Shaklee CIO goes "all in" to the cloud
http://www.shaklee.com/index.shtml ">Shaklee CIO Ken Harris was all about the cloud before it was even called the http://www.networkworld.com/supp/2009/ndc3/051809-cloud-faq.html ">cloud. Five years ago, the nutritional products retail company decided to move as many of its business processes into software-as-a-service (SaaS) platforms as possible.Well before Microsoft CEO Steve Ballmer declared Microsoft was "all in" on the cloud, Harris was adopting the same strategy from the customer side, he explained in a speech this week at the Cloud Leadership Forum, a conference hosted by IDC and IDG Enterprise.
"I define 'all in' not as being guaranteed we're going to do a cloud-based solution, but rather that we will consider a cloud-based solution for any and every business need the company has," Harris said.
Shaklee's strategy hit a rough patch on its very first attempt to move a business process into the cloud. Five months into the implementation of Shaklee's first SaaS application, "the vendor said we're getting out of this business," Harris said, without naming names. "They weren't going out of business. They were just getting out of that section of the business."
Harris said roadblocks like that shouldn't deter customers from adopting the cloud computing model. Shaklee struck a deal with that particular vendor allowing the customer to take the software in-house, and then went about looking for other cloud services.
Ultimately, Shaklee outsourced more than half of its business services to cloud vendors. Shaklee contracts with at least 10 cloud vendors, including Virtela for network access, RightNow for CRM, SuccessFactors for human resources and PivotLink for business intelligence. Shaklee determined that the cloud was not a good fit for numerous applications, including order processing and order entry.
No consideration, even security, prevents Harris from considering a cloud service, but he won't adopt one unless it's just as good as an on-premise option.
"You cannot give up stability, performance, availability or anything just to go to the cloud," Harris said. "Not all vendors understand what it takes to be a cloud service provider."
Harris is a seasoned negotiator, an important skill for dealing with software vendors. In all his dealings with cloud vendors he demands a certain monthly uptime, for example 99.9%. If the vendor hits 100% in a month, it gets a bonus. At 99.9% the vendor receives 100% of the agreed-upon price. If availability is lower than 99.9% the vendor takes a pay cut, and if the service is atrociously low -- say 90% -- the vendor gets nothing for the month.
Vendors initially resisted, but "with almost every vendor we've reached an agreement," Harris said. Interestingly, Harris says as cloud computing has grown in popularity he has noticed some vendors adopting the very same terms as standard clauses in service-level agreements.
Harris applies the same strategy to response time in the event of an outage. If Shaklee has a major problem and demands that a vendor respond within, say, four hours, the vendor gets a bonus if it's there in two hours, and a penalty if it takes more than four hours.
Vendor management, the way Harris describes it, is simply another form of IT management. Shaklee's IT organization has declined in size by about 30% over the last five years, but the remaining IT staffers are skilled at vendor management and helping users learn how to interact with cloud services.
"The skill set has gone much more to how to help the users use the technology, almost consultant-like rather than how to build it," Harris said. "My staff spends a lot more time with business partners helping them to use the data warehouse or helping them leverage the CRM technology."
At the Cloud Leadership Forum, attendees cited agility, new capabilities and cost as the main drivers for adopting cloud computing. Cost can potentially be a major benefit, Harris said. While an on-premise implementation could take a year and a half and cost a whopping eight figures, depending on the application, a cloud implementation -- if done right -- can be rolled out in just 90 days for six figures, he said.
Harris believes the biggest cloud challenge is integration, particularly in terms of integrating cloud services with existing legacy IT systems.
"Integration continues to be the number one problem," Harris said. "The cloud doesn't necessarily make that any easier or harder. ... I've not had a lot of success in my career with integrated solutions."
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