"Think about it. When a product or service is free, the demand for it is potentially infinite. But, once that product or service has a cost, the end-users begin to shape both supply and demand. Once end-users are paying a price, they'll better understand how the cost of IT impacts their business functions"

It's no longer business-as-usual in the IT shop. Long regarded as "just" technology providers, IT organizations now are routinely called on to leverage infrastructure advances and virtualization in order to drive efficiencies, improve performance and transform business functions throughout the enterprise. That's a tall order, and forward-thinking IT leaders realize that the only way the IT shop can accomplish these tasks is to reinvent itself. Yesterday's technology providers now must become tomorrow's IT service providers, agile business partners able to provision resources efficiently and effectively in response to the changing needs of the enterprise.

Unfortunately, though, transitioning to "IT as a service" is easier said than done, as IT pros find their progress limited by a variety of significant constraints. VM sprawl, delays with resource provisioning, variable resource demands, complex configuration requests, ambiguities of Shadow IT — the list of new hurdles goes on and on. What's more, these challenges overlay persistent pressure for IT to "deliver more with less" while under increased scrutiny to prove ROI. It's no surprise that today's IT leaders feel frustrated — and at times, uncertain about how to proceed.

Some infrastructure managers are coping by implementing policies to formalize public cloud usage. Others are using systems management and automation tools to extend existing datacenter assets. Many are doing even less, maintaining a wait-and-see approach. Clearly, though, these are only short-term fixes that do little more than "kick the can down the road." Can the IT shop do better? How can IT transform itself into a true service provider?

As we see it, the solution has two parts. First, any IT organization that wants maximum agility and self-service while still maintaining its existing physical, virtual and heterogeneous IT investments in a secure fashion, must implement an on-premise cloud. Second, that on-premise cloud must be run like a business. After all, an on-premise cloud empowers your IT organization to take full advantage of all that infrastructure and virtualization advances have to offer. Given the strategic impact of technology to both the top and bottom line of a company, it makes sense to monitor performance and drive transparency into the total cost of delivering each IT service. You can also improve agility by automating and continuously managing the budget, forecast and planning cycle of IT. Here is our seven-step plan to help get you there:

1. Baseline your current cost and quality of service

Before you can justify any on-premise cloud initiative, you'll need to first accurately determine your existing IT costs and consumption metrics. Maybe you have a hunch you're not fully utilizing infrastructure? Could you be over- (or under-) investing in certain areas? By benchmarking vs. third-party cloud vendors and outsourcing options you'll establish a baseline and uncover where to focus initial efforts. In addition, analytics geared toward "what-ifs" and scenario planning can help tease out additional concerns regarding security, internal costs and investments, open source technology needs, etc. Ultimately, you must be able to cost out internal IT products, identify areas where cloud could potentially help and then eventually, measure the ROI of the transition to ensure projected cost savings become reality. This process improves transparency and helps IT:

  • Determine which IT services are the best candidates for moving to the cloud.
  • Provide visibility into cost and utilization of existing applications and underlying infrastructure
  • Identify technology stacks and workloads with utilization profiles that are best aligned for cloud computing usage.
  • Establish breakeven point for investment in cloud migration.
  • Choose which cloud provider has the lowest one, three and five year TCO.

2. Define on-premise cloud services with pricing and SLAs

An on-premise cloud allows IT organizations to leverage existing investments in hardware, construct hybrid clouds and enable end-users within the business to self-provision. Start by identifying those applications and IT services ready to move into the on-premise cloud. Consider:

  • Web services. Are your current web services constrained by scalability, unpredictable workloads, high availability requirements, etc.?
  • Dev/Test or Dev/Ops. Do your development and test teams have trouble managing frequent setup and teardown of resources? Are they unable to standardize configurations for globally distributed teams, or do they have difficulty responding to variable infrastructure demands?
  • Big Data applications. Does your business now depend on applications that require massive amounts of resources, but only for a short period of time?

If you answered "yes" to any of those questions, an on-premise cloud can help. For example, development and test teams can flexibly and securely run their virtual instances using the on-premise cloud's management and encryption capabilities.

