Cost management is an element of cloud economics, but it is not the entire equation. In order for cloud economics to be implemented in a beneficial way, organizations must realize that cloud economics is not a budgetary practice, but rather an organizational culture shift.

The very definition of “economics” indicates that the study is more than just a numbers game. Economics is “a science concerned with the process or system by which goods and services are produced, sold, and bought.” The practice of economics involves a whole “process or system” where actors and actions are considered and accounted for. 

With this definition in mind, cloud economics means that companies are required to look at key players and behaviors when evaluating their cloud environment in order to maximize the business value of their cloud. 

Once an organization has fully embraced the study of cloud economics, it will be able to gain insight into which departments are utilizing the cloud, what applications and workloads are utilizing the cloud, and how all of these moving parts contribute to greater business goals. Embodying transparency and trackability enables teams to work together in a harmonious way to control their cloud infrastructure and prove the true business benefits of the cloud. 

If business leaders want to apply cloud economics to their organizations, they must go beyond calculating cloud costs. They will need to promote a culture of cross-functional collaboration and honest accountability. Leadership should prioritize and facilitate the joint efforts of cloud architects, cloud operations, developers, and the sourcing team. 

Cloud economics will encourage communication, collaboration, and change in culture, which will have the added benefit of cloud cost management and cloud business success. 

Where do companies lose control of their cloud costs?

When companies lose control of cloud costs, the business value of the cloud disappears as well. If the cloud is overspending and there is no business value to show for, how are leaders supposed to feel good about their cloud infrastructure? Going over budget with no benefits would not be a sound business case for any enterprise in any industry. 

Out-of-control cloud spending is quite easy, and it usually boils down to poor business decisions that come from leadership. Company leaders should first recognize that they wield the power to manage cloud costs and foster communication between teams. If they are making poor business decisions, like prioritizing speedy delivery over well-written code or not promoting transparency, then they are allowing practices that negatively impact cloud costs. 

When leaders push their teams to be fast rather than thorough, it creates technical debt and tension between teams. The following sub-optimal practices can happen when leadership is not prioritizing cloud cost optimizations:

  • Developers ignore seemingly small administrative tasks that are actually immensely important and consequential, like rightsizing infrastructure or turning off inactive applications. 
  • Architects select suboptimal designs that are easier and faster to run but are more expensive to implement.
  • Developers use inefficient code and crude algorithms in order to ship a feature faster, but then fail to consider performance optimizations to execute less resource consumption.
  • Developers forgo deployment automation that would help to automatically rightsize.
  • Developers build code that isn’t inherently cloud-native, and therefore not cloud-optimized.
  • Finance and procurement teams are only looking at the bottom line and don’t fully understand why the cloud bill is so high, therefore, creating tension between IT/dev and finance/procurement. 

When these actions compound, it leads to an infrastructure mess that is incredibly difficult to clean up. Poorly implemented bad designs that are not easily scalable will require a significant amount of development time; therefore, leaving companies with inefficient cloud infrastructure and preposterously high cloud costs.

Furthermore, these high and unexplained cloud bills cause rifts between teams and are detrimental to collaboration efforts. Lack of accountability and visibility causes developer and finance teams to have misaligned business objectives. 

Poor cloud governance and culture are derived from leadership’s misguided business decisions and muddled planning. If leaders don’t prioritize cloud cost optimization through cloud economics, the business value of the cloud is diminished, and company collaboration will suffer. Developers and architects will continue to execute processes that create high cloud costs, and finance and procurement teams will forever be at odds with the IT team.

What are the benefits of cloud economics?

Below are a few common business pitfalls that leaders can easily address if they embrace the practice of cloud economics:

