modernization Archives

FinOps Driven Modernization: An Approach for Large Enterprises

Congratulations! You made it to the cloud.

You made a decision and a plan. You selected a migration partner. And you exited your traditional datacenter successfully by migrating thousands of virtual machines to the public cloud. You breathed a huge sigh of relief because it wasn’t easy, but you and your team pulled through.

While you and your teams were preparing to return to focusing on business value-driven tasks and features, the newly minted cloud estate was ticking away like a taxi meter 24 hours a day, seven days a week. The first invoice came, and it seemed a little higher than your forecast. The second monthly invoice was even higher than the first! Your business units (BUs) are now all-in on the cloud, just like you asked, and deploying resources and new environments at will like kids in a candy store. The invoices keep coming, and eventually, Finance takes notice. “What happened here? I thought moving to the cloud would reduce costs?” If this sounds familiar, you’re not alone.

As with many new technologies and strategies, moving to the public cloud comes with risks and rewards. The cloud value proposition is multi-faceted and, according to AWS, includes:

Total Cost of Ownership (TCO) Reduction
Staff Productivity
Operational Resilience
Business Agility

For many enterprises, the last three pillars of productivity, resilience, and agility have gotten overshadowed by the promise of a lower TCO. It’s not hard to understand why. Measuring cloud usage costs is easy. The cloud service provider (CSP) does this for you every month. The idea that migrating to the cloud is a cost-driven exercise excludes three-fourths of the potential business value – especially when migrating with a lift-and-shift approach.

The Lift-and-Shift Approach

When you consider workloads like black boxes, you start your journey without complete visibility into the public cloud’s opportunities. Maybe you had an expiring datacenter contract and had to evacuate under time pressure. That’s understandable. But were you educated and prepared for the tradeoffs of that approach? Or were you shocked by the first invoice and the speed at which the invoices are growing? Did you prepare the CFO in advance and share the next steps? So, what did you miss?

When you took a black-box lift-and-shift (BBLAS) approach, the focus was on moving virtual machines in groups based on dependency mapping. Your teams or your cloud partner, usually with the help of automation, defined the groups and then worked with you to plan the movement of those groups – typically referred to as “wave planning.” What you ended up with is a mirror image of your datacenter in the public cloud.

**You have now migrated to someone else’s datacenter.**

The old datacenter was predictable where fixed hardware investments dictated capacity, and efforts towards efficiency only occurred when available resources started to dwindle from new and existing services and applications being deployed or scaled. This new datacenter charges by the millisecond, has unlimited capacity, and the investment in additional capacity bypasses procurement and is in the hands of the engineers. Controlling costs in this new datacenter is a whole new world for most enterprises. Enter the FinOps movement.

“FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.” – finops.org

What is FinOps?

FinOps is to finance and engineering, as DevOps is to development and operations. The FinOps philosophy and approach is how you regain cost control in a BBLAS environment. Before diving into how FinOps can help, let’s look at the Cloud Cost Optimization Cycle (CCOC). The CCOC is a precursor to the FinOps framework and another black-box approach to cost efficiency in the cloud.

A black-box approach is when virtual machines are viewed as a fixed infrastructure without regard to the applications and services running on them. Seasoned professionals have lived through this traditional IT view for years, and it is what separates operations and development concerns. DevOps philosophy is making inroads, of course, but many enterprises have only begun to introduce this philosophy at scale.

The Cloud Cost Optimization Cycle goes like this. Every month your CSP makes cost and usage data available. An in-house resource or a consultant analyzes the massive amount of data and prepares recommendations for potential savings. The consultant presents these recommendations to the operations team, which then reconfigures the deployed infrastructure to achieve cloud savings.

This cycle can produce significant savings at scale and is the traditional starting point for gaining visibility and control over runaway cloud costs. The process follows the FinOps recommended progression of crawl, walk run toward a mature practice. This approach has both benefits and limitations:

Benefits	Limitations
Infrastructure-focused cost savings	Cost savings are limited to infrastructure and cloud configuration changes
Brings financial accountability and cloud spend awareness to the enterprise	Application architecture remains unchanged
Sets a trajectory towards FinOps best practices (crawl, walk, run)	Can create friction between Operations and AppDev teams
Accomplished primarily by the Operations team	App refactoring focused on patching instead of business value or modernization

The Black-Box Dilemma

In an ideal state, operations teams can iteratively reconfigure public cloud infrastructure based on cost and usage data until the fleet of virtual machines and associated storage are fully optimized. In this ideal state, interactions with the application teams are minimal and driven by the operation team’s needs. The approach ignores the side effects that right-sizing infrastructure can have on somewhat brittle monolithic legacy applications. What usually happens in a BBLAS environment is that the lift-and-shift migration and the subsequent CCOC reveal unforeseen shortcomings in the application architecture, and runtime defects surface.

