Lessons From a Cloud Service Implementation

U.S.-based Equinix operates data centres and other facilities that are used by many of the world’s providers of software-as-a-service (SaaS), platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS). So who better to talk about these rapidly evolving cloud services as they relate to finance management and other corporate activities than Equinix CFO Keith Taylor?

 
“We use Salesforce.com for our CRM solution,” he says. “We also use Marketo [for marketing solutions], we use Workday [for human resources solutions].” But the 1,600-strong company, which has data centres and operations in 11 countries including Japan and Singapore, has not signed up with any SaaS financial management provider.  
 
“Pushing our financial data out in the public environment, I don’t think we’re ready for that stage,” says Taylor. “I think there’s still some work to be done with cloud service providers and how they’re going to [handle] certain key services that are very sensitive.”
 
The U.S.-based CFO recently spoke with CFO Innovation’s Cesar Bacani. Below are excerpts of the conversation.
 
I’m really interested in cloud computing, but it’s difficult to find a CFO in Asia who’s actually using cloud services for financial management.
We use Salesforce.com ourselves for our CRM solution. We also use Marketo [for marketing solutions], we use Workday [for human resources solutions]. We as a company do use cloud service providers. Whether it’s SaaS, whether it’s PaaS, whether it’s IasS, we can use it as an opportunity to sell to and in some cases we might use it as an opportunity [to become] a customer of that customer.
 
Is your financial management or parts of it done with a cloud services provider as well?
None at this point. We’re using Oracle databases and that infrastructure is housed on our database servers inside our own facilities.
 
Is that because you’re happy with the way things are or you’re not confident about security and other aspects of current cloud service providers or you need to get the most out of the investment that you have made in the financial management infrastructure?  
I’ll speak for myself and I don’t want to speak for all of CFOs generically. We’re in the middle of building a global single [implementation of] Oracle inside our facilities here [in the U.S.]. We’re creating a uniform mapping and chart of accounts structure on these Oracle databases so that we can have the efficiency we need on a global basis.
 
Pushing our financial data out in the public environment, I don’t think we’re ready for that stage. I think there’s still some work to be done with cloud service providers and how they’re going to provide certain key services that are very sensitive, so they need to make sure they have the security, they have the reliability, they meet the regulatory compliance requirements. I just don’t think the market is quite ready for that yet on a mainstream basis. It doesn’t mean people aren’t doing it, but we’re not ready for that.
 
I imagine a smaller company, not listed, a start-up perhaps, maybe using the cloud for financial management is something they should look at?
Yes, they might be willing to do that. Oracle on Demand is an example of that. I’m sure SAP has a [similar] solution; so do some of the smaller providers. But what you’re seeing [smaller organisations] do is, instead of investing in hardware infrastructure, they’re willing to use other people’s processing capacity [i.e., tap infrastructure-as-a-service], which is probably a little easier for them, less costly. And so your ability to deploy a [financial management] solution is much easier using the public environment than it would be doing it privately.
 
But then if like yourself you actually had begun to invest so much in your own infrastructure, then it doesn’t make sense to stop midway and do it the cloud computing way.
We’re just not ready for it. One day, the market will be, but it’s not today and it’s not tomorrow. There’s some real issues around service delivery, the architecture, service level agreement, what are the costs, how do you evaluate it, can you define the business case and how do you hold the service provider accountable. We’re just not ready for that in the company.
 
DEFINING CLOUD SERVICES
Let’s step back a bit and make sure we’re talking about the same things. What do we mean here when we talk about cloud services?
There’s a lot of misunderstanding about what cloud services are. I think it’s important to understand what the key attributes of cloud services are, and how one becomes defined as a cloud service provider.
 
What’s important to know when you think about cloud services is that it has to be service-based; it has to be a service [whether it’s the provision of software, platform or infrastructure]. It has to be able to be metered, it has to be shared, it’s got to be scalable and somewhat elastic, and it has to be done through Internet-based technology. That’s how people think about cloud services. Without those attributes, you’re really not a cloud service provider.
 
Some companies like Salesforce.com are absolutely cloud service providers. But I would tell you today I don’t think Oracle is, but it’s certainly thinking about how it might go there as a company.
 
Is it possible to have cloud services provisioned within a company, using internal resources instead of the public infrastructure? I’ve heard people refer to private clouds versus public clouds.
What some people mistakenly call a private cloud is really internal infrastructure that, in some cases, use outsourced service providers. That’s really not cloud. As I mentioned earlier, cloud has to be a service offering, it has to be unit-based, it has to be elastic, it has a shared infrastructure.
 
Some banks offer cash management, treasury and working capital management solutions where they process your receivables and payables, make disbursements, receive payments, issue receipts and so on. Is this cloud services?
It’s outsourced; it’s not cloud services. Some might describe it as a private cloud, but in fact it’s outsourced services. Cloud services, as a theme, has to be metered, has to be shared infrastructure. None of the banks share their infrastructure with anybody. Their infrastructure might use the Internet or Internet-based technology, but it would just be a segment or a subcomponent.
 
