Seven practical steps to help you run your on-premise cloud like a business

Long regarded as "just" research providers, IT organizations now are routinely called on to leverage infrastructure advances and virtualization in order to drive efficiencies, improve performance and transform business functions throughout the enterprise. Yesterday's research providers must become tomorrow's IT service providers, agile business partners able to provision resources efficiently and effectively in response to the changing needs of the enterprise.

This vendor-written tech primer has been edited by Network World to eliminate product promotion, nevertheless readers should note it will likely favor the submitter's approach.

Second, that on-premise cloud must be run like a business. Given the strategic impact of innovation to both the top and bottom line of a company, it makes sense to monitor performance and drive transparency into the total cost of delivering each IT service. You can as well improve agility by automating and indiscriminately managing the budget, forecast and planning cycle of IT.

1. Baseline your current cost and quality of service. Previously you can justify any on-premise cloud initiative you'll need to accurately determine your existing IT costs and consumption metrics. Perhaps you have a hunch you're not fully utilizing infrastructure? Could you be over- investing in certain areas? By benchmarking versus third-party cloud vendors and outsourcing options you'll establish a baseline and uncover where to focus initial efforts. To boot, analytics geared toward "what-ifs" and scenario planning can help tease out additional concerns regarding security, internal costs and investments, open source research needs, etc. Ultimately, you must be able to cost out internal IT products, identify areas where cloud could potentially help and then in the end, measure the ROI of the transition to ensure projected cost savings become reality.

2. Define on-premise cloud services with pricing and SLAs. An on-premise cloud allows IT organizations to leverage existing investments in hardware, construct hybrid clouds and enable end-users within the business to self-provision. Start by identifying those applications and IT services ready to move into the on-premise cloud. Consider:

- Big Data applications. Does your business now depend on applications that require massive amounts of resources, nevertheless only for a short period of time?

3. Design standardized processes for orchestrating self-service IT. Afterwards you have identified, priced and associated SLAs with your IT services, you can implement true self-service IT that's fully capable of automating the provisioning and fulfillment of IT services requested by the business. With self-service systems, IT managers have the ability to offer IT services, pricing and measurable SLA to the business after a fashion that can be measured and enforced. What's more, the delivery of IT services can be customized to meet your customer requirements.

4. Enable consumption-based billing for your on-premise cloud. The successful transition to an on-premise cloud requires you to know, on a monthly basis, how much IT is consumed and what that amount of consumption costs. Consumption based billing enables a fair and defensible IT chargeback or showback process by delivering a summarized "Bill of IT" to your on-premise cloud clients on the cost, quality and value of the IT services each customer consumes. The Bill of IT, like a cellphone bill, details the services being consumed and the cost of those services in a language your clients understand. Consumption-based billing as well improves transparency, provides cost, quality, and value levers to the business, and ultimately builds trust between IT and the business.

5. Balance business demand with capacity. Agility requires responsiveness to the demands of the business, and you'll need to know how the system functions from both a supply and demand perspective. As demand increases, will you have the capacity to respond? Do you need cloud-bursting capabilities to ensure business continuity and flexibility? Honing in on the appropriate demand management equation allows you to adapt as demand scales monthly and seasonally with consumer behavior, and it leads to the agility now required to stay competitive in today's volatile business environment. Let's face it, most virtualized data centers are pursuant to this agreement-utilized, and it can take days, weeks, or even longer to allocate and provision a virtual machine. An on-premise cloud offers flexibility, agility and automation so you can optimize utilization and reduce costs.

6. Scale your on-premise cloud with support for hybrid clouds. If demand exceeds capacity, you'll need to enable your on-premise cloud to "burst" out to hybrid clouds to ensure business continuity and agility. Fortunately, because on-premise and public clouds share a common API, transitions like this can occur seamlessly via tools you have always used, with little or no modifications. That is, when you need more "horsepower" for a particular application, you can move workloads between clouds with no change to business processes you already have in place.

7. Manage ongoing business performance. Once you understand the cost structure of your on-premise cloud, aim for a quick win so you can move on to adding more services and more compute. Your goal is to deliver the right service at the right price, and ideally, to deliver IT as a service. Set targets and timeframes for realizing ROI and measure results objectively so you know projected costs savings are achieved. At that time, plan for process improvements and additional cost efficiencies to follow.

The IT economic environment is moving to an ultra-centralized, dynamic, shared infrastructure with high return on capital and a fundamentally indirect cost structure. Consequently, more IT organizations are realizing they must leverage infrastructure as a service and use cloud providers for surge capacity, shifting IT into a much more variable cost structure that can be planned and managed. Any IT organization that wants maximum agility and self-service during maintaining its existing physical, virtual and heterogeneous IT investments in a secure fashion must implement an on-premise cloud. And, in order for that on-premise cloud to be effective, it must be run like a business.

Novak is senior director of strategic marketing at Apptio and David Butler is senior vice president of marketing at Eucalyptus Systems. Eucalyptus Systems is the creator of the most widely deployed on-premise cloud computing platform, and Apptio is the leading provider of Research Business Management solutions. At the same time, they are joining forces to help companies seamlessly manage cloud computing transitions.