In the last 15 years, I wrote the first service level agreement for the company that invented data center colocation, and I drove two publicly traded IT software and hardware companies with traditional enterprise licensing terms to move to usage-based pricing models. The experience has taught me a lot about how large enterprises think about IT procurement, and about how cloud providers think about service delivery.
This is one Venn diagram without a lot of overlap, unfortunately. Here are three things to keep in mind as your large enterprise considers moving to Amazon Web Services (AWS).
1. Your legal department isn’t going to get what it wants.
Service-level agreements used to be negotiable in the early days of cloud computing. Cloud providers profit when they can deliver the same exact service repeatability, and varying service levels on a per-customer basis is not a repeatable or scalable model.
Because service-level agreements have always been negotiable in large IT outsourcing contracts, most large enterprise legal departments assume there is room to define and negotiate the SLA with AWS. This just isn’t the case, and asking for it will slow your AWS implementation down without showing any results other than your frustration.
Instead of hitting that wall, investigate the additional support offerings available from AWS. These address many of the same concerns but in a standard package that may just be a click away.
2. Your procurement department is not going to help you.
In a large enterprise, the procurement department often steps in to negotiate. This works really well in a large enterprise because a professional negotiator will often outperform an IT executive. Except when talking to a wall, in which case the procurement department’s professional negotiator will only slow down the project.
The AWS prices are posted and standardized for all to see. Rumors persist that some very large companies have successfully negotiated rates, but I believe these were in the very early days of AWS, and it does not happen today with very many companies… if at all. Even if you love the AWS offering, your procurement department may twist your arm to make you look elsewhere so the professional negotiator will have something to do.
Just remember that AWS has a habit of regularly updating their pricing and when it updates, it’s usually in one direction… down! In fact, since 2006, there have been 38 price reductions on AWS…keep that in mind when looking elsewhere.
3. Your CFO is going to choke.
Large enterprise ERP and financial systems typically assume that you are going to be buying servers and renting space in a data center somewhere. Those are either capital costs or fixed monthly ongoing operational costs. Predictable numbers are relaxing to finance executives.
Unpredictable, usage-based pricing models tend to break static business processes and keep finance executives biting their nails. Unfortunately, there’s not much a cloud provider can do here. Enterprises are becoming better at working with unpredictable usage-based pricing that is becoming an increasing percentage of the IT budget.
Remember to be patient working with your financial team. As much as moving to the cloud is an adjustment for IT, it’s a complete change in approach for finance. Working together will ultimately result in a much better work environment for everyone… and keep frustration to a minimum.