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Gartner: A 10-step cookbook for building a cloud strategy

Editor’s note: The following is a guest article from Gartner drawing on analyst insights about how IT leaders can formulate a cloud strategy for their organization.

Businesses are embracing the transformational nature of shifting to the cloud, recognizing the impact it offers on performance, agility and security.

By the end of 2019, more than 30% of technology providers’ new software investments will have moved from cloud-first to cloud-only. As organizations increase their reliance on cloud technologies, IT teams are seeking to embrace cloud applications and relocate existing digital assets. 

The C-suite will look to the CIO to answer questions about cloud and define a plan for its integration in the enterprise. The CIO often relies on an enterprise architect and/or chief technology officer to drive this effort.

A cloud strategy is an outline for the role of cloud in an organization, not a plan to move everything to the cloud.

Today, most organizations do not have a formal cloud strategy, although by 2022, 70% of organizations will have one. Businesses with such a plan have a more coherent approach to cloud usage, optimizing resources and costs. 

By adopting a “cookbook approach” to creating a cloud strategy, IT leaders can ensure cloud decisions align with corporate goals and account for all necessary factors and potential risks, ensuring the buy-in of the C-suite. 

Mapping this strategy back to existing implementation and migration plans will support an effective shift to the cloud. 

When creating a cloud strategy, CIOs should focus efforts on a living document, updated as the organization’s digital assets and goals evolve.

Here is a “cookbook” — 10 steps IT leaders can follow to formulate a comprehensive, actionable cloud strategy that aligns with business needs:

1. Executive summary

A cloud strategy should be for and by more than just the IT team. A summary is important to recap the document for leaders in all departments, including senior management. 

This section should also highlight the people in the business’s cloud council to demonstrate its importance beyond the IT department. 

2. Cloud computing baseline

Simply put, this section should define the terms used throughout the document.

Organizations can leverage existing reference architectures, such as those from The National Institute of Standards and Technology (NIST), to define cloud terms in clear and concise language.

Choose a set of definitions and stick to it — what’s important is these terms are explicitly stated and kept consistent. 

3. Business baseline

It’s imperative to define how the cloud strategy connects to the company’s top-line goals and digital transformation initiatives. Highlight the organization’s key objectives and how cloud can help achieve them. 

Consider the unique business, industry or geographical factors that will impact cloud adoption:

  • Are you in a highly regulated industry where certain technologies will not meet industry standards?
  • Do you have access to datacenters in countries with privacy regulations that align with your organization’s needs? 

Taking these factors into account, discuss the specific opportunities and risks that cloud adoption poses to the business. 

4. Service strategy

When determining the role of cloud in an organization, IT leaders must decide when to consume services from a public cloud provider versus when to build.

Most enterprises will adopt a hybrid cloud strategy, as almost no company can afford to put everything in a public cloud or do everything itself. 

Choosing when to adopt public cloud and which providers to work with is a critical and ongoing part of the cloud strategy. This section defines a framework for how these decisions will be made. 

5. Financial models

Identifying the financial implications is essential for any cloud strategy decision. This section of the plan, developed in conjunction with finance leaders, should look at the financial options available and address issues such as cost transparency, visibility, budgeting and predictability. 

While cloud is typically funded by an operating expense model instead of a capital expense model, understanding the impacts that this could have on the organization’s financial profile is key before funding decisions are made.

This is where working with departments outside of IT becomes vital for a successful cloud strategy. 

6. Principles

Principles are the meat of an organization’s cloud strategy and thus should be explicitly stated. Principles can also include vendor-oriented preferences. 

Some common principles to consider are “cloud first,” “buy before build” and “best of breed.”

Cloud first is a principle recommended for most organizations. This means that any new business or technology initiative should look to cloud as the first option, with the preferred approach being to use the public cloud. 

7. Inventory

As a cloud strategy should be applied workload by workload, an inventory assessment is warranted. It is helpful to gather a summary of information for each workload, including meta characteristics such as name, owner and vendor, as well as performance characteristics. 

Performance characteristics can be rated on a spectrum (from unpredictable to well-behaved) to determine whether a workload is a good candidate for cloud.

An example of an unpredictable workload would be a website or a mobile app, which would be an excellent candidate for cloud.

By comparison, a steady-state enterprise application that is already running efficiently in your data center will not benefit as much from cloud. 

Gartner

8. Security

While in years past, IT leaders have been wary of trusting the security of the public cloud, there has been a recent shift where organizations are in some cases becoming too trusting of public cloud providers.

