It’s Time to Transform IT Procurement
Cloud computing heralds a revolutionary shift, akin to the advent of the automobile. Yet many organizations continue to procure resources via outdated methods designed for traditional data centers, akin to asking for faster horses while innovative companies race ahead in vehicles. To truly unlock the power of the cloud, organizations must change their perspective and adopt procurement processes that enable them to effectively evaluate options and select the optimal solutions.
The Pitfalls of Using Legacy Procurement Methods
Organizations face a critical decision with cloud computing: embrace new operating models to reap its benefits or cling to the status quo and risk stagnation. While many comprehend the advantages of the cloud, there is often a reluctance to let go of established legacy systems. Those who delay cloud adoption in search of a middle-ground frequently encounter issues such as inconsistent standards, confusion, security vulnerabilities, and budget overruns.
In this rapidly advancing technological landscape, holding onto outdated practices is akin to navigating a horse and buggy on a freeway. This realization has prompted many executives to hasten their cloud adoption efforts. However, procurement processes are still heavily influenced by outdated evaluation criteria based on on-premises infrastructure.
Traditionally, organizations focus on pricing to manage costs when selecting vendors. This strategy may work for purchasing standard hardware but falls short when assessing cloud solutions. With the vast array of cloud products available, the key question becomes which solutions deliver the greatest value. Just as individuals now consider car ownership, public transport, and ridesharing services, organizations must broaden their criteria to encompass the diverse advantages offered by cloud computing and identify which options yield the highest return on investment. For more insights on this, check out this blog post here.
What Unique Value Does Cloud Computing Offer?
Cloud computing enhances organizational capabilities through scalability, flexibility, and global reach, eliminating the need for substantial upfront capital investments. The comparison of on-premises and cloud procurement models against nonlinear application demand illustrates this shift.
Workloads generally follow variable demand patterns. On-premises models often lead to over-provisioning to accommodate spikes, resulting in wasted capacity. In contrast, cloud solutions can dynamically adjust resources in real-time, reducing excess costs and seizing market opportunities. The AWS Cloud Value Framework highlights five pillars: cost, productivity, resilience, agility, and sustainability.
Moreover, cloud solutions provide advantages such as:
- Cost savings via efficient usage-based pricing
- Increased productivity by allowing organizations to focus on value-added activities
- Enhanced resilience through distributed infrastructure and robust security measures
- Business agility through immediate scalability to respond to market changes
- Sustainability through providers’ use of renewable energy and efficient technologies
Cloud solutions enable scalable access to shared resources, enhancing capabilities while driving efficiency through optimal resource utilization and economies of scale. The flexible pay-as-you-go model also mitigates risks and barriers related to large capital expenditures on owned infrastructure.
Is Focusing on Price Enough?
While cost remains a pivotal concern in procurement, the cloud’s flexible pricing models introduce new factors beyond upfront expenses. Organizations must consider variables like usage levels, scalability needs, and resilience requirements for each workload. This more intricate analysis ultimately enhances total value.
Additionally, the disparity between quoted costs and actual expenditures often exists, regardless of the solution. However, concentrating solely on price can lead to shortsighted decisions that create inefficiencies despite lower nominal costs. Organizations should instead prioritize overall return on investment—both initially and post-deployment. The cloud’s inherent scalability and rapid pace of innovation present advantages that capital investments in owned infrastructure cannot easily replicate. Workloads can be continuously optimized over time to maximize efficiency as needs evolve. In summary, while the cloud introduces new pricing dimensions, its flexibility results in superior lifetime value and a reduced risk of stranded spending compared to legacy solutions. Organizations must adapt their evaluation criteria accordingly. For further understanding, visit this excellent resource.
How Can Organizations Change Their Approach?
When making procurement decisions, organizations must adopt a long-term vision that aligns with their strategic goals, not just their immediate needs. Just as investing in a gasoline vehicle risks stranded assets amid the rise of electric cars, legacy infrastructure investments may soon become outdated as cloud adoption accelerates.
Instead of merely lifting and shifting workloads to minimize execution risks, organizations should refactor them for optimal cloud performance. Though this requires more initial effort, it avoids technical debt and ongoing inefficiencies. After hurried migrations, re-architecting for cloud operations rarely happens later due to organizational inertia.
Similarly, organizations should evaluate managed services, platform as a service (PaaS), software as a service (SaaS), and serverless options prior to defaulting to infrastructure as a service (IaaS), as these alternatives can offer greater agility and operational efficiency. Ultimately, the solution that provides the highest return on investment and likelihood of long-term success—not necessarily the quickest or cheapest option—should be chosen, even if it comes with greater implementation challenges. This necessitates a thorough assessment of both technical and organizational considerations beyond basic functionality. Future-proof decision-making is crucial to maximize value and avoid stranded assets.
Next Steps for Organizations
To foster a modern procurement strategy, organizations should:
- Prioritize total value and return on investment over initial costs.
- Rationalize applications before procurement to align with strategic objectives.
- Incorporate live demos in vendor evaluations for practical solution assessments.
- Transition to a DevSecOps/DevOps culture, utilizing frameworks and processes like Agile, continuous integration and continuous delivery (CI/CD), and infrastructure as code (IaC) to empower teams and spur innovation.
Amazon IXD – VGT2
6401 E Howdy Wells Ave, Las Vegas, NV 89115
Leave a Reply