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Tag Archives: risk analysis

VMware Cloud Compass Tool (powered by Alinean)

Author: Thomas Pisello, Alinean CEO and founder

It can be a challenge knowing which cloud solution is best for your particular workloads and business requirements: a private cloud, public cloud or hybrid solution?

To help you determine the best option, VMware worked with the business value experts at Alinean to create the VMware Cloud Compass Tool.

The VMware Cloud Compass Tool factors your unique workloads, budget goals, risk tolerance and desired business outcomes to provide a customized 3rd party recommendation as to the best cloud option for your unique requirements. The tool factors the most important elements to help guide your cloud decision, all in less than 10 minutes to complete.

Starting with a few simple questions about your company and workload requirements, the tool then provides:

  • A comparison of total cost of ownership (TCO) for various compute options, differentiating the costs for on-premise with public and private cloud options, tallying differences in CapEx, OpEx and business benefits.
  • An assessment of your Risk Tolerance, analyzing the importance of Availability, Governance and Compliance, Security and Privacy and Business Relationship Management in your selection of the right cloud platform.
  • An assessment of Results Expectations, determining how important Accessibility, Business Responsiveness, Scalability and Cost & Accounting is to the cloud decision.

Based on the workloads, TCO, risk and results assessments the tool delivers an online summary of the recommendation results; with an overview of the right cloud recommendation based on your unique factors and requirements.

For a more detailed view, a complimentary customized white paper can be downloaded and shared with your team, personalized for your specific workloads, budget, risk tolerance, desired business outcomes, and most importantly, cloud recommendations.

For a quick introduction to the VMware Cloud Compass, watch the short video below with VMware Accelerate Advisory Services Benchmark Practice lead Craig Stanley, and you can read Craig’s recent blog, The 3 Rules for Making Confident IT Decisions, for a deep dive on VMware’s risk analysis methodology.

Access the VMware Cloud Compass to determine the best cloud solution for your workload and business requirements.

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Craig Stanley is the Benchmarking Practice Lead for VMware Accelerate Advisory Services. You can follow him @benchmarkguru and Thomas Pisello @tpisello on Twitter.

If you’re at VMworld San Francisco today, stop by the VMware Accelerate Advisory Services demo booth in the Solution Exchange, and meet Craig in person!

 

The 3 Rules for Making Confident IT Decisions

Author: Craig Stanley

When presented with a choice between two solutions with an obvious difference in cost and value, you should always choose the cheaper one, right?  We all know that’s not the case, as it’s just not that simple. In fact, many times the more expensive choice may be the right one when all factors are considered. But it’s important that the cost premium delivers a value that exceeds the cost differential and potential for failure.

The other intangible factors that influence decisions are what can be generalized as “risk.” The major components of risk are: risk exposure, risk tolerance, confidence and trust, probability and chance, and the size of the risk or decision. Counterbalancing risk is return, which is comprised of the same factors, but refers to the ability to achieve value goals. A robust risk analysis establishes a framework for identifying, measuring, evaluating, and objectively comparing these factors.

VMware’s process to analyze risk identifies specific areas of risk, assesses your reaction to the potential for problems to occur and risk tolerance, and computes an inherent risk/return factor that can be applied to the total cost of ownership (TCO). This process is used to create a risk-adjusted TCO by increasing or decreasing the benefit with respect to the perceived risk.

As an IT decision maker, your response to risk is an emotional reaction that influences your decision and even your ability to make a decision. When deciding between two options, the decision you make that will likely deliver the most favorable outcome adheres to three general rules:

  1. The ratio of the investment to the expected return influences the decision between financial risk and performance risk.
  2. The level of risk tolerance should exceed the level of risk exposure.
  3. The upside value potential should exceed the value being put at risk.

In the first rule, your emotional connection to financial and performance risk is evaluated. First, you have consider how the decision will impact you or your organization if the decision turns out to be a bad one.

  • What if this doesn’t turn out as expected?
  • What if it ends up costing more and taking longer to implement?
  • Am I getting locked into something I’ll have trouble getting out of?

As the uncertainty of these types of concerns increase, the likelihood of your decision stalling will increase as well, because it may appear that doing nothing is less risky. But making no decision carries risk exposure as well in terms of lost opportunities and unmitigated risk exposure. This type of risk can be categorized as performance risk as it is associated with the success and probability of failure in the competing solutions.

And, the size of the decision’s cost and the potential revenue or value being put at risk also makes your decision more of an emotional one. This type of risk can be categorized as financial risk, being associated with the ratio of the investment to the outcome. For example, the game of poker is basically the same whether you’re playing a friendly game for pennies or playing with $1,000 chips in Las Vegas. But you play the game very differently when the stakes of losing are significantly higher and, consequently you are less willing to take chances.

If you were presented with an opportunity to make a sizeable return on an investment, but the amount you needed to investment was large, then you might not be inclined to accept the opportunity without much consideration. But if the same situation was presented and you only had to make a very small investment, then you might accept the opportunity immediately.