While top-tier cloud providers do an excellent job of securing services, it is the client’s responsibility to secure applications and data.   

Aligning the cloud strategy with the organization’s overall security strategy is key. Understand it is sometimes necessary to adjust security strategy to accommodate the realities of cloud.

This section of the cloud strategy can address issues such as governance and compliance as well. 

9. Supporting elements

It is important to ensure alignment with existing strategies such organizational and staffing issues, architectural and technical issues, and data center strategies. 

In the case of organization and staffing issues, coordinate with HR in the effort to identify how cloud will impact staffing requirements, including headcount and required skill sets. 

10. Exit strategy

An exit strategy defines how to get out of a cloud decision if it does not work out as planned.

While contracts are the most obvious element of the exit strategy, it should also address data ownership, backup and portability.

IT leaders should discuss the issue of lock-in: at the data level, application level, the architecture level and the skills level.

The exit strategy ensures awareness and planning if a cloud decision needs to be changed or rolled back. 

David Smith is a vice president and Gartner Fellow in Gartner Research, where he leads the research agendas for digital disruption and cloud computing. He specializes in the impact of catalytic technologies, such as the internet, cloud computing, digital business and consumer technologies.

Experian works in reverse to apply AI, ML to data

With technology advances making data storage boundless, companies have additional pressure to collect, analyze and deploy data.

But eagerness has left companies with large stories of unused, uncatalogued information.

Here’s why this happens: More than half of organizations’ data is unused, according to a survey of 1,300 business leaders by data analytics and processing firm Splunk. Yet, 81% of respondents say data is valuable to their overall success.

Part of the disconnect with unused data — which Splunk refers to as “dark data” is businesses are unaware of what data they store, or, they know what they have but do not know how to use it. 

The lack of visibility into data stores cramps eagerness to apply artificial intelligence and machine learning. While in the early stages of adoption, the application of AI and ML requires data organization.

This calls for businesses to rethink their approach data. Consumer credit reporting company Experian starts at the end. 

The company is beginning with the customer and consumer, Shri Santhanam, executive VP and general manager of global analytics and AI, told CIO Dive. Working backwards helps the company “pull back and understand really what the ML and AI capabilities to realize that outcome are.”

Ultimately, it will help Experian understand what data outcomes require, whether that’s improving financial inclusion or building new customer-oriented services. 

“It’s less of a technical or an analytical exercise in collecting that data,” Santhanam said, which can lead to “enormous amounts of investment in people, time, data without clarity on the outcomes, which we want to get.”

Overhauling data

Applying artificial intelligence and automating insight generation is a far cry from traditional data analytics. 

“Traditional analytics is math,” said Michele Goetz, principal analyst at market research firm Forrester. Training algorithms for analysis is the complete opposite.

ML capabilities in an AI system are best at classification, interpretation and inference around patterns, said Goetz, in an interview with CIO Dive. Just like we train “ourselves to have domain knowledge and become experts, algorithms are being trained to be specialists.”

The reason to train those systems is because a company has a purpose in mind, whether that is meeting a customer need or finding a cancer diagnosis. 

Handing an algorithm raw data will prove fruitless. It could come back with disparate conclusions or concepts. 

Instead, effective ML applications always start with “what we want to do,” Goetz said. 

Looking at the end goal of a project first might sound like a simple concept, but it can prove difficult to execute. 

Companies are not always set up with the end in mind, Santhanam said. Stakeholders might provide different project pieces, but do not hold end-to-end consumer and business impact. 

Technology can also prove to be a limiting factor. Since the arrival of CIO Barry Libenson in 2015, Experian has worked to reevaluate how products were built and software developed. 

Libenson’s goal was to create a stack that had more synergy, reusability and a more flexibly delivery model for clients, he told CIO Dive in an interview earlier this year. The modernization effort is grounded on a “build anywhere, deploy anywhere” strategy, freeing customers and software developers from concern about where they want technology delivered. 

The infrastructure investments are the foundation for Experian’s data strategy. The effort shows foresight and a commitment from leadership to actually enable an end-to-end innovation cycle, said Santhanam.

Experian’s data-oriented roadmap

It’s early days at Experian for Santhanam, who joined the company in June

His efforts will focus on building a foundation around data, analytics and AI while simultaneously working backwards from key outcomes. In addition to working with the CIO, he will partner with stakeholders across the business. 

