Companies moving to the cloud often find themselves at a crossroads near the midpoint of their migrations, spending more than they intended and getting less than they hoped. Often that’s because their IT organization isn’t equipped with the culture, mindset, and skills necessary to capitalize on the cloud. Andy Nallappan has had a long career in IT, including CIO roles, but his current job at Broadcom is managing the company’s external cloud platform, DevOps, and SaaS operations across multiple software divisions. Along the way he’s developed deep expertise in what it takes to succeed in the cloud.
“Businesses traditionally transacted with end customers through four walls, but over the last three to five years, that’s changed,” he says. “Now the paradigm has shifted. Customers dictate how, when, and where they do business. The four walls and time zones have come down and customers can transact 24/7. So moving to the cloud is all about changing the culture, rightsizing your approach, and having a roadmap to get into a dynamic architecture that scales up and down during the working week. That’s how you can scale.”
But when the cloud is operationally new for a company, there can be a disproportion on excess spend to achieving the right outcomes—a result that directly correlates with a failure to change the culture.
“Operations in on-prem is completely different than in the cloud,” he says. “If you run your operations the same way as when you operated in data centers, the cloud will be three to five times as expensive.”
With on-prem, the mentality is around allocation and sunk costs, he adds, but in the cloud, that mindset has to change.
“Software engineers should know how much the cloud costs for their area, have visibility into where they spend money, and be equipped to manage those costs, because the cloud is a land of opportunity,” he says.
Martha Heller, CEO of IT executive recruiting firm Heller Search Associates, recently spoke with Nallappan about dynamic cloud architecture, cloud cost containment, developing a cloud-conscious culture, and why it makes sense to give engineers financial goals when giving them ownership over their cloud estates. Read the full interview here for more insights.
On company cohesion: You need to develop a cloud-conscious culture by bringing in new leaders who have a FinOps mindset and a focus on security. It’s also important to bring the software groups together. We have consortia for DevOps, security, and cloud, so the developers can talk to each other and not reinvent every time. Developers love to build their own tools, but that’s not necessary in the cloud.
On FinOps in action: Our on-prem software testing labs were running different operating systems and hardware combinations because every customer is unique. We had to test each combination, and we were allocating those costs to the software businesses. When I moved the labs to the cloud, I told the engineers to move only what they’re working on right now. When they need more cloud services, they’re empowered to get them; they don’t need to ask my permission. But I also gave them financial goals and visibility into the costs of the tools. When we were in data centers, IT would buy the hardware, and because they knew they needed headroom, they’d overbuy and allocate those costs to the businesses. Today, the engineers themselves are empowered to buy only what they need, and to hit their own financial goals. Those savings are a part of the P&L and have a positive impact on the engineers’ bonuses. FinOps has also helped to change the sunk cost mentality. The engineers know that if they bring cloud costs down, they contribute to their business’s P&L and their bonus goes up.
On managing software business operations: In our hardware business, the COO runs the supply chain. My role in the software business is similar. I manage the external cloud platform as a partner to the businesses. My job is to liberate the engineers in the businesses to do incremental innovations and not boil the ocean. At Broadcom, each software division is run by a GM responsible for the P&L. I work across all the software divisions and manage three things: DevOps, the tools used to build the software; the cloud platform, which developers build the software on; and SaaS operations, which run that. Since the divisions all use the same platform and tools, we can leverage common software operations so customers have a similar experience. We have multiple divisions but a common toolset and platform. Software is software, and while the user experience and transactions layer might be different in each division, there are commonalities in the layer below. As head of software business operations, I manage the noncore elements of the software so the lines of business can be free to manage the core. My role is part of the revenue, not the cost.
On mistakes to avoid: Companies should avoid the lift-and-shift approach and understand that you can’t refactor every application on day one. To rightsize your move to the cloud, you need people who know the cloud, but these aren’t the same people who’ve been managing your on-prem environment for the last 20 years. It’s also important to understand that in your first year in the cloud, your costs will be higher than in years two, three, and four, but you’ll be able to do incremental innovations. With on-prem data centers, you innovate once in five years because that’s how data center technology refresh works. With the cloud, you innovate every quarter, month, and week. That’s the beauty of the cloud. We bring the developers together so they can be proud of what they do and share it. With FinOps, we shift their pride to saving money and contributing to customer outcomes.
Budgeting, Business Operations, CIO, Cloud Management, Cloud Security, Fintech, IT Leadership, SaaS