  1. Cost Savings: The cloud eliminates the need for upfront hardware investments and reduces ongoing maintenance and operational costs. Organizations only pay for the resources they use, allowing for cost optimization and scalability.
  2. Infrastructure Efficiency: Cloud providers can achieve economies of scale by consolidating resources and optimizing data center operations. This results in higher infrastructure efficiency, reducing costs for businesses compared to managing their own on-premises infrastructure.
  3. Agility and Speed: The cloud enables rapid deployment and provisioning of resources, reducing the time and cost associated with traditional IT infrastructure setup. This agility allows businesses to quickly adapt to changing market demands and launch new products or services faster.
  4. Global Reach and Accessibility: Cloud services provide a global infrastructure footprint, allowing businesses to easily expand their operations into new regions without the need for physical infrastructure investments. This global reach enables faster access to customers and markets.
  5. Scalability and Elasticity: Cloud services offer the ability to scale resources up or down based on demand. This scalability eliminates the need for overprovisioning and ensures businesses have the necessary resources to handle peak workloads without incurring additional costs during idle periods.
  6. Improved Resource Utilization: Cloud providers optimize resource utilization through virtualization and efficient resource management techniques. This leads to higher resource utilization rates, reducing wasted capacity and maximizing cost efficiency.
  7. Business Continuity and Disaster Recovery: Cloud services provide built-in redundancy and disaster recovery capabilities, reducing the need for costly backup infrastructure and complex recovery plans. This improves business continuity while minimizing the financial impact of potential disruptions.
  8. Innovation and Competitive Edge: The cloud enables rapid experimentation and innovation, allowing businesses to quickly test and launch new products or services. This agility gives organizations a competitive edge in the market, driving revenue growth and differentiation.
  9. Focus on Core Business: By offloading infrastructure management to cloud providers, businesses can focus more on their core competencies and strategic initiatives. This shift in focus improves productivity and resource allocation, leading to better economic outcomes.
  10. Decentralized Costs and Budgets: Knowing budgets may seem obvious, but more often than not, leaders don’t even know what they are spending on the cloud. This is usually due to siloed department budgets and a lack of disclosure. Cloud economics requires leaders to create visibility into their cloud spend and open channels of communication about allocation, budgeting, and forecasting.
  11. Lack of Planning and Unanticipated Usage: If organizations don’t plan, then they will end up over-utilizing the cloud. Failing to forecast or proactively budget cloud resources will lead to using too many unnecessary and/or unused resources. With cloud economics, leaders are responsible for strategies, systems, and internal communications to connect cloud costs with business goals.
  12. Non-Committal Mindset: This issue is a culmination of other problems. If business leaders are unsure of what they are doing in the cloud, they are less willing to commit to long-term cloud contracts. Unwillingness to commit to contracts is a missed opportunity for business leaders because long-term engagements are more cost-friendly. Once leaders have implemented cloud economics to inspire confidence in their cloud infrastructure, they can assertively evaluate purchasing options in the most cost-effective way.

What are the steps to creating a culture around cloud economics?

Cloud economics is a study that goes beyond calculating and cutting costs. It is a company culture that is a cross-functional effort. Though it seems like a significant undertaking, the steps to get started are quite manageable. Below is a high-level plan that business leaders must take charge of to create a culture around prioritizing cloud economics:

1. Inform: Stage one consists of lots of data collecting and understanding of the current cloud situation. Company leaders will need to know what the trust costs of the cloud are before they can proceed forward. Creating visibility around the current state is also the first step to creating a culture of communication and transparency amongst teams and stakeholders.

2. Optimize: Once the baseline is understood, leadership can analyze the data in order to optimize cloud costs. The visibility of the current state is crucial for teams and leadership to understand what they are working with and how they can optimize it. This stage is where a lot of conversations happen amongst teams to come up with an optimization action plan. It requires teams and stakeholders to communicate and work together, which ultimately builds trust among each other.

3. Operate: Finally, the data analysis and learnings can be implemented. With the optimization action plan, leaders should know what areas of the cloud demand optimization first and how to optimize these areas. At this point in the process, teams and stakeholders are comfortable with cross-collaboration and honest communications amongst each other. This opens up a transparent feedback loop that is necessary for continuous improvement. 

Conclusion

The entire organization stands to gain when cloud economics is prioritized. A cost-efficient cloud infrastructure will lead to improved productivity, cross-functional collaboration between teams, and focused efforts towards greater business objectives. 

Ready to take control of your cloud costs and maximize the value of your cloud infrastructure? Contact 2nd Watch today and let our team of experts help you implement cloud economics within your organization. As a trusted partner for enterprise-level services and support, we have the expertise to assist you in planning, analyzing, and recommending strategies to optimize your cloud costs and drive business objectives. Don’t let cloud spending go unchecked. Take charge of your cloud economics by reaching out to a 2nd Watch cloud expert now

Mary Fellows | Director of Cloud Economics at 2ND Watch


The Importance of Leadership in Moving to a DevOps Culture

Why DevOps?

DevOps is a set of practices that improve the efficiency and effectiveness of IT operations. Utilizing many aspects of agile methodology, DevOps aims to shorten the systems development life cycle and provide continuous improvement. As you consider incorporating DevOps into your operations, understand the effect DevOps has on processes and culture. Successful implementation is about finding the right balance of attention on people, processes, and technology to achieve improvement.

The ultimate goal is continuous improvement through processes and tools. No amount of tooling, automation, or fancy buzz words can cause any greater effect on an organization than transforming their culture, and there’s no other way to do that than to focus on the change.