A lack of necessary cloud skills and experience on the operations side can exacerbate the issues. For example, if the operations team chooses the incorrect cloud instance type for the workload, applications can become bound by resource constraints. When cloud skill and experience are missing from the application development side, this can cause long delays where defects are difficult for the team to triage and patch. So now, instead of cost optimization efforts gloriously precipitating savings, they are producing a mixture of saving money and addressing issues.

This combination creates an environment where engineering and operations teams begin to collide. The applications were stable in the old datacenter due to factors like:

Extremely low network latency between services
Applications and databases tuned for the hardware they were running on
Debugging and quality processes tuned over the years for efficiency

Now application teams have a new stream of issues entering their backlogs driven by fundamental changes in infrastructure introduced by the noble pursuit of tuning for cost savings. Business value, architectural improvements, and elimination of technical debt are slowed to the point that Application Development leaders start to push back on the CCOC. Operations teams don’t understand why the application is falling apart because the metrics and the cloud cost data they collect support the reduction or reconfiguration of cloud resources. Additional factors are now in play from an application development perspective with a black-box cloud cost optimization strategy:

Users are constantly communicating new feature requests to the business
Enterprise and Application Architects are pushing teams for modernization
Software Team leads are insisting on dedicating capacity to technical debt reduction

Enterprises are struggling to retain developers and are more resource-constrained than ever, causing a general slowdown in time to market for features and architectural improvements when flaws in legacy applications need patching.

Going Beyond the Lift-and-Shift

You need a different strategy to overcome these challenges. You must look inside the black boxes to move forward. The CCOC, at its best, will produce a finely tuned version of a legacy application running in the public cloud. You can address the cost pillar of the cloud value framework from an operations perspective, but additional opportunities abound in the form of Application Modernization.

Enterprises in situations like the one described here need to do two things to move forward on their cloud journeys.

Mature cloud cost optimization towards FinOps
Invest in Application Modernization

These two strategies are complementary and, combined, what 2nd Watch has dubbed “FinOps Driven Modernization.”

The amount of cost and usage data available to enterprises operating in the cloud reveals an opportunity to use that data to drive application modernization strategy at scale across all business units. The biggest challenges in approaching application modernization at scale are:

Resource constraints
Cloud skills and experience
Analysis paralysis – where do we start
Calculating Return on Investment

Modernization efforts will be slow and costly without the resource capacity having the necessary cloud architecture and operations skills. They will not produce further buy-in through the socialization of success stories. Getting started seems impossible when an enterprise consists of multiple business units and thousands of virtual machines across hundreds of accounts and development teams. Modernization costs rise dramatically when cloud cost optimization requires changes to the software running on the virtual machines. It can add a significantly higher risk than changing instance families and reconfiguring storage tiers.

How Can FinOps Help Drive Modernization?

Let’s look at how maturing FinOps drives modernization opportunities and capacity. We discussed how an infrastructure-focused CCOC could slow down features, business value, and modernization efforts.

A potentially significant percentage of the savings realized from this approach will be diverted to triaging and patching application issues.

Do the additional development efforts overshadow the infrastructure savings?
Is the time to market for new features slowed to the point that the enterprise’s competitive advantage suffers?

Most enterprises don’t have the processes in place to answer these questions. FinOps Driven Modernization is the answer. With the data from the CSP, the FinOps team can work with the operations and development teams to determine if an optimization recommendation is feasible and valuable to the business.

How does this work at scale among all business units? When you combine cost and usage data with information like:

Process information from inside each virtual machine
SLA metrics
Service ticket and bug metrics
Nature of the cloud service
- IaaS, PaaS, FaaS
- More on this in the next installment of this series
Revenue – unit economics

You begin to see a more holistic view of the cloud estate and can derive insights that include cost and much deeper business intelligence.

Sample FinOps Output from 2nd Watch

Consider being able to visualize where to focus cost optimization and modernization efforts across multiple business units, thousands of virtual machines, and hundreds of applications in a single pane of glass dashboard. The least innovative, noisiest, and most costly areas in your enterprise will begin glowing like hot coals. You can then focus the expenditure of resources, time, and money on high-impact optimization and modernization investments. This reallocation of spending is the power of FinOps Driven Modernization. Finance, operations, engineering, product, and executives are all working together to ensure that the enterprise realizes the actual value of the cloud.

