With more than 100,000 employees and billions in revenue, the multinational food company Almuri had recently approved a strategic plan aimed at making it the world leader in the snacks market within five years. But to realize this ambitious growth plan, CEO Jeffrey Sandler knew that Almuri needed the right operating system and, most important, better information management.
The proposal on the table was whether to adopt HP Helion, a hybrid cloud computing system from Hewlett-Packard designed for companies that would take advantage of Almuri's current servers and complement them with resources in the cloud under a single solution. Sandler had a big decision before him.
Pros and Cons
If Almuri opted for the HP Helion contract, it would no longer own the IT infrastructure and servers. Rather, it would have to depend on an information storage and management service over which it would have less control.
In particular, part of Almuri's data would go from being internally held and managed to being held and managed by HP. The vulnerability of company data was a major concern for Sandler. Fresh in his mind was another well-known cloud-computing service, Amazon Web Services, which had been in the news for suffering a security breach, leading to the loss or hacking of sensitive customer data.
Despite those concerns, the HP Helion solution would give Almuri greater flexibility and responsiveness to make updates and develop applications, and would also reduce the risk of errors, thanks to unified data management by HP. Moreover, Almuri would no longer have to worry about infrastructure maintenance, which at times had become a real nightmare for the company.
Above all, the HP proposal would make the process of integrating other businesses with Almuri's IT infrastructure that much easier. This was an extremely relevant consideration, given Almuri's strategic plan to buy up smaller competitors.
Although it was difficult to calculate the exact cost savings, HP had estimated that its cloud-based solution could save Almuri as much as $2.5 million a year. This would be achieved via economies of scale and the standardization of services that were made possible through the use of large server farms in the cloud.
The advent of such possibilities was leading more and more companies and government agencies to migrate their IT needs to the cloud, for two additional reasons: (1) capital expenditure (capex) could be converted to operational expenditure (opex), which carried different fiscal implications; and (2) energy use would be made more efficient, reducing the overall environmental impact.
What Were the Alternatives?
If Almuri ruled out the HP option, one alternative was to continue with its traditional model, developing and managing IT infrastructures itself. At the other end of the spectrum was full migration to the cloud, as some of the younger IT staff were advocating.
For the latter option, there was a growing number of services on the market, which varied according to one's particular security needs and how much one was willing to pay. These services were based on either a public cloud, which enabled different customers to share resources via the internet, or a private cloud, which leveraged the company's own infrastructure to serve its different locations via the web.
For the public cloud model, Amazon was the benchmark with its Amazon Web Services. Microsoft had created Azure. Google was also an important player through its Google Cloud Platform and Google Drive. IBM and Oracle also had their own offerings.
Given this range of options, what was the best choice for Almuri? Should it go with HP or keep exploring other avenues? And if it chose HP Helion, how would it need to adjust its operating model? For example, how should new applications be developed? Who should start the process, control the execution, solve potential problems, and so on? These were among the many questions swirling around in the CEO's head as he faced a decision confronting many companies today.
The case study "The HP Helion Proposal: To Migrate or Not to Migrate to the Cloud, That Is the Question" (P-1140-E), by Juan Enrique Flores, Francisco Vázquez and IESE Prof. Philip Moscoso, won the 2015 European Foundation for Management Development (EFMD) Case Writing Award in the category of Supply Chain Management. The case is available from IESE Publishing at www.iesep.com.