The second rule of the decision process is that the level of risk that is acceptable to you should be greater than the level of risk you’re being exposed to. Analyzing these risk factors involves:

  • Identifying the most comment incident events that might occur
  • Determining how each event would impact your decision
  • Determining how much risk you can tolerate for each event
  • Evaluating the probability of the event occurrence in each of the decision choices

These risk factors are evaluated to arrive at a risk exposure and risk tolerance value for each solution. The gap between the tolerance and exposure is termed “inherent risk.” If this result is negative, then the inherent risk of your decision is unfavorable and indicates that there may be unmitigated risk in the decision since the exposure is greater than what you are willing to accept. Conversely, if the gap is positive, then inherent risk is favorable and suggests opportunity for you to assume some additional risk to gain additional value opportunities. The inherent risk can be applied to the decision investment to create a risk-adjusted investment value.

The third rule of the decision process is that the upside potential should value be placed at risk. The upside potential is based on the value differential between the solutions. The value being placed at risk, or downside, examines the potential losses that could be incurred within the context of the rated risks. Ideally, the former should be greater than the latter.

For example, let’s assume you can make $1,000 performing some task, but if anything goes wrong, you’re out $100,000. Would you take that risk?  Probably not, since there’s just not enough profit in that scenario to assume a 100:1 risk, unless you have extreme confidence that you have effectively removed the potential for failure.

These three rules describe results that can be integrated into an overall decision framework that produces a risk-adjusted investment or TCO in an IT decision; a return on risk; and an estimation of value impact.

The risk adjustment is a function of the inherent risk and the investment. When I’m working with IT decision makers, we compare the inherent risk of the decision that’s being evaluated with the competing TCO values to determine a mitigation-versus-value opportunity offset. This offset is applied to the TCO to arrive at a risk adjusted TCO, or a TCO that reflects the impact of the inherent risk. The risk adjusted TCO will reflect an increase or decrease depending on the inherent risk factors.

We can determine the return on risk by the ratio of the upside opportunity to the downside exposure as a function of the inherent risk and the investment ratio. If, as described in the first rule above, the financial risk of your decision is very small, then your return on risk may be largely driven by the inherent risk factors. Otherwise, a large financial risk tends to take precedence over the inherent risk. A positive return on risk suggests the potential for success in your decision is good, while a negative suggests a higher likelihood of failure.

Lastly, we can estimate the overall impact on the value stream by factoring the investment or TCO adjustments within the context of the investment ratio. This result will estimate the potential revenue or budgetary impact you may see of your decision with competing or comparison solutions.

Because the risk analysis process reveals both risk and opportunity, these three results enable you to make a more confident decision. Measuring your emotions and beliefs about one solution versus another helps your decision-making process and removes the fog of uncertainty.

The Accelerate risk analysis methodology described here is straight-forward to use and delivers results that are relevant, accurate, and easy to understand. The results are provided in a format that can be readily shared throughout the enterprise as needed. Applying risk analysis to the public/hybrid cloud decision process and other major IT initiatives will help you gain insight into the risk factors involved for each alternative, quantify the real value of the risk and opportunity, and increase your confidence in the decision.

Learn more in our white paper How Risk Analysis Streamlines Decision Making for Major IT Initiatives

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Craig Stanley is the Benchmarking Practice Lead for VMware Accelerate Advisory Services. You can follow him on Twitter @benchmarkguru.

If you’re at VMworld San Francisco tomorrow, stop by the VMware Accelerate Advisory Services demo booth in the Solution Exchange, and meet Craig in person!

Want to continue the conversation with your C-level executive peers?  Join our exclusive CxO Corner Facebook page for access to hundreds of verified CxOs sharing ideas around IT Transformation right now by going to CxO Corner and clicking “ask to join group.”

Happy 10th, VMworld!

Author: Ed Hoppitt

I’m heading into my seventh year presenting at VMworld, and it’s hard to believe that this is the event’s 10-year anniversary. I’ve been with VMware for a year now, with over 14 years in the IT service industry, and VMworld gets more exciting every year. This year VMware will show attendees how to extend the benefits of virtualization to all data center services—and I can tell you that those that I’m working with love the idea of moving away from their legacy data center architectures towards the software-defined data center.

If you’ve already registered to come and find out how to accelerate the agility, reliability, and savings that you can get from evolving to the software-defined data center then welcome on board. If you haven’t already registered, there’s still time. Along with me, there are several other Accelerate consultants who’ll be presenting. Below are abstracts with links to their sessions and panels so you can easily add them to your VMworld Schedule Builder, which is now available to help you plan your time effectively.

You will also find us in the VMworld demo grounds, where we’ll have an Accelerate booth staffed with consultants who will demonstrate how data center virtualization examines much more than just the traditional view of server virtualization.

Can’t wait to catch up with you in San Francisco—make sure you come say hi !

Ed

Ed Hoppitt is an Accelerate business solutions architect based in the U.K.