A Business Case for FinOps

Let’s dig into a hypothetical business unit struggling with cloud costs. The FinOps team has identified that their per-unit costs exceed the recommended range for their cloud cost-to-revenue ratio. The power of FinOps-Driven Modernization has revealed that the BBLAS approach has resulted in a fleet of virtual machines running commonly modernized workloads like web servers, database servers, file, or image servers, etc. In addition to this IaaS-heavy approach, the BU heavily leverages licensed software and operating systems. This revelation triggers a series of interviews with the BU leadership and application owners to investigate the potential and level of effort to introduce application modernization approaches. The teams within the BU know there is room for improvement but lack the skills and available resources to act.

They learn through the interview process that they can move licensed databases from virtual machines to a managed cloud platform. Additionally, they discover they could migrate most of the databases to open-source alternatives. Further, they can decommission the cluster of file servers and migrate the data to cloud-native storage with minimal application refactoring. By leveraging the CSP and operational data, a business case for investing in helping the BU make improvements writes itself.

Without leveraging the FinOps philosophy and extending it with a focus on application modernization, this business unit would have operated for years in a BBLAS state, costing the enterprise orders of magnitude more in cloud spend than the investment in modernization. Extending this approach across the enterprise takes cloud cost management to the next level, resulting in purpose-driven, high-impact progress towards realizing the value of the public cloud.

FinOps is the practice that every enterprise should be adopting to help drive financial awareness throughout the organization. FinOps enables an inclusive and virtuous cycle of continuously improving when leveraged as a driver for application modernization.

Schedule a whiteboard session with our FinOps and Application Modernization experts to discover how 2nd Watch’s approach can help you and your team meet your transformation objectives.

Jesse Samm, Application Modernization Practice Director at 2nd Watch

Mind the Gap! The Leap from Legacy to Modern Applications

Most businesses today have evaluated their options for application modernization. Planned movement to the cloud happened ahead of schedule, driven by the need for rapid scalability and agility in the wake of COVID-19.

Legacy applications already rehosted or replatformed in the cloud saw increased load, highlighting painful inefficiencies in scalability and sometimes even causing outages. Your business has likely already taken some first steps in app modernization and updating legacy systems.

Of the seven options to modernize with legacy systems outlined by Gartner, 2nd Watch commonly works with clients who have already successfully rehosted and replatformed applications. To a lesser extent, we see mainframe applications encapsulated in a modern RESTful API or replaced altogether. Businesses frequently take those first steps in their digital transformation but find themselves stuck crossing the gap to a fully modern application.

What are common issues and solutions businesses face as they move away from outdated technologies and progress towards fully modern applications?

Keeping the Goal in Mind

Overcoming the inertia to begin a modernization project is often a lengthy process, requiring several months or as much as a year or more to complete the first phases. Development teams require training, thorough and careful planning must occur, and unforeseen challenges are encountered and overcome. Through it all, the needs of the business never slow down, and the temptation to halt or dramatically slow legacy modernization efforts after the initial phases of modernization can be substantial.

No matter what the end state of the modernization journey looks like, it can be helpful to keep it at the forefront of the development team’s minds. In today’s remote and hybrid working environment, that’s not as easy as keeping a whiteboard or poster in a room. Sprint ceremonies should include a brief reminder of long-term business goals, especially for backlog or sprint reviews. Keep the team invested in the business and technical reasons and the question “why modernize legacy applications” at the forefront of their minds. Most importantly, solicit their feedback on the process required to accomplish the long-term strategic goals of the business.

With the goal firmly in your development team’s minds, it’s time to tackle tactics in migrating from legacy apps to newer systems. What are some of these common stumbling blocks on the road to refactoring and rearchitecting legacy software?

Refactoring

Refactoring an application can encompass a broad set of areas. Refactoring is sometimes as straightforward as reducing technical debt, or it can be as complex as breaking apart a monolithic application into smaller services. In 2nd Watch’s experience, some common issues when refactoring running applications include:

