Apps running with greater reliability than they did in-house, CIO says--and IT's budget down 30%. Here's a look at Domino's sweet cloud arrangement.
Florida Crystals, the owner of Domino Sugar and C&H Sugar, has drastically cut its IT staff and reduced its annual IT budget by 30%, while moving its SAP production applications out of its West Palm Beach, Fla., headquarters into a Vienna, Va., data center.
It didn't happen in one leap. But the apps are now in a multitenant, x86 commodity infrastructure operated by a young, venture-backed, service supplier, Virtustream. The SAP apps are being run there with greater reliability than when Florida Crystals had them in its own data center, says CIO Don Whittington. Furthermore, his reduced IT expense, including the contract with Virtustream, has driven his IT spending down to just one-third of the annual expense that's typical for the consumer packaged goods industry. "Our peers typically spend 2-2.5% of revenues on IT. We're well under 1%," he said in an interview.
Whittington is claiming reliable operation combined with reduced costs that most CIOs just dream about. What's going on here?
Whittington is using what he calls "the enterprise cloud" or a "virtual private cloud" inside what looks a lot like a typical multitenant, public cloud--that is an x86 virtualized host environment with many different customers running alongside each other. A handful of manufacturing companies currently run their applications in Virtustream data centers. Florida Crystals applications share those virtual machine hosts, leading to more efficient server utilization than Florida Crystals could achieve on its own. But certain measures, such as firewalls and VPN communications, are in place to ensure that Florida Crystal's privacy and data integrity are maintained, Whittington said.
Unlike the typical infrastructure as a service, however, the Virtustream enterprise cloud environment includes an element that Amazon and other infrastructure-as-a-service (IaaS) providers lack. The Virtustream staff has expertise in enterprise apps and knows how to configure and deploy them in virtualized environments. "We've built in-house the human skills needed to manage enterprise Oracle and SAP applications," said Rodney Rogers, chairman and CEO of Virtustream, in an interview.
Another major difference between Amazon and Virtustream is that Virtustream offers response time and other performance guarantees. Virtustream's Rogers said: "We price higher than Amazon but the customer gets guaranteed SLAs."
That's a sticking point for Amazon's enterprise customers after its Easter outage. They want enterprise-level SLAs, with penalties for an outage, but they can only get free replacement time. There are no penalties Amazon pays for lost business. Whittington won't divulge exactly what's in his SLA with Virtustream but he says it's different than that. "If there's an outage, there are consequences for Virtustream," he said in a follow up email to our interview.
Amazon, Verizon Business, and Rackspace likewise offer an equivalent "virtual private cloud" or extra-secure services as an option within their public cloud infrastructure. SAP even certified Amazon Web Services on May 18 as ready to run production versions of SAP Business Objects and SAP Rapid Deployment Solutions--but not the full SAP ERP suite. Virtustream was certified Nov. 10 to run SAP ERP; at the time, it was the seventh party to receive the production-environment certification.
In part, that reflects how Virtustream has come out of the managed hosting field with expertise in SAP operations. It also reflects a special relationship between Whittington and Rogers that goes back 10 years, when Florida Crystals purchased consulting services from Adjoined Consulting, headed by Rogers. The two men have become friends as well as business associates, a fact that was immediately evident to me when I met them for breakfast at the W Hotel in San Francisco last week. I asked whether their level of mutual trust was necessary to move production applications into an off-premises operation.
Whittington said friendship can't be allowed to get in the way. When the Virtustream contract came up for review, he disclosed to his board of directors the fact there was a personal (as well as business) relationship. As a result, he and the company's C-level executives were ordered to review the decision, including how other suppliers had been evaluated. Amazon was one of the parties considered along with two other IaaS suppliers. The decision stood up to review, and the contract was approved.
"It doesn't matter how good a friend you are. This agreement is about business," said Whittington.
But in going before the board, Whittington told me, "I had to stay away from the term 'cloud.' It doesn't sell in the board room," he said. Added Rogers: "No one is panic-buying the enterprise cloud," where many applications move off premises into a multitenant environment. Instead, "there's months of methodical review."
How Enterprises Are Attacking the IT Security EnterpriseTo learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
2017 State of IT ReportIn today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.