Since end-users will be self-provisioning, it will be critical for you to define your on-premise cloud services in terms the business understands, and what's more, you'll have to encourage a mind shift toward the realization that IT is not "free." How? By putting a price on your new on-premise cloud services. Think about it. When a product or service is free, the demand for it is potentially infinite. But, once that product or service has a cost, the end-users begin to shape both supply and demand. Once end-users are paying a price, they'll better understand how the cost of IT impacts their business functions, and as a result, they'll help you minimize waste and gain more insight into how you can improve quality and meet demand.

3. Design standardized processes for orchestrating self-service IT

After you have identified, priced and associated SLAs with your IT services, you can implement true self-service IT that's fully capable of automating the provisioning and fulfillment of IT services requested by the business. With self-service systems, IT managers have the ability to offer IT services, pricing and measurable SLA to the business in a way that can be measured and enforced. What's more, the delivery of IT services can be customized to meet your customer requirements.

At minimum, your on-premise cloud will need to be agile. An orchestration layer capable of automating standardized process around compute resources ensures requested IT services can be provisioned quickly on-demand. Some, like your tech-savvy infrastructure, development and operations teams, will be less interested in a shopping cart self-service experience when provisioning these services. However, if your on-premise cloud serves LOB customers, you may want to consider an actionable self-service catalog experience to link the provisioning experience to the orchestration and automation back-end processes of your on-premise cloud.

4. Enable consumption based billing for your on-premise cloud

The successful transition to an on-premise cloud requires you to know, on a monthly basis, how much IT is consumed and what that amount of consumption costs. Consumption based billing enables a fair and defensible IT chargeback or showback process by delivering a summarized "Bill of IT" to your on-premise cloud customers on the cost, quality and value of the IT services each customer consumes. The Bill of IT, like a cell phone bill, details the services being consumed and the cost of those services in a language your customers understand.

Consumption-based billing also improves transparency, provides cost, quality, and value levers to the business, and ultimately builds trust between IT and the business. Customers can use their "bill" to decide whether they: 1) still value the services being provided, 2) want to upgrade to higher levels of service and options offered, or 3) prefer to evaluate other providers to make sure they are getting the best deal. In this way, consumers choose the services they value, and you are better able to align your services with what your end consumers want most.

5. Balance business demand with capacity

Agility requires responsiveness to the demands of the business, and you'll need to know how the system functions from both a supply and demand perspective. As demand increases, will you have the capacity to respond? Do you need cloud-bursting capabilities to ensure business continuity and flexibility? Honing in on the appropriate demand management equation allows you to adapt as demand scales monthly and seasonally with consumer behavior, and it leads to the agility now required to stay competitive in today's volatile business environment. Let's face it. Most virtualized datacenters are under-utilized, and it can take days, weeks, or even longer to allocate and provision a virtual machine. An on-premise cloud offers flexibility, agility and automation so you can optimize utilization and reduce costs.

6. Scale your on-premise cloud with support for hybrid clouds

If demand exceeds capacity, you'll need to enable your on-premise cloud to "burst" out to hybrid clouds to ensure business continuity and agility. Fortunately, because on-premise and public clouds share a common API, transitions like this can occur seamlessly via tools you have always used, with little or no modifications. In other words, when you need more "horse-power" for a particular application, you can move workloads between clouds with no change to business processes you already have in place. Scaling in and out improves efficiencies, cuts costs and balances workflow.

7. Map out on-going business performance

Once you understand the cost structure of your on-premise cloud, aim for a quick win so you can move on to adding more services and more compute. Your goal is to deliver the right service at the right price, and ideally, to deliver IT as a service (similar to a utility). Set targets and timeframes for realizing ROI and measure results objectively so you know projected costs savings are achieved. Then, plan for process improvements and additional cost efficiencies to follow. For example, an on-premise cloud can help you rein in shadow IT. (Perhaps certain Dev/Test AWS environments now could be provisioned at lower cost in-house?)