Understanding What You Are Trying to Accomplish with DevOps

Ask yourself what you are trying to achieve. It may seem obvious, but you may get on the wrong track without thinking about what you want your development and operations teams to achieve.

Often, when clients approach 2nd Watch wanting to incorporate DevOps, they are really asking for automation tools and nothing else. While automation has certain benefits, DevOps goes beyond the benefits of technology to improve processes, help manage change more effectively, and improve organizational culture. Change is difficult. However, implementing a cultural shift is particularly challenging. Often overlooked, cultural change is the greatest pain 2nd Watch consultants encounter when working with companies trying to make substantial organizational changes. Even implementing things as simple as sharing responsibility, configuration management, or version control can cause turmoil!

From IT Management to Leadership

There is a distinction between what it means to be a manager versus being a leader. And, in all industries, being a manager does not necessitate being a good leader.

It’s helpful to consider the progression of those in technical roles to management. Developers and operations personnel are typically promoted to managers because they are competent in their technical position—they excel at their current software development process, configuring a host or operating a Kubernetes cluster. However, as a manager, they’re also tasked with directing staff, which may put them outside of their comfort zone. They are also responsible for pay, time and attendance, morale, and hiring and firing. They likely were not promoted for their people skills but their technical competencies.

Many enterprise organizations make the mistake of believing employees who have outstanding technical skills will naturally excel at people management once they get that promotion. Unfortunately, this mistake breeds many managers who fall short of potential, often negatively affecting corporate culture.

Leading the Change

It’s imperative to understand the critical role leadership plays in navigating the amount of change that will likely occur and in changing the organization’s culture.

Whether you’re a manager or leader matters a lot when you answer the question, “What do I really want out of DevOps?” with, “I want to be able to handle change. Lots and lots of change.”

Better responses would include:

  • “I want our organization to be more agile.”
  • “I want to be able to react faster to the changing market.”
  • “I want to become a learning organization.”
  • “I want to embrace a DevOps culture for continuous improvement.”

The underlying current of these answers is change.

Unfortunately, when bungled management occurs, it’s the people below that pay the price. Those implementing the changes tend to take the brunt of the worst of the change pain. Not only does this cause lower morale, but it can cause a mutiny of sorts. Apathy can affect quality, causing outages. The best employees may jump ship for greener pastures. Managers may give up on culture change entirely and go back to the old ways.

However, there is light at the end of the tunnel. With a bit of effort and determination, you can learn to lead change just as you learned technical skills.

Go to well-known sources on management improvement and change management. Leading Change by John P. Kotter[1]  details the successful implementation of change into an organization. Kotter discusses eight steps necessary to help improve your chances of being successful in changing an organization’s culture:

  1. Establishing a sense of urgency
  2. Creating the guiding coalition
  3. Developing a vision and strategy
  4. Communicating the change vision
  5. Empowering broad-based action
  6. Generating short term wins
  7. Consolidating gains and producing more change
  8. Anchoring new approaches in the culture

It’s all about people. Leaders want to empower their teams to make intelligent, well-informed decisions that align with their organization’s goals. Fear of making mistakes should not impede change.

Mistakes happen. Instead of managers locking their teams down and passing workflows through change boards, leaders can embrace the DevOps movement and foster a culture where their high-performing DevOps team can make mistakes and quickly remedy and learn from them.

Each step codifies what most organizations are missing when they start a transformation: focusing on the change and moving from a manager to a leader.

The 5 Levels of Leadership

Learning the skills necessary to become a great leader is not often discussed when talking about leadership or management positions. We are accustomed to many layers of management and managers sticking to the status quo in the IT industry. But change is necessary, and the best place to start is with ourselves.

The 5 Levels of Leadership by John C. Maxwell[1] is another excellent source of information for self-improvement on your leadership journey:

  • Level 1 – Position: People follow you only because they believe they have to.
  • Level 2 – Permission: People follow you because they want to.
  • Level 3 – Production: People follow you because of what you have done for the organization.
  • Level 4 – People Development: People follow you because of what you have done for them.
  • Level 5 – Pinnacle: People follow because of who you are and what you represent.

Leadership easily fits into these levels, and determining your position on the ladder can help. Not only are these levels applicable to individuals but, since an organization’s culture can revolve around how good or bad their leadership is, this ends up being a mirror into the problems the organization faces altogether.

Conclusion

When transforming to a DevOps culture, it’s essential to understand ways to become a better leader. In turn, making improvements as a leader will help foster a healthy environment in which change can occur. And there’s no better catalyst to becoming a great leader than being able to focus on the change.

2nd Watch collaborates with many different companies just beginning their workflow modernization journey. Contact us to discuss how we can help your organization further adopt a DevOps culture.

-Craig Monson