Public Cloud Computing Socializing Enterprise IT

By Neil Brandmaier, CIO , Capital District Physicians’ Health Plan, Inc. (CDPHP)

Neil Brandmaier, CIO , Capital District Physicians’ Health Plan, Inc. (CDPHP)

The majority of my career has been spent working at large IT organizations with budgets of over $500 million. Typically, we were able to meet the requirements of our business without financial constraints, and we had scale: multi-year, $100 million projects were not uncommon.

“Done right, cloud computing can reduce the technology divide between large and medium-sized enterprises”

Today, I work for Capital District Physicians Health Plan, Inc. (CDPHP®), a not-for-profit health plan with an annual IT budget of less than $80 million. We have financial constraints and reduced scale, yet we must meet the same business requirements as our larger, for-profit competitors.

Over the years, our business units have endured manual processes, assumed operational risk, and technology roadmaps have been elongated to manage investment costs. The challenge we are tackling is this: Can we effectively leverage public cloud computing to compete against larger IT organizations, within the same industry, to provide similar business capabilities to internal and external stakeholders?

In 2007, while working at a large property and casualty insurer, I was the second customer to implement Microsoft Office 365. Even though the service was immature, we standardized 65 globally-disparate email systems with 6,000 mailboxes onto one high-availability system. Our cost of ownership was reduced, user functionality increased, upgrades occurred seamlessly in the background, and we had robust system redundancy and disaster recovery. While we had the resources to operate our own email, Microsoft was simply better, freeing up IT to focus on the projects that differentiated our business.

Six years later, CDPHP migrated its 1,500 mailboxes to Office 365. The service is now mature and the migrations were fast and seamless. Prior to the conversion, we could not properly maintain our system and had only 250MB mailboxes. As a result, emails were deleted after 30 days. We now have high-availability email and built-in disaster recovery, with 50GB mailboxes which are always maintained on the most current Microsoft Exchange version. Today, large and small companies alike have equal access to cloud email systems with state-of-the-art capabilities, at similar unit costs, and with the required security.

CDPHP is also initiating the enterprise-wide implementation of a customer relationship management (CRM) system, which will be integrated with our customer portals and call centers, all to provide a single view of each customer. Because cloud solutions had previously not met our security requirements – and would have required a large project to buy and implement a licensed and internally-hosted solution – these capabilities have been largely out of reach. Now that cloud CRM solutions are maturing to support highly-regulated data, we can implement a solution to know our customers just as well as our large competitors know theirs.

To date, it has also been cost prohibitive for CDPHP to buy a licensed and internally-hosted enterprise resource planning (ERP) solution. With cloud options from Oracle, Workday, and others, we can implement more quickly, at an affordable price point, and with capabilities that meet or exceed the legacy ERP systems installed at larger companies.

To minimize costs, CDPHP had previously utilized subscription disaster recovery services. However, these solutions can be difficult to test, do not guarantee access during a disaster, and are time-bound. We have now migrated our data backups and our disaster recovery to an Infrastructure as a Service (IaaS) solution. As a result, we can now build servers in ten minutes, and perform a disaster recovery (DR) test in 24 hours, rather than 72. In addition, we have unlimited capacity during a disaster event with guaranteed access and no duration constraints. We have also reduced costs in this area by 30 percent, and our DR capabilities will soon be on-par with active-active solutions utilized by larger IT organizations, at a fraction of the effort, with minimal capital costs.

Cloud computing reduces the demand on internal IT organizations, shifting services to partners. But if cloud computing is left unmanaged by IT, chaos will soon emerge. Enterprise architecture is necessary to ensure interoperability, and service management is the key to ensuring incident and problem management are occurring at an enterprise level.

As you know, the transformation to embrace cloud computing is not easy. There are myriad data security issues to be considered and resolved. Mid-sized enterprises will still be limited by the amount of scope they can manage in one year, so having a rigorous project selection process is vital. IT will need to be re-engineered to think differently about the value it delivers. It is no longer about coding applications and standing up servers, but about delivering new business capabilities in short timeframes, while agilely adapting to fast-changing market conditions. Wide area networking expertise is required, as services move out of the in-house data center. Alignment and collaboration between business and IT are mandatory to ensure successful implementations. And to achieve the full benefit of cloud computing, an organization’s business processes will need to be modified to match the delivered business processes of the application, eliminating customizations, and focusing on configurations.

The adoption of public cloud computing into an enterprise will be determined by a number of factors, including an organization’s tolerance of risk, its willingness to implement technology with partners and cede some control, and the culture of collaboration. Done right, cloud computing can reduce the technology divide between large and medium-sized enterprises.