Updated: Oct 24, 2018
Cloud software is ubiquitous in business today. Forbes estimates that companies dedicate 80% of their IT budgets to cloud computing. Other research shows that in many organisations more cloud services are being used than IT is aware of; as many as ten times more.
So, even if you have not gone all in with a cloud-first strategy, chances are your organisation is using it pervasively.
In the early days, the cloud was sold as innovative and cheap. Cloud vendors and system integrators quickly dropped ‘cheap’ as the savings did not immediately materialise. Instead, business agility, speed to market and other benefits had to be used to measure value.
However, according to research by NASDAQ, the financial benefits did come. There is a “20.66% improvement in the time to market”, ”18.80% increase in process efficiency”. and “19.63% increase in company growth”.
With this experience, prospective cloud buyers and internal IT teams were taught not to expect overnight savings but to play the long game, and the benefits would come.
The problem is, many cloud systems are not built to take advantage of the cloud properly. So the benefits they deliver are not as good as they should be.
They took old technology and thinking and shifted it into the cloud. And then charged by user with ‘pay per month’ subscription models.
As the graphic illustrates, there are 720 hours in a monthly subscription. However, of those hours, only 168 are usable. Moreover, it is likely that many Apps are used just to 2 hours a day. Or, 5.8% of the overall time. However, you still pay for 720 hours of access.
This means you are paying between 4 and 17 time more for each user. While your return on investment may have worked for the first tranche of users, you are not getting any scale benefits. Your cloud vendor is either incapable of delivering the scale benefits (because of how they built their system), or they are not passing them on.
This is why serverless cloud architectures matter to your business.
THE FUTURE (IS ALREADY HERE)
Serverless architected cloud systems do not use computer servers. Or at least, not in the way they did before. Serverless systems take proper advantage of the cloud, unlike systems that still rely on the old ‘pay per user’ subscription models.
Big public cloud vendors like AWS charge for the services you consume (not per user). And with a serverless architecture, you consume a lot less. For a start, when serverless architected systems are idle (when a user is not using them), there is no consumption charge. Moreover, other expenses, like storage, are now so small that the equivalent of 1000 NetFlix movies costs as little as $25 to store per month.
Many existing cloud solutions have architectures that require numerous servers to sit around doing nothing useful. These servers are in clusters and constant communication. If you could hear these servers speak, it might sound like a variation of the Marco Polo game. “I’m here! Are you there?”, “Yep, I’m here! You still there?”,“Yep. I’m still here! Got any data for me?”, “No, not yet. Nothing happening. You still there?...”.
Pay-per-user subscription models reflect this unnecessary cost. Costing you now and when you go to leverage, your shiny cloud platform, it cause you OPEX shock as you realise there is no leverage.
After an initial success, many organisations will want to leverage their platform by building more Apps. More workforce automation and more customer self-service. However, then they discover new Apps means adding new users. The costs are linear; there is no ‘leverage’. Once what was sold as platform for growth, becomes just another IT system.
Knowing all of this, what organisations need to do is use serverless cloud architected systems and find cloud Software-as-a-Service (SaaS) subscriptions that accurately reflect costs and not charged per user.
When choosing serverless, you should still expect to pay for the underlying intellectual property of the service, plus consumption costs. However, when you decide to scale, pivot, or otherwise transform what you are doing, you will now have a platform that accurately reflects costs.
Being ‘serverless’ might sound geeky, but just like cloud did in the first place, it further improves your business agility and speed to market by allowing you to scale. Having the effect of improving on what NASDAQ found made the original cloud investment case.
Serverless matters to your business because business growth matters to your business.