Some of the larger financial institutions house some of their servers and other critical infrastructure inside Equinix [data centres]. They then do quantitative or algorithmic trading, some do back-office work [for bank customers]. It’s not cloud, though. Basically it’s an outsourced solution.
 
BROADER STRATEGY
But it’s possible for a company to have an amalgam of outsourced services, cloud services and internal shared services? This seems to be what is happening in Equinix, given your global Oracle implementation and use of Salesforce.com, Marketo and Workday.
When we talk about cloud and outsourcing, it’s not completely clear to the market that they are just one segment of a much broader strategy. It’s software, it’s storage, it’s hardware, it’s networks, it’s applications. All of that has to come together in an IT environment, so the relationship between a CIO and CFO today is probably much broader than it has been in the past, particularly if you’re looking to leverage off cloud services as a means to run part of your IT infrastructure.
 
It’s not about one-stop shopping. You don’t just say, ‘I’m going to use Salesforce.com, or Marketo or Workday.’ You have to think about how it will fit into your overall IT strategy. As an example, we as a company changed our network deployment when we [adopted] Salesforce.com. We had to go to 3G technology for our PDAs. What happens is that [cloud services] causes you to look at other aspects of your IT infrastructure to support some of the decisions that you make.
 

It’s about the complexity of running cloud services and how it fits into your overall strategy. It’s also thinking about interdependencies. Do you have regulatory or compliance issues around your software services? How about the commitment levels and your capacity and your technology?

 
Cloud services still is in the very early stages of adoption and I think as we go forward in time, it’s going to simplify, it’s going to consolidate around some major providers. Today, there are hundreds of different cloud service providers. The large ones that will survive in the next 5 to 10 years, I think they’re going to be consolidated into 10 or so core providers, probably the likes of the Oracles of the world, the IBMs, Salesforce.com, Amazon.  
  
And they will not be exactly competing with each other because they will be offering different products?
It’s hard to say. So many of these companies have so many irons in the fire. I think in some cases there will be some overlaps. In some cases, there will be some consolidation and the consolidation will be according to areas of specialty.
 
DEPLOYMENT OF CLOUD SERVICES
Let me ask you about the process leading up to the decision to use Salesforce.com, as an example of how a company makes these decisions. First, who has ownership of this CRM cloud services in Equinix?
There are three key owners of that service offering. First and foremost it’s the sales organisation because it’s a CRM solution on behalf of our sales and sales operations organisation. IT manages it alongside the sales organisation, we call that a two-in-a-box, so IT and sales are in a box together. From a financial perspective, I’m involved because I look at it from ‘how are we going to deploy our capital, are we going to invest in software or are we going to buy services on a cloud basis?’ So there’s a broad relationship across the organisation. But for CRM, in this particular case, it’s the sales organisation and the IT organisation that own that relationship.
 
Finance is there to make the determination that, yes, this is cost-effective, or no, we can’t adopt this cloud service because it’s not value-accretive, you would need to change your IT infrastructure, it’s not worth it?
In this case we were actually supportive of Salesforce.com. We think it is the best solution out there for our company. Finance was involved in the business model decision. Certainly there’s a cost to it, [but] we didn’t want to develop [a CRM solution] internally. When you think about the Salesforce.com solution, it’s scalable, it’s elastic, so as we add more sales people to our organisation, it can easily ramp up the user profile.
 
You had to upgrade to 3G for your PDAs. Was that a cost that you were aware of?
We were aware of that as we were rolling up the solution. We want to be as mobile as we can as an organisation, so we put PDAs in everybody’s hands in the sales organisation.
 
But perhaps other organisations might not have thought of it and discover there is that extra cost after the implementation?
Not all companies might be as mobile and are happy to work off their desktops, log in via their desktop solution. It depends on the companies that are architecting their network assets and their IT infrastructure.
 
Before switching to Salesforce.com, Equinix had its own CRM application internally?
We had some Excel-based solution, and it was very inflexible, very structured. It did not give you the global ability to manage according to our sales pipeline or an aggregation on a regional country or sales rep basis. Salesforce.com just allows you to move and operate at a much higher level of efficiency.
 
When we thought about what we wanted to accomplish, it really was about sales force management and understanding exactly what the sales force saw, how they record it, what is the size of their pipeline, how are they tracking their performance, the time to close.
 
We know who the key providers [of CRM solutions] are out there. You have Salesforce.com, which is a SaaS solution, you have Oracle, you’ve got Siebel, you’ve got other providers as well. We lined it all up and we decided on who the key vendors we wanted to meet, and then they did a presentation. We then brought in the sales organisation, which decided who had the best service offering. Once you’ve got a pretty good sense of who the best service offering was, then you bring in the procurement team to negotiate the best terms and conditions. 

 

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