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Building A Business Case For Automation And Orchestration

Building A Business Case For Automation And Orchestration
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If you're tasked with building a business case to add an automation or orchestration layer to your management stack, you'll first have to account for the risks involved.

For the typical enterprise, and this likely means yours, here is the business case around adding an automation or orchestration layer to your management stack:

"By all that's holy, don't do it! Stop now before you bring down everything it took thousands upon thousands of your colleagues' hours to build! If they find out it was you who green-lit this abomination, they will hunt you down and set your pale-visaged pate upon a pike at the entrance to the data center, from whence it will stare balefully as a caution to others."

In case that's too much math for you, let's break it down with a real-world example.

Automation and Orchestration: Icing on the Cake, or Just Another Useless Layer?

In June 2012, RBS's NatWest and Ulster Bank subsidiaries descended into madness when a glitch in its CA-7 workflow automation software caused a month of business disruption that forced tellers at 1,200 branches to stay late, doubled the call center staff, stranded travelers abroad, delayed mortgage requests, double-charged borrowers and, in one extreme instance, caused a Mexican hospital to threaten turning off the ventilator of a seven-year-old girl stricken with cancer if NatWest didn't pay up. (The money flowed and they kept her plugged in, but she died a week later.) The CEO had to forego his bonus because of the fiasco's impact on roughly 20 million stakeholders, and RBS canceled its presence at Wimbledon that year.

Bear in mind, CA-7 automates a mature process: scheduling mainframe batches. Now imagine how some anonymous, underpaid, possibly off-shore control room jockey could screw up a global financial services provider if s/he fat-fingered the code that controls all the enterprise's RISC, x86, storage, network, web portals and mobile device interfaces. And not just for one end-to-end process, but for every business process, both internal and customer-facing.

The easy lesson is to make sure you have the right people, and it looks like RBS didn't. Although the bank has never confirmed this, The Register reported at the time that CA-7 was run out of an outsourcing office in India, which was still staffing up to accommodate the workload orphaned by the bank's layoff of 20,000 British IT workers.

But wait, it gets worse: If such a straightforward process as batch scheduling can be fouled up so badly, how far off the rails can less well-understood business processes like incident remediation or self-service provisioning fly before you can shut them down?

And even worse: Let's say you shut them down every bit as fast as human hands can function. The damage is done. How long will it take to test your systems, bring them back up to accustomed service levels, and push through all your backlog?

You can buy all the software you want, but if you don't have the right people, processes and contingency plans, you got nothing to automate.

Accounting for Risk

In a more-or-less honest business case, there are two ways to reflect the added risk of this kind of initiative.

The first is to make sure you burden the target state with all the precursor projects you'll need if you're to have any chance of a successful orchestration implementation. Whatever you need to do, buy, learn, hire or out-task, make sure it goes in the business case. We'll keep things clean and suppose that all the precursor work as well as the actual orchestration implementation can be compressed into one year. It can't, but this is supposed to be a short article.

Figure 1: Automation/Orchestration Project Costs

Note:A download link for this Excel spreadsheet calculator is available at the end of the article under Business Case Resources.

Second, hike up the discount rate. Consider RBS for a moment. They don't have any cost of capital to speak of; they're a money-center bank. If they need more cash, they just ask the Bank of England for it. So let's say they use 5 percent as a discount rate to incorporate the typical amount of project risk as well as the minimal time value of money. If I were their CIO (an acronym, in this case, for Career Is Over), I'd have required a 15 percent discount rate for starters.

For the sake of argument (and it's likely you will get an argument), let's say that the only cost relevant one-tie costs in adding an orchestration layer are the software license itself, three months of implementation services and a box to run it all on.

To be honest, there will likely be huge impacts on network provisioning, network backbone, security rejiggering and additional storage requirements. Less honest people than you and me might recite the old incantation amongst the practitioners of the dark art of business case modeling: "Such costs might be incurred, but they more properly burden the [work owned by some poor schmuck who didn't think of this first] project, which is a precursor to any orchestration or automation efforts."

But that would be wrong. Don't let your boss catch you doing that [winking emoji]. 

Benefits of Automation and Orchestration

The benefits aren't unusual. It's the same for a lot of IT initiatives: Spend a little more on software, save a whole lot on labor. In this case, the labor savings will come from systems administrators, of course, but also from shared IT Service Management types related to business process management and business continuity and recovery (maybe some others).

For the sake of simplicity, we'll assume no relevant inflation, price performance or process improvement, and that server, software and storage capacity all grow 30 percent/year.

We'll also assume these annual benefits will be gradually attained as a stair-step function:

  •     50 percent sysadmin savings;
  •     67 percent ITSM savings;
  •     33 percent server hardware savings.

These will be slightly offset by an immediate 10 percent/year increase in network costs and 15 percent/year increase in software costs. 

(These values are predicated on nothing, so don't use them. Ask your vendors for their numbers. Those will also be predicated on nothing, but at least you can tag them as the source.)

Here's the current state, followed by the target state.

Figure 2: Current State

Figure 3: Target state with stair-step functions

Here's where we mash these together and throw in the project costs:

Figure 4: Investment Analysis

A negative NPV! Heavens to Betsy, the project is doomed!

Sadly, no.

If your boss wants a positive business case, you still have some knobs to turn.

First, there's the discount rate -- "d=" in the figure above. If we dial that down from 15 percent to 12 percent, it turns from red to black; the lower you go, the better it looks.

Or you can keep d at 15 percent. If you go back to the stair-step function and just be a little more aggressive with how fast you can attain the exit-rate benefits -- and you don't have to actually change those exit-rate benefits -- speed becomes your friend.

Figure 5: Speed to exit rate -- did you even notice the difference?

This is why it's important for you, as the one charged with constructing the business case for automation/orchestration, not be the one who owns the assumptions. Those who make the decisions need to own these inputs.

Business Case Resources:

To help you get your business case for Automation and Orchestration off the ground, download this Excel calculator and PowerPoint template, which you can customize to your needs.

The Excel calculator will help you determine your current state, project costs, and target state. It includes all of the inputs you'll need so you can present the final analysis. The PowerPoint template will walk you through adding the analysis from the Excel calculator so you can present the information to your stakeholders in a logical way.

  >> Download Excel Calculator
  >> Download PowerPoint Template

To get a better understanding of the key metrics and math used in these resources, take a look at How to Build a Successful Business Case for an IT Project.

More Business Case Resources:

More Business Cases