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Ed Hoppitt, VMware Accelerate Business Solutions Architect with Phil Richards, CTO Global Markets , BT Plc
OPT4689 – Operations Transformation – Expanding the Value of Cloud Computing
 — Cloud computing is a forcing function for change. It is helping IT organizations move away from focusing on siloed technology challenges, towards driving business transformation through IT agility. But that change is also transforming the way IT approaches Service Operations Management.  In this session, consulting professionals from VMware and BT Global Services will share real world transformation stories about a range of customer engagements, as well as BT’s own vCloud deployment on multiple vBlocks. Learn key insights and lessons learned to optimize cloud era operations. Also avoid common mistakes and stumbling blocks. And, understand how to determine if you’re at risk for an “All the gear, no idea” cloud strategy.

Eric Ledyard, VMware Accelerate Chief Technologist
VSVC4509 – SDDC is Here and Now: A Success Story 
 — We partnered with one of the largest financial companies in the world to design an actionable plan around SDDC and study whether or not it was feasible in 2013, what the impact would be to the existing organization, and what the value would be of moving forward with an infrastructure built on a SDDC architecture. Coming out of this, we have an incredible success story for them and have proven the feasibility and tremendous value that SDDC brings to one of the toughest companies in the world.

Rich Pleasants, VMware Accelerate Architect with Rich Bourdeau, VMware Group Marketing Manager
OPT5474 – The Transformative Power and Business Case for Cloud Automation
 — While the cost savings of virtualization are substantial and undeniable, the savings and service delivery improvements of deploying on-demand self service and scalability in a private or hybrid cloud environment are also compelling.  But all three require automation to deliver full opex and agility value potential.  But what do we mean by automation? Scripting, workflow, and orchestration are all types of automation.  Some are a better fit than other for specific use cases.  And each have different short term and long term costs and benefits. If you’re like most companies, you may struggle to develop a cogent automation strategy that quantifies costs and benefits with your cloud deployment project.   Attend this session to understand the terminology and the key success factors behind the concepts.   Well explore different types of automation and look at specific use cases that are a great fit for each. And we will also offer proven approaches for articulating the value of IT automation in terms of operational efficiency and resource utilization savings, improved service quality, and increased agility and responsive to business needs.

Rich Pleasants and Heman Smith, VMware Accelerate Architects with Paul Chapman, VMware VP of Information Technology; Kevin Lees, VMware Principal Architect; and Jeffrey Ton, SVP Corporate Connectivity & CIO, Goodwill Industries of Central Indiana
OPT5315 – Transform IT Into a Service Broker – Key Success Factors
— The IT service broker concept is compelling. IT takes a portfolio view of workloads and capabilities, and brokers the right “fit for purpose” solution for each service. IT may move applications to SaaS, build and deliver services on-premise, or subcontract depending on circumstance. But it takes more than a “cloud” or fielding a new team, or re-organizing the department to change long standing service delivery and service consumption behaviors. This panel is packed with those who have “been there done that” and understand the challenges, tricks, and benefits of the service broker model. We’ll draw on the real world experience of the panelists and the audience to help you identify and apply the secrets of successful transformation.

Craig Stanley, VMware Accelerate Analytics Consultant
PHC7117 – Using The Cloud Compass to Evaluate Technology Risk in Cloud Decisions
 — Public and hybrid clouds offer enterprises significant opportunities in terms of cost efficiency, better reliability and improved business agility. Cloud solution deployments vary based on the workloads, cost to deploy and run, and impact to the business. While the implementation and operating costs of cloud migration are important, the business impact may be even more important to understand from the perspective of risk, return and other factors that could complicate your cloud implementation. See a live demonstration of the The Cloud Compass — an automated process for evaluating these difficult-to-quantify risk and return factors. It illustrates how risk impacts the public/hybrid cloud TCO, generates a return on risk and enables the enterprise to make decisions based on intangible but real observations.

Padmaja Vrudhula, VMware Accelerate Strategist with Thirumalesh Reddy, VMware Sr. Director of Emerging Solutions & Innovation
VSVC4948 – Moving Enterprise Application Dev/Test to VMware’s internal Private Cloud – Architecture, Implementation and Integration
— The VMware IT team responsible for managing enterprise applications is moving all dev/test environments to our private cloud IaaS. We have achieved impressive cycle time and cost reduction. This technical session is presented by VMware Director of IT responsible for automating deployment and testing of complex multi-application dev/test environments in a vCloud environment. To improve agility, SDLC throughput, and reduce costs, we have automated deployment of more than a dozen standard dev/test instances including provisioning and testing combinations of dozens of different application and middleware components. In this session, we will highlight an automation platform we developed to deploy complex application stacks into a vCloud environment. We will share architecture and implementation lessons learn and real bottom line benefits that result our internal use of a range of VMware products including vCloud virtualized infrastructure, building blueprints using App Director, self-service catalog and policy management using vCAC, policy-based tiered infrastructure resource management, provisioning with integrated monitoring and analytics, and provisioning and de-provisioning based on a leased resource model. Attend this session to hear lessons learned and gain insights from an expert with both product and architecture expertise.