Santhanam said success in his first year will show: 

  • Evidence of tangible consumer impact.

  • Clear evidence of market success for Experian and its customers.

  • Meaningful progress on building foundations and kick-starting an agenda for rolling ML and AI into the business.

His data-oriented efforts can apply to products like Experian Boost. The product allows consumers to introduce data to build out credit files and improve their score by showing regular payments on services including utilities or phone bills, according to the company’s annual report. The goal is in part to bring more consumers into the credit system.  

Experian Boost is a ripe application for AI-driven data, instead of traditional analytics. 

Building the product required “first truly understanding the consumer problem that we wanted to solve,” Santhanam said. Looking at the issues of financial inclusion, Experian came back and asked what data and analytics were required. 

The business realized “part of the data to help consumers achieve better outcomes resided with the consumer themselves, he said. Rather than “going into an exercise of trying to collect that data, we created a model where we said ‘we’ll allow the consumer to help themselves’ and then pulled back from that and created the analytics.”

AI a lifeline to competition, but 25% of companies fail half their projects

Dive Brief:

  • One-quarter of companies report a 50% failure rate with AI projects, according to IDC’s Artificial Intelligence Global Adoption Trends & Strategies report. 
  • AI models require trial and error periods preferably fueled by high quality and high volume data, Ritu Jyoti, program VP of artificial intelligence strategies at IDC, told CIO Dive. But tech industry’s favorite “fail fast” strategy cannot apply to AI because companies rack up costs and diversions. 
  • More than 60% of organizations changed their business models to adjust to AI adoption, according to the report. Next-generation business models, like those belonging to Netflix and Amazon, are only possible because of AI, said Jyoti.

Dive Insight:

AI is a business disruptor, evidenced by the chaos Amazon brought to retail, Uber brought to taxis and Netflix brought to streaming

The AI solutions the Amazons and Ubers of the world are investing in are the ones that offer open source frameworks, edge computing, facial recognition, predictive maintenance and e-commerce searches. 

A company that uses AI at its foundation “refers to companies that have a business model where the company would cease to exist if AI did not exist,” said Jyoti. 

Companies that thrive go toe-to-toe with existing competitors as well as next-generation competitors, giving them an advantage when developing end-to-end customer experience. “This is a serious competition based on a transformative business model,” she said. 

If a company’s business model is outdated, unable to support AI projects, “you cannot compete,” according to Jyoti. Aligning AI strategies with a new business model, in turn, opens companies up to being on the positive side of disruption. 

Still, nearly one-third of businesses say AI applications lack practicality for their business. Conservative implementation and experimentation is often influenced by shallow talent resources and a shortage of AI building blocks

However, companies don’t necessarily need to reframe their entire business model around AI, according to Jyoti. Companies can remake models by department or at the line-of-business level. 

“The change and cost impact will also vary from one company to another,” she said, likely contributing to the emergence of AI classes and adoption priorities. Experimental AI applications have low adoption rates, like back office automation, synthetic training data and GANs, a type of neural network.

Hackers mount attacks on Webmin servers, Pulse Secure, and Fortinet VPNs – CloudTweaks

To nobody’s surprise, hacker groups have started exploiting vulnerabilities that have been made public earlier this month, taking advantage of public technical details and demo exploit code to launch attacks against real-world targets.

Attacks have started this week, and they’ve been seen targeting Webmin, a web-based utility for managing Linux and *NIX systems, but also enterprise VPN products such as Pulse Secure and Fortinet’s FortiGate.

All three types of attacks are equally dangerous, as they target devices in enterprise networks, and allow attackers to take full control of the attacked systems…

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Amid a recession, slashing tech budgets might mean economic whiplash

Market watchers are carefully tracking the inversion of the yield curve and other troubling signs that say the U.S. might be headed for an economic recession. 

If some financial forecasters are correct, and the country does head for a downturn as early as 2020, the economy would be bracing for a contraction in a much more digital-driven context than the Great Recession of 2008.

“I’m pretty concerned about it, actually,” Justin Donato, VP of business systems at Nintex told CIO Dive. “If it doesn’t happen it’s the best scenario, but my personal opinion is that we’ll come close to it.” 

Amid a contraction, Donato said his focus at the workflow automation company would shift away from capital-expenditure heavy projects, like rolling out a new audiovisual system or refreshing server technology. 

“That’s typically the first thing we put the breaks on,” Donato said. Instead, the company would prioritize updates to productivity improvements. 

