What giant companies WON’T put in the cloud

Legacy investments and a reluctance to expose certain assets keep some enterprises from moving more to the public cloud

Cloud computing illustration
Credit: Chris Koehler

In our interviews with CIOs at large enterprises, we found that adoption levels vary from simple experimentation to heavy use of cloud apps and infrastructure in public and private settings. Yet even among the most cloud-focused businesses, there are resources CIOs won’t consider migrating to the cloud – at least not yet.

Certain tactical capabilities can easily be acquired in the public cloud, but not everything falls into that category. Some enterprise systems aren’t ready to be run in the public cloud because of safety and reliability concerns, says Joe Spagnoletti, CIO at Campbell Soup.

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Spagnoletti emphasizes that Campbell’s is not trying to do everything in the cloud. Projects are "highly targeted to the things we're trying to change. Double entry bookkeeping hasn't changed for a long time," Spagnoletti says.

At Dow Chemical, IT has built a cloud-based infrastructure that includes systems hosted by vendors as well as its own private cloud. On the applications side, while the majority of its applications are in a cloud environment, only about 10% are in the public cloud. Looking ahead, about 30% to 40% of applications are expected to be in the public cloud within three years, says Paula Tolliver, CIO and corporate vice president, business services.

Dow’s private cloud delivers a lot of the benefits of cloud, and it positions the company for future public cloud migrations. As the company does its lifecycle planning and weighs future investments, it starts with a cloud mindset. What likely won’t go to the cloud? ERP. Dow doesn’t have any plans to move its core SAP systems to the cloud. Doing that would mean major upheaval, Tolliver says. “What’s the financial incentive for us to go?”

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Neither is Family Dollar rushing to move its core business systems to the cloud.
Family Dollar runs a variety of cloud set-ups, including SaaS applications and infrastructure-as-a-service through Amazon. Systems that have been moved to the cloud include HR applications for training, hiring and screening of new employees; SharePoint, through Amazon, for store operations; and the Familydollar.com website, which is run through Amazon. In general, the systems that lend themselves to cloud need to be used most of the day, don’t have a batch processing cycle, and aren’t terribly data intensive, says Family Dollar CIO Josh Jewett.

josh jewett

Josh Jewett

Still, most of the company’s core IT resides on premises. ERP and data warehousing, for example, are internal largely because so much data runs through these systems that “there isn’t a good business case” for passing it in and out of the company continuously, Jewett says. “You have to move it through a skinny pipe. That takes a lot of time, and partners may charge by the megabyte or terabyte. If you’re talking about close to a petabyte of data, not only is it hard to move but it’s cheaper to keep it on premises,” he says.

Jewett doesn’t anticipate having to do a major upgrade of his ERP system for a few years, and at that time, he’ll revisit its cloud potential. 

Legacy investments are also keeping Progressive Insurance from a broad move to the public cloud.

Progressive today relies on the cloud mainly for SaaS applications that aren’t core to running the business, such as HR management and expense reporting, says CIO Ray Voelker, who estimates that 20% of the company’s business process applications are hosted and run in a SaaS model. On the infrastructure side, Progressive uses IaaS largely for experimentation at this point. “Given the highly regulated industry within which we operate, we need to keep our data private,” Voelker says.

More widespread use of the public cloud is a ways off, if ever, at Progressive. “We’re likely to continue to watch the move toward hybrid clouds very closely as that technology continues to develop and mature,” Voelker says. He could envision a hybrid cloud architecture that combines public cloud resources – such as weather data in the public domain -- with internal Progressive data such as usage-based driving records.

But Progressive is in no rush to move its data into a public cloud setting. Voelker says it would be “a whole new ballgame” if Progressive were some midsized business that didn’t have an extensive data center footprint. “We already have assets we own that we can leverage.”

Similarly, Western Union has selectively deployed cloud apps, including Salesforce.com, Workday for human resources, and several from Adobe for online customer experience, data management and analytics. “We’ve made some reasonably safe bets with vendors who are recognized leaders,” says Sanjay Saraf, CTO at Western Union.

The company is taking a prudent approach in terms of how it leverages cloud for infrastructure. Western Union is wary of moving too fast because it must comply with hundreds of local, national and international financial regulations. “Money movement is complex,” Saraf says. “I’m not so hell-bent on cutting costs but on modernizing the technology.”

For analytics, Western Union wanted to ramp up quickly on Hadoop last year and tested some cloud scenarios with Cloudera and Amazon. Ultimately, the company decided to keep analytics in-house with an internal Hadoop ecosystem. “Data is so core to what we’re about, we decided to bring it in,” Saraf says.

Editor’s Note: Giants in the Cloud was written by Network World assistant managing editor, features, Ann Bednarz, based on interviews conducted by CIO Magazine managing editor Kim S. Nash, CIO.com senior editor Brian Eastwood, Network World senior writer Brandon Butler and Computerworld technologies editor Johanna Ambrosio. This package, based on an idea from CIO executive editor Mitch Betts, was edited by Network World executive features editor Neal Weinberg, designed by Steve Sauer and illustrated by Chris Koehler.

This story, "What giant companies WON’T put in the cloud" was originally published by Network World.

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