With Shaky Stats on Cloud Revenue, the Safest Bet Is Good Capacity Management

    March 7, 2016

    By John Miecielica

    While the cloud has been publicly touted as a boon for vendors, revenue data is often opaque. Implementing mature capacity management is the only surefire way to guarantee efficiency, which may or may not come from the cloud.

    In the world of IT, there’s probably no technology that gets more hype than cloud computing. While many cloud providers have publicly boasted impressive revenue streams from their cloud services, their actual earnings statements have been somewhat murkier. The devil, as they say, is in the details.

    The issue is that large cloud vendors, such as Microsoft, Google, and IBM, often include “cloud-related” services in their cloud service department revenue statements (or, in other words, non-cloud revenue sources). This inflates the perception of their performance by potential buyers and, as Brandon Butler observes at Network World, serves to whet the appetites of Wall Street Financiers.

    Gartner's David Mitchell Smith and Ed Anderson noted this issue in a December report, recommending that, “CIOs direct their organizations to never take vendor cloud revenue at face value.”

    This isn’t to say that cloud vendors are trying to pull the wool over our eyes. But for CIOs, this hype can make cloud vendor selection difficult. However, they should always consider another recourse before even looking at vendors and their revenue statements — of course, I’m talking about effective capacity management.

    Matter of Deception or Definition?

    TechTarget has called this vendor strategy “cloud washing.” Akin to corporate “green washing,” inflated statements about the environmental friendliness of products or services, cloud washing is an overstatement about what cloud vendors actually provide.

    While the definition of “cloud computing” is quite broad (encompassing any product or service supplied over the internet) true cloud service, as TechTarget notes, is very specific. Among other things, it includes: a virtualized infrastructure, linear scalability, a multi-tenant architecture, and user provisioning, which manages employee lifecycles through the software.

    As Butler observes, vendors have been more than flexible with their terms: consulting and professional services, management tools, and even servers and virtualization software all seem to make the cut. Amazon, for its part, has been quite transparent, probably due to its truly massive cloud success.

    In many ways, this is understandable. A significant portion of cloud providers still sell traditional enterprise hardware and related services, so it makes sense that those revenue sources would be used to convince current clients to stay over the cloud transition.

    However, the interesting part is that CIOs need not necessarily make the switch in the first place, depending on their particular IT infrastructure.

    Only Capacity Management Can Determine Infrastructure Needs

    For enterprise IT professionals, conversations about cloud revenues should be mostly moot — the needs of their IT systems should drive decisions to incorporate the cloud, or not, and that takes effective capacity management. While revenue streams should ultimately figure in vendor due diligence, their actual mix of service offerings is much more relevant to enterprise IT performance.

    As we’ve written elsewhere, companies often fall into the hype trap and massively overspend on the cloud (as much as 50% of cloud storage goes unused), because they lack a clear understanding of their IT systems.

    The only way to choose the most appropriate cloud vendor is to first carefully measure, document, and manage your IT system performance. Are your workloads distributed in the most efficient way possible? Can you confidently avoid service outages? Is it demonstrably clear that a certain cloud service (not just the cloud) will help your IT department grow most profitably?

    The tech industry and its vendors will always be saturated with hype. But with a rigorous capacity management program in place, your choice of vendor should be obvious.

    (Main image credit: Wikipedia)