But companies planning to slash projected tech investments might actually hurt their chances to weather the storm, analysts and academics say.

If anything, a downturn in the economy means ideal timing for tech build outs, as lower demand offers respite from disruptive modernization projects.

Pitfalls of slowing investments

In a recession, companies commonly cancel contracts with vendors where they can, or decline to commit to new relationships. Industry saw it happen a decade ago.

“In the SaaS arena, during the Great Recession, growth rate dropped significantly,” J. P. Gownder, VP and principal analyst at Forrester, in an interview with CIO Dive. “But the problem is when you do this you can create discontinuity that sets you back. If you started a move to the cloud, and then you say ‘we need to cap usage,’ you don’t know what downstream impact you’ll face.”

Studies have shown companies that lay off staffers amid a recession tend to have lower stock prices and revenue once the recessionary period is over, according to Gownder. 

Instinctive moves from companies facing the effects of a recession tend to backfire because they’re reactive instead of proactive. A plan must be in place before the wave hits.

“The responses that companies have to the recession are pretty well known, and they’re ineffective” said Nikolai Roussanov, professor of finance at the Wharton School of the University of Pennsylvania in an interview with CIO Dive. “We know in recessions there will be a reduction in staffing.”

But there’s opportunity in recessionary periods to get a leg-up on the competition.  

“It’s logical to use the recession to upgrade software and production facilities,” according to Roussanov. “The opportunity cost is lower because you’re less likely to be able to take productive resources offline at a time of higher demand.”

Vendor impact

In a recession, vendors in the enterprise software industry would have to contend with two forces.

Customers look to IT first when searching for ways to optimize a budget, Roussanov said, which could mean pullback from existing customers.

On the other hand, a recession can mean boom time for technology products that promise more efficiency in operations.

“We went through that in the back end of the [2008] financial crisis,” said Donato. The need for productivity gave Nintex a unique selling point.

Industry will need to adjust its ability to serve customers with new propositions, new prices and experiences as quickly as possible, Gownder said.

MetLife names head of global technology, expects new tech to disrupt business models

Dive Brief:

  • Insurance company MetLife named Bill Pappas EVP and head of global technology and operation, effective Nov. 19, according to a company announcement
  • Pappas “will become an executive officer of MetLife and a member of its Executive Group” and will report directly to CEO Michel Khalaf, according to the announcement.
  • Pappas previously served as CIO for Bank of America’s global wholesale banking business, head of global capital markets operations, and head of technology for the bank’s Europe, Middle East, Africa and Asia Pacific regions. He is replacing Martin Lippert as MetLife’s head of global technology, who served in the role since 2011.

Dive Insight:

With savings from the tax reform working in banks’ favor, IT can reap the benefits.

Investments in technology should result in benefits later. Pappas left Bank of America just as it announced a 10% increase in its annual $3 billion tech budget. But he comes to MetLife as the company continues a projected $1 billion tech investment.

In April 2017 then CEO of MetLife Steven Kandarian announced plans to reduce operating costs by about $800 million by investing $1 billion in an efficiency program. The money was to go to technology improvements, according to a letter to shareholders

The program was meant to run through 2019. In the time since Kandarian announced his plan, MetLife’s operating income has fluctuated. In 2017, the insurance company’s operating expenses were about $58.7 billion and increased to about $61.6 billion year-over-year in 2018.  

Singling out the availability of tools for data collection and analysis in its FY 2018 annual report, the company said technology like database analysis and electronic communications may require MetLife to “modify our assumptions, models, or reserves.” 

Though the company is evaluating changes in systems and processes, new technology initiatives also may “impact the composition and results of MetLife’s investment portfolio,” according to the annual report. 

VMware continues ‘acquisition spree’ with planned $4.8B purchase of Pivotal, Carbon Black

Dive Brief:

  • VMware, a San Francisco-based maker of cloud computing and virtualization systems, announced its intent to acquire two smaller tech companies Thursday. It plans to acquire cloud security company Carbon Black and software development platform Pivotal for $2.1 billion and $2.7 billion, respectively. 
  • The addition of Pivotal will let VMware “deliver a comprehensive Kubernetes portfolio to build, run and manage modern applications,” said Pat Gelsinger, CEO at VMware, in the announcement. Carbon Black, Gelsinger said in a separate statement, will in turn equip VMware with an “enterprise-grade platform” in the security space.
  • The $4.8 billion cash and stock push to acquire these two companies is the latest round of M&A activity from publicly-traded VMware. On Tuesday, the company confirmed the acquisition of serverless computing startup Intrinsic for an undisclosed amount. 