Limited knowledge of cloud-based architectural patterns.
Even common architectures like 2- and 3-tier applications require some legacy code changes when an application has moved from a data center to a cloud service provider or among cloud service providers. Where an older application may have hardcoded IP addresses or DNS, a modern approach to accessing application tiers would use environment variables configured at runtime, pointing at load balancers.
Lack of telemetry and observability.
Development teams are frequently hesitant to make changes quickly because there are too many unknowns in their application. Proper monitoring of known unknowns (metrics) and unknown unknowns (observability) can demystify the impact of refactoring. For more context around the types of unknowns and how to work with them in an application, Charity Majors frequently writes on the topic.
Lack of thorough automated tests.
A lack of automated tests also slows the ability to make changes because developers cannot anticipate what their changes might break. Improved telemetry and observability can help, but automated testing is the other side of the equation. Tools like Codecov can initially help improve test coverage, but unless carefully attended, incentivizing a percentage of test coverage across the codebase can lead to tests that do not thoroughly cover all common use cases. Good unit tests and integration testing can halt problems before they even start.
No blueprint for optimal refactoring.
Without a clear blueprint for understanding what an optimally refactored app looks like, development and information technology teams can become frustrated or unclear about their end goals. Heroku’s Twelve-Factor App methodology is one commonly used framework for crafting or refactoring modern applications. It has the added benefit of being applicable to many deployment models – single- or multiple-server, containers, or serverless.

Rearchitecting

Rearchitecting an application to leverage better capabilities, such as those found in a cloud service provider’s Platform-as-a-Service (PaaS) or Software-as-a-Service (SaaS) options, may present some challenges. The most common challenge 2nd Watch encounters with clients is not fully understanding the options available in modern environments. Older applications are the product of their time and typically were built optimally for the available technology and needs. However, when rearchitecting those applications, sometimes development teams either don’t know or don’t have details about better options that may be available.

Running a MySQL database on the same machine as the rest of the monolithic application may have made sense when initially writing the application. Today, many applications can run more cheaply, more securely, and with the same or better performance using a combination of cloud storage buckets, managed caches like Redis or Memcached, and secrets managers. These consumption-based cloud options tend to be significantly cheaper than managed databases or databases running on cloud virtual machines. Scaling automatically with end-user demand and reduced management overhead are additional benefits of software modernization.

Rearchitecting an application can also be frustrating for experienced systems administrators tasked with maintaining and troubleshooting production applications. For example, moving from VMs to containers introduces an entirely different way of dealing with logs. Sysadmins must forward them to a log aggregator instead of storing them on disk. Autoscaling a service can mean the difference between identifying which instances – of potentially dozens or hundreds – had an issue instead of a small handful of them. Application modernization impacts every person involved with the long-term success of that application, not just developers and end-users.

Conclusion

Application Modernization is a long-term strategic activity, not a short-term tactical activity. Over time, you will realize the benefits of the lower total cost of ownership (TCO), increased agility, and faster time to market. Recognizing and committing to the future of your business will help you overcome the short- and mid-term challenges of app modernization.

Engaging a trusted partner to accelerate your app modernization journey and lead the charge across that gap is a powerful strategy to overcome some of the highlighted problems. It can be difficult to overcome a challenge with the same mindset that led to creating that challenge. An influx of different ideas and experiences can be the push development teams need to reach the next level for a business.

If you’re wondering how to modernize legacy applications and are ready to work with a trusted advisor that can help you cross that gap, 2nd Watch will meet you wherever you are in your journey. Contact us to schedule a discussion of your goals, challenges, and how we can help you reach the end game of modern business applications.

Michael Gray, 2nd Watch Senior Cloud Consultant

Why You Need to Modernize Your Media Supply Chain

The demand for direct-to-consumer services and media content is continuously growing, and with that, audiences are raising their expectations of media and entertainment companies. Agile and innovative companies, such as Netflix, YouTube, and Amazon Prime, have arguably created and continue to enable the current viewership trends.

These streaming services have disrupted the traditional media landscape by empowering audiences to watch any content wherever and whenever they want. To accommodate new audience behaviors, relevant media companies use technologies to support the modern-day digital media supply chain, which has become increasingly complex to manage.

However, legacy media companies have something that audiences still want: content. Most of these institutions have massive budgets for content production and enormous existing media libraries that have latent revenue potential. For example, legacy media brands own nostalgic cult classics, like “The Office,” that viewers will always want to watch, even though they have watched these episodes multiple times before.

As the volume of content consumption and demand increases, media organizations will find that a traditional media supply chain will constrain their ability to grow and meet customers in their preferred venues, despite owning a broad range of content that viewers want to watch. In order to keep up with audience demand, media companies will need to transform their media supply chains, so that they can distribute their media quickly and at scale, or they risk falling behind. Cloud technologies are the key to modernizing digital asset management, metadata models, quality control, and content delivery networks.

The Challenges of a Traditional Media Supply Chain

There are a lot of moving parts and behind-the-scenes work for media and entertainment businesses to push media assets to audiences. The media supply chain is the process used to create, manage, and deliver digital media from the point of origin (creator, content provider, content owner, etc.) to the destination (the audience.) For the right content and best experience to reach users on devices and platforms of their choice, digital media files must pass through various stages of processing and different workflows.

