Selling cloud to the board

Carsales.com.au CIO Ajay Bhatia (centre), with Rob Purdy, director of cloud services at Datacom (left), and Chris Morris, an analyst at IDC.

Cloud computing has moved from the edge of IT and into the heart of how CIOs procure and deliver technology services, with hybrid cloud deployments, in particular, leading the way. IDC says that nearly 50 per cent of enterprises worldwide would have deployed a hybrid cloud solution by 2017.

But to make sure your hybrid cloud strategy works, you need to have a conversation with the rest of the executive team about the benefits and potential risks of moving infrastructure to the cloud.

Ajay Bhatia, CIO at online vehicle seller carsales.com.au, spoke about how to sell hybrid cloud to the board during a panel session at last week's CIO Summit in Melbourne. The session was sponsored by Datacom.

He also talked about strategies to explain the business impact – financial and reputational – if something goes wrong.

Three years ago, online automotive, motorcycle and marine classifieds company carsales.com.au’s on-premise servers were struggling to handle the sheer number of images that were being uploaded to its websites in Australia, Brazil, Indonesia, Malaysia, Singapore, and South Korea.

Bhatia says carsales.com.au initially asked several hardware companies to provide quotes for additional servers that would enable the organisation to serve more images per advertisement.

“The quotes that came back were in seven figures – disaster recovery added another seven figures,” Bhatia says. “It started to get very expensive, so we needed to explore the public cloud.”

In 2012, caresales.com.au has been hosting 12 billion images per month on cloud infrastructure provided by Azure in the United States. The Akamai content delivery network (CDN) software runs on top to deliver these images quickly to users across its sites.

During evening peak times, the organisation uses 90 servers at the Azure data centre, which is scaled back to five servers during slow periods in the morning, under a ‘per hour’ billing agreement.

Initially, board members expressed concerns about not being in control during an outage and being low on the priority list of customers who would need services restored, says Bhatia.

“The conversation started with board members asking ‘what happens if Azure is down – it’s in the public cloud – isn't that a risk?’” says Bhatia.

“One of the board members said ‘if we deal with a local company, we might be the biggest company dealing with them and we will have the number one priority [if there’s an outage]'. But dealing with Azure, you’re right down the pecking order,” he says.

Bhatia explained the virtues of the Chaos Monkey tool, which enables carsales.com.au to constantly test the resiliency of cloud services.

“It was really explaining what that means,” he says.

Incidentally, carsales.com.au experienced a couple of outages in the Azure public cloud last year.

“In one case, we moved all of our image infrastructure [from the US West Coast] to Brazil within minutes. Akamai CDN shields us from outages up to one hour – we have a 95 per cent offload on Akamai – it offloads the majority of our images and caches in Australia.

“So for 95 per cent of those images, for 60 minutes, we don’t see an outage,” he says. “During that time, we can move our back-end Azure serving to another country and I’ve done that twice within one year and no-one has known about the outage.”

Ease of disaster recovery, time to market for new services, and only paying for what you use are the three most compelling reasons why it made sense for the organisation to use a public cloud service.

“I’ve never viewed cloud as being necessarily cheaper, but I’ve always seen it as being more efficient,” he says. “You pay for what you use and that is the whole argument.”

Reporting losses to the executive

Carsales.com.au, an ASX 100 company with a market capitalisation of between $2 billion and $3 billion, charges car dealers for the number of leads its delivers.

“If our site is down, we don’t get the ads and we don’t get the money,” says Bhatia. “So we can easily measure the impact of not having the site live."

Bhatia stresses that simply reporting outages is not enough. Instead, an analyst put together metrics that illustrate to the board how much money the organisation will lose if its websites are down during peak and off peak times.

“In many cases, let’s say, if farmmachinerysales.com.au is down, consumers do come back if it’s only down for one hour,” he says. “They will come back the next hour and we may not lose the full hours’ worth of revenue. But the way we report is always a potential loss – so it’s the worst case scenario.”

Carsales.com.au uses a business impact rating (BIR) to calculate the business impact risk of outages. These impacts and their severity are reported to the board each month.

“Each [BIR] is $1000 potential loss and that’s become the currency around the board,” he says.

These metrics are not about creating fear, they are about creating awareness of the risks, he says.

“It was about putting that metric in the board report for months and months and starting that conversation throughout that metric. And then the board started to talk to me rather than me talk to them,” he says.

Rob Purdy, director or cloud services at Datacom, says IT leaders are getting more educated about how to sell the benefits of hybrid cloud to the executive board.

"I think we are still in an immature phase in IT around the adoption of hybrid cloud," he says. "One of the things people will need to go through is working with the CFO," he says.

CIOs need to make it clear to the CFO that the organisation will receive a monthly bill for services, and costs will vary from time to time, he says.

"There's a bit of a education process for the CFO and the CEO around that."

There's a cultural change happening in IT and at the board level, he says, around losing control of assets and not having one big vendor's throat to choke if things go wrong.

"But [cloud] gives us a lot of flexibility around how we deploy IT and rapidly get to market," he says.

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Follow Byron Connolly on Twitter:@ByronConnolly