Dive Insight:

The recent acquisition push from the company shows the scope of the puzzle VMware’s trying to solve for: how to retain and grow its customers amid heated competition from hyperscaler providers. 

“It’s actually part of an acquisition spree they’ve been on,” said Craig Lowery, VP of research at Gartner. “They’ve been doing it at a serious clip.”

Pivotal brings to VMware a high-end programming solution, one that is more appealing to software developers, the analyst said. This puts VMware closer to where Azure and AWS are: two IaaS players that offer developers less-restrictive, easier to use programming platforms. 

In turn, Carbon Black’s security tool will add capabilities that let VMware offer stronger protection to its enterprise users. The cybersecurity platform uses a combination of big data and behavioral analytics to offer endpoint protection to 5,600 customers and 500 partners.

DoorDash reveals details of its new tipping model – CloudTweaks

DoorDash announced last month that it would be changing its controversial tipping model. Today it’s revealing the basics of how the new system will work.

Under the past model, Dashers (DoorDash drivers and other delivery people) were guaranteed a minimum payment per delivery, with DoorDash paying a $1 base, then providing an additional payment boost when a customer’s tip wasn’t enough to meet the minimum — a system that made it seem like tips were being used to subsidize DoorDash payments.

Under the new system, meanwhile, DoorDash will pay a base between $2 and $10 (the amount will depend on things like delivery distance and duration), with additional bonuses from DoorDash.

Most crucially, as CEO Tony Xu put it in a blog post, “Every dollar customers tip will be an extra dollar in their Dasher’s pocket.”

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Volkswagen CEO wants a stake in Tesla: Manager Magazin – CloudTweaks

BERLIN (Reuters) – Volkswagen (VOWG_p.DE) CEO Herbert Diess wants to take a stake in Tesla (TSLA.O) to access the U.S. company’s software and batteries technology, German business publication Manager Magazin reported on Thursday.

“Diess would go in right away if he could,” the magazine quoted an unidentified top Volkswagen manager as saying.

Acquiring a stake would be enough for the German carmaker to access Tesla’s technological expertise, the report said.

An obstacle, however, would be to get the consent of Volkswagen’s controlling Piech and Porsche families to fund the stake purchase, the magazine said.

Volkswagen was not immediately available for comment.

A source close to Volkswagen said the management board was not currently in talks to acquire a Tesla stake.

Diess meets with Tesla CEO Elon Musk on a regular basis, Manager Magazin said, adding the U.S. electric carmaker has so far rebuffed efforts at striking an alliance.

A banker close to Volkswagen said that while Diess would love to have Tesla’s software developers, the CEO believed it was almost impossible to justify paying $30 billion (27 billion euros) to buy the whole company.

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Show me the money (and benefits), job-seeking technologists say

Dive Brief:

  • Technologists zero in on five criteria when evaluating a possible new role: competitive pay and benefits, workplace flexibility, career advancement opportunities, access to ongoing learning, and a company’s ethical reputation, according to a survey of 1,000 tech workers from Indeed.
  • Tech workers said it’s important to work at companies driven by transparent and open leadership, social impact programs that give back to the community, and values that match their own. 
  • Though adequate pay is the top decision-making factor for workers, half responded they’d be willing to opt for a role with a lower salary in order to access better career advancement opportunities or more workplace flexibility. 

Dive Insight:

Today’s job market is thirsty for technologists, a scenario which gives employees a clear upper hand when selecting a new workplace.

The scarcity for talent is driven by an aging workforce, a wider adoption of tech across industries and the evolution of technology itself. Some analysts even see the possibility of a major tech talent drought hitting the U.S. in the coming decade.

Amid the crunch, employers might benefit from boosting their in-house training programs and flexible work options. Per Indeed’s data, it would let companies tap into a bigger talent pool, as half of employees say they look for these perks even if they come with a smaller paycheck.

What does “flexible work” mean? Among technologists who value a flexible workplace, 59% say having adjustable work hours are the most important feature. Tech workers also look for work-from-home policies and remote-work options.

“Offering flexibility at work makes it easier for workers to manage different areas of life, such as caring for children and aging parents, as well as taking care of themselves,” according to Indeed. “And since flexibility tends to lead to productivity, it’s a win for employers, too.”