Media supply chain management is challenging and if there are inefficiencies within this process, issues that will ultimately affect the bottom line will crop up. The following are top challenges of media supply chain management:

Decentralized Assets

The content wars are in full swing, and as a result, the media and entertainment industry has seen an influx of divestitures, mergers, and acquisitions. Organizations are accumulating as much content as possible by bolstering their media production with media acquisition, but as a result, content management has become more difficult. With more content comes more problems because this introduces more siloed third-party partners. As companies merge, the asset management system becomes decentralized, and media files and metadata are spread across different storage arrays in different datacenters that are managed by different MAMs with various metadata repositories.

Reliance on Manual Processes

Legacy media companies have been around much longer than modern technologies. As a result, some of these organizations still do many media production and distribution tasks manually, especially when it comes to generating, reviewing, and approving metadata. Metadata is essential for sorting, categorizing, routing, and archiving media content, as well as making the content accessible to a global, diverse audience. Using manual processes for these functions not only severely slows down a business, but they are also susceptible to human-error.

Quality of Media Assets

Today, consumers have the latest technology (4K TVs, surround sound systems, etc.), which requires the highest quality version of content sources. With dispersed content libraries and team, working derivative edits to meet localization and licensing requirements and locating native frame rate masters can be a challenging and time-consuming problem to tackle.

Benefits of Using Cloud Technology to Modernize the Media Supply Chain

Cloud-based technologies can help manage and resolve the issues typically encountered in a media supply chain. If media organizations do not utilize cloud solutions to modernize their supply chain, they risk being less agile to meet global audience demand, incurring higher costs to deliver media, and eroding viewership.

Legacy media brands are recognizing the consequences of not adopting modern technology to support their media supply chains, and recently, we’ve seen established media corporations partnering with cloud service providers to undertake a digital transformation. A recent and newsworthy example of this is the MGM and AWS partnership. MGM owns a deep library of film and television content, and by leveraging AWS, MGM is able to distribute this content with flexibility, scalability, reliability, and security to their audiences. AWS offers services and tools to modernize MGM’s media supply chain to be able to distribute content across multiple platforms quickly and at scale.

Businesses don’t need to strike historic deals with cloud service providers to receive the same benefits. By transforming into a cloud-based framework, any media company can reap the following major benefits of modernizing their media supply chain:

Scale and Agility

This point cannot be repeated enough because, again, customer media consumption is rapidly increasing, and businesses must find a way to meet those demands in order to retain customers and remain competitive. With cloud computing, the media supply chain is no longer limited to the capacity of on-premise data centers or the capital expenditure budget that was forecasted a year earlier. Using cloud technology allows organizations to be dynamic and flexible to adjust for growing demand. Businesses can easily scale services up (or even down) based on audience demands by simply adding (or removing) more cloud resources, which is easier and more forgiving than having to add more infrastructure or being stuck with wasted databases.

Cost Effective

Cloud services employ pay-as-you-go billing, which allows companies to pay for what they use rather than paying a fixed cost that may not fit their needs later on down the road. Most importantly, using the cloud removes the maintenance and operational costs associated with maintaining data center footprints. The costs of server hardware, power consumption, and space for traditional data centers can really add up, especially because these costs are inflexible based on actual consumption. Utilizing cloud technology provides flexibility in billing and trims down maintenance costs.

Automation and Efficiency

Cloud services offer tools that can handle abstract operational complexities, like metadata management, that were historically done manually. These automation and AI features can dramatically reduce the need to manually generate this metadata because it implements machine learning and video, audio, and image recognition to largely automate the generation, review, and approval of metadata. Harnessing the power of automation frees up teams’ resources and time and redirects that energy on impactful, business-differentiating activities.

Data-Driven Decisions

Large audiences also means large amounts of data. Massive volumes of both structured and unstructured data requires increased processing power, storage, and more. Cloud computing has the scalable infrastructure to rapidly manage huge spikes of real time traffic or usage. Moreover, cloud service providers offer a variety of analytic tools that enable extract, transform, and loading of enormous datasets to provide meaningful insights quickly. Media companies can harness this data to improve user experiences and optimize supply chains, all of which greatly affects their bottom line.

How do I Get Started in my Media Supply Chain Transformation?

The process is less daunting than you think, and there are experienced cloud advisors and consulting firms who can point you in the right direction. At 2nd Watch, we embrace your unique modernization journey to help transform and modernize your business and achieve true business growth through cloud adoption. To learn more about our media cloud services, visit our Media and Entertainment page or talk to someone directly through our Contact Us page.