The downturn in the global economy is taking its toll on businesses. Forbes reports that as much as 40% of small businesses aren’t expected to survive the COVID recession. Many “non-essential” mid-sized enterprises have also lost a significant portion of their revenues as their customer base finds themselves with less discretionary income.
But COVID-19 hasn’t impacted every business equally. Essential businesses and those that haven’t been affected by mandated closures may find themselves emerging from the crisis in a relatively strong cash position. As Grant Thornton predicts, the COVID recession may actually create a wave of new deals as troubled companies look for exit strategies. If you’re among the fortunate ones, you may find yourself presented with some opportunities for expansion in the months ahead. While you’re assembling your due diligence teams and performing your cost/benefit analyses, you’ll want to remember to include the cost of adopting a hybrid cloud infrastructure.
What is a hybrid cloud infrastructure?
We define a hybrid cloud infrastructure as one that encompasses both cloud and non-cloud resources. The cloud portion can include a number of different types: public (e.g., AWS or Azure), hosted private cloud, multitenant cloud, etc. Non-cloud resources would be those managed on-site in an on-premises data center or colocated in a provider’s data center.
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If you’re leveraging cloud resources, you probably already have workloads deployed across multiple clouds, often from different cloud vendors. It’s not uncommon for an acquisition to leave you with a true hybrid infrastructure, including resource types that are unfamiliar to your team.
Imagine this scenario: Company A has weathered the recession well, and they find themselves in a strong position in the 3rd quarter. But, they’re an older organization with a somewhat traditional approach to business and IT. In the back office, they’re running financial applications that haven’t been updated in twenty years. In fact, the core application is still green screen, running on AS/400 hardware.
Knowing they need to innovate to survive long-term, management is taking a good look at Company B. They’re a young organization in the same market with a deep talent pool and a lot of cutting-edge ideas. Unfortunately, they weren’t well-funded going into the recession, so they’re actively looking for an infusion of cash to keep the dream alive.
It seems like a match made in heaven. Company A can provide the cash to continue to fuel R&D as well as a ready-made customer base for up-sell opportunities. Company B has a small but not insignificant customer base already, and they provide the talent and the innovative spirit to propel the combined organization into a market leadership position. Culturally, the companies are naturally different, but with strong, top-down direction, these minor differences can be easily overcome.
So, what can go wrong? (Aside from the cultural issues, I mean. Realistically, anyone who’s ever been through an acquisition knows there’s no such thing as easily overcoming cultural differences.)
The accidental hybrid cloud infrastructure
The odds of these two diverse organizations having a similar approach to IT is extremely low. We already know Company A has legacy applications. Company B, on the other hand, sees IT as a strategic advantage. Every application they use is in the cloud, and most of it is subscription-based.
Company B’s strategy of empowering employees has served them well in R&D, but it’s led to a hodge-podge of solutions in IT and an overall lack of control. In fact, they’ve never quite gotten around to creating a configuration management database (CMDB), and they’re not really sure how many applications the organization has deployed.
Post deal, the combined IT organization will be tasked with managing a hybrid cloud infrastructure, with a mix of cloud and non-cloud resources. Consolidating IT into an environment that can be managed centrally, or at least consistently, across divisions could have a number of benefits, including tighter system security, greater resiliency, and lower spend. The challenge is, no one in either team has the expertise they need to lead such a consolidation.
Working with a managed cloud hosting provider
The combined organization could benefit from what Gartner calls a Managed Hybrid Cloud Hosting (MHCH) provider in a Market Guide they published late last year.
Complimentary download: Market Guide for Managed Hybrid Cloud Hosting, North America
An MHCH provider has broad experience across multiple types of clouds as well as experience with integrating non-cloud resources into the mix. They also provide common tools and services across resources to create a unified experience for the organization using their services. As importantly, this unified experience gives the customer the visibility into their resources they need to manage them more effectively.
Gartner also offers five recommendations for finding and working with the right MHCH:
- Minimize operational risk by assessing what the managed service provider’s (MSP’s) offered statement of work (SOW) and SLAs do and do not cover across the different delivery services.
- Reassess provider options by proactively and frequently reviewing the market for changes and the needs that can work in order to gain advantage (rather than waiting for contract break points).
- Ensure proper skill and ﬁt by examining the providers’ hyperscale partner certiﬁcations and how they can augment the organization. Capabilities that are certiﬁed by third-party auditors are more reliable.
- Minimize disruptions by actively managing the division of operational and support responsibilities between in-house staff and the MSP.
- Mitigate risk by having a strategic exit plan or multicloud strategy in case of a change in vendor status and viability.
How TierPoint help with your hybrid cloud infrastructure
As a Managed Hybrid Cloud Hosting Provider, TierPoint has helped dozens of clients assimilate unfamiliar IT systems after a merger or acquisition. This often involves a significant replatforming effort, e.g., migrating from an on-prem data center to the cloud. Sometimes, we’re just called in to assess the situation to give our client a clear view of the challenges that lie ahead. Occasionally, we’re even called in pre-acquisition to assist in the due diligence efforts. To learn more about our services reach out to one of our cloud experts.