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Transitioning to the Cloud—Inevitable, Not Easy

—February 04, 2016
Transitioning to the Cloud—Inevitable, Not Easy
By Erez Nir, Executive Vice President & Chief Technology Officer, Mitchell

According to IDC, by 2020, people will stop referring to the cloud as public and private, and sometime thereafter, it will stop being called the cloud at all—it will simply be the “way business is done and IT is provisioned.” For established enterprise software companies with existing hosted systems, the transition to the cloud—whether public, private or hybrid—is inevitable, but it is not straightforward. As the CTO of Mitchell, a company facing this transition, I often get questions—from CTOs of other software companies, from clients, and from our employees—about our plans for adopting cloud technology. With that in mind, I’d like to provide some insight into our journey, the past experience that informs it, and a few of the challenges we’re working to overcome.

A History of Adaptation

As an established technology company, Mitchell’s previous experience adapting to technology advancements is guiding how we approach the transition to the cloud. Initially, we owned our own data centers, a solution that worked well for us and our clients. As the company grew and the business environment evolved, we were looking to scale more efficiently and more keenly focus on our core competency—creating software and solutions that automate complex claims processes and inform decision making around insurance claims management. We made a strategic decision to get out of the data center business. At the same time, virtualization was becoming mainstream, allowing for a reduced hardware footprint, and co-location was becoming more sophisticated and affordable. These market trends came together in a way that made the transition to a co-located environment viable.

We took a strategic, measured approach to the transition, and it served us well, resulting in no disruptions to our clients’ businesses. Through careful planning and implementation, we achieved our business goals while architecting a state-of-the-art hosting solution, enhancing disaster recovery capabilities, and keeping pace with growing market expectations for uptime and business continuity. We also transferred many of the environmental aspects of modern hosting, like real estate management, cooling, and power, to an outside organization more directly focused on them. Today, Mitchell’s data centers are co-located in third-party data centers in both the U.S. and Canada (because Canadian regulations mandate that some data be kept within Canadian borders).

Like the transition to our hosted environment, we face many challenges in the transition to the cloud. But we’ll take the same strategic, measured approach we’ve employed in the past, keeping our client’s need for stability a top priority.

Co-Location to Cloud—Some Things to Consider

Chief among the concerns that enterprise software companies—and their clients—have as they make the transition to the cloud, are security and privacy. No company can afford a data breach—the costs to customers, brand, and bottom line are too significant. This is especially true for companies that handle sensitive data that is subject to regulatory oversight. One thing to keep in mind is that no software system and its associated data—whether it is on-premises, co-located, or in a public, private, or hybrid cloud—is inherently secure. All systems must be carefully architected for security wherever potential vulnerabilities exist, from infrastructure to application. To that end, cloud providers like Amazon and Microsoft take extraordinary measures to secure their environments, often above and beyond what their average client could do. But that’s only part of the equation. As Gartner explains, “the secure use of public clouds requires explicit effort on the part of the cloud customer.” The cloud customer must design their system for maximum security and then be vigilant in monitoring and maintaining it. At Mitchell, we are committed to keeping clients’ data safe. Building in comprehensive security and privacy measures—and continuing to enhance them as technology advances—is one of our foremost considerations as we look to the cloud.

Another concern for enterprise software companies as they transition from on-premises or hosted software to the cloud, is a skill set mismatch. The skills and experience necessary to develop, deploy, and manage software over a company’s own infrastructure are somewhat different than what is required in a cloud environment. As companies make this transition, they will continue to need the technical talent, knowhow, and institutional knowledge of existing teams and individuals, and they will need to support them in developing new skills and expertise as well. It helps that such a transition does not take place overnight. For most companies going through this transition, it should happen gradually and thoughtfully, over a number of years, providing time for employees to acquire additional expertise along the way.

Getting a handle on the cost structure isn’t easy, either. When an enterprise software company builds its own infrastructure, it builds it in anticipation of peak usage—rush hour, essentially. From there, it’s fairly straightforward to map costs to a growth trajectory. But when you don’t own that infrastructure and you’re charged to use it based on volume or instances, things can get complicated quickly. Cloud providers’ models for predicting usage and costs are incredibly complex, and as a result, companies making the transition sometimes face significant, unanticipated fees. It’s a little like choosing a cell phone plan based on anticipated usage when you have no point of reference—only the stakes are much higher. The financial perspective is further complicated when a company moves its infrastructure to the cloud, because traditional and well-understood capital expenditures move to a monthly operational cost. It’s simply a different financial model that requires careful planning.

A Strategic, Measured Approach

Taking our cue from the lessons we learned as we transitioned away from operating our own data centers, Mitchell is taking a strategic, measured approach. Our objective now, as it was then, is to embrace the benefits of technology advancements as they make sense for both our business and our clients’ businesses. The technology must be able to support the complexity of our solutions. The long term financial implications must be fully understood as well. And the transition must be made with no measurable disruption to service.

To this end, Mitchell has been actively exploring cloud technology on a number of fronts. In fact, we first started looking into it when Microsoft Azure was announced in 2008. After some exploration, we discovered we were just too early—the services available at that time could not properly support the solutions we were considering moving there. During this time, we also started migrating our internal business systems—CRM, financial systems, learning management, etc.—to SaaS providers. In doing so, we have learned what to look for in negotiating and working with cloud service providers in terms of uptime, security, costs, and other key issues. Further, we are bringing tools on board to move some of our software development environments into the cloud, and learning along the way.

Ultimately, Mitchell delivers software solutions that our clients depend on to solve business problems. Cloud technology is the most contemporary, preeminent enabler of software delivery at large scale, and if moving to the cloud will help us better serve our clients, then it makes sense for us to make that transition. That said, a pure cloud solution is not imminent. Mitchell is taking a strategic, measured approach, as we did when we co-located our data centers with third-party vendors. Reliability is absolutely essential to our clients, and we are deeply committed to ensuring that throughout the process. I foresee Mitchell making the transition—likely to a hybrid private/public cloud—carefully, over a number of years, and in a way that results in the best outcomes for our company, our employees, our clients, and their customers.

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