Cloud Services Brokerage Lessons From Alex Rodriguez, Baseball’s Trade Deadline

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( A guest post from Ray Holloman, NJVC Corporate Communications)

Two stories sat atop baseball’s marquee in the final days of July.
The first was the non-waiver trade deadline, baseball’s annual pros-for-prospects surge staffing. The second was the pending punishment of Alex Rodriguez, the former sweet-swinging shortstop turned sullen slugger turned cautionary tale and financial wild pitch of the New York Yankees.
Tucked in that double play of headlines was an impromptu lesson about the value of cloud services brokers (CSBs).
In a general sense, baseball’s trade deadline is a valuable part of its own asset lifecycle.
For non-contending teams, the deadline historically is the time to exchange expensive, often past-its-prime talent (say, baseball’s legacy hardware) for cheaper, younger players. For teams in the penant race, the deadline offers an opportunity to add talent on a short-term basis to meet important objectives, say adding additional on-demand SaaS options like Salesforce to meet immediate campaign goals.
If executed properly, either approach can benefit your organization.
Ask an Astros fan about acquiring future franchise cornerstone Jeff Bagwell from the Red Sox for reliever Larry Andersen in 1990 as an August waiver wire trade and watch them beam ear to ear, at least until they get knocked silly by a Boston fan with a fungo. On the flip side, ask any Yankees fan about the value of David Cone, a 1995 acquisition, to the team’s four World Series wins in five years from 1996 – 2000, at the cost of prospects who never became so much as household names in their own households.
While Yankees GM Brian Cashman may not be the first person to visit with your cloud strategy functional requirement documents, when it comes to the trade deadline, effective baseball general managers share a playbook and set of guidelines with effective cloud services brokers.
Understand the Needs of Your Team
Effective CSBs and effective GMs intimately understand the needs of the team and the specific circumstances of the marketplace. In a blue-sky environment, every team in baseball would benefit from the addition of a star pitcher like Jake Peavy. Likewise, were money and technology no obstacle, nearly every company would find some benefit in using public cloud services.
Whether or not either option is the best course for your team or company requires an understanding in end goal and, more importantly, current position against that goal. Reduced overheard/increased effieciency is the top-level goal of every IT department, just as every baseball’s team goal is to win the World Series. An effective GM or CSB will understand the position of your company and react accordingly. Just because companies have the same goal doesn’t mean they have a one-size-fits-all approach to the cloud, as every baseball team shouldn’t make trades with the goal of winning the World Series at season’s end.
For example, in 2002, the then Montreal Expos (kids, consult your history books) overestimated its success potential and traded future All Stars Brandon Phillips, Cliff Lee and Grady Sizemore for Bartolo Colon, only to both badly miss the playoffs by 12.5 games and lose Colon as a free agent at the end of the year. The trade (in fairness, completed under the cloud of possible contraction) set the Expos on the course to relocation to Washington, DC and effectively took baseball out of the French vocabulary.
Large cloud strategies without a proper understanding of time, place and expertise can be just as crippling, burdening a company with lengthy contracts and underperforming software.
The value of a CSB is the same as an effective general manager. Both the GM and CSB find the best available value and plot the best strategy with the specific goals of your company in mind, be it downsizing, upsizing or changing course altogether. There are no one-size-fits-all strategies, nor, likely, any one vendor to best meet all needs.
Kevin L. Jackson
Understand the Marketplace
In baseball, there are no sticker prices. Player acquisition is a negotiation between one buyer and one seller, so price discovery is an inexact science. From year to year, the value of a type of player changes as a simple function of supply and demand. Some deadlines are overloaded with starting pitchers, some don’t have a single hurler that could make a dent against the Bad News Bears or, worse, the Houston Astros.
Cloud strategy isn’t much different.
Due to dynamic pricing relative to any number of factors between vendor and end user, maximizing the value of your IT investment in cloud is a difficult course to plot without extensive familiarity with the marketplace.
Further, with an increasing number of cloud solutions, ranging from the ordinary, like storage or email, to the more exotic, like disaster response, an effective CSB, like an effective general manager, needs to make certain the return on investment is sufficiently high in an era of dwindling IT dollars. Even if your primary need is upgrading desktop applications or, say, acquiring a second baseman, if the cost exceeds your budget, an effective GM or CSB will offer the best course of when to commit and when to wait or explore other options.
Full-service CSB, which provides transparency into pricing through service acquisition portals, as well as expert consultative service, helps provide a full view. At NJVC, Vice President and General Manager, Cloud Services, Kevin Jackson, leads the company’s cloud efforts, including both strategy assessment and the use of the innovative Gravitant CloudMatrix platform. Jackson sees the evolution to a broker model as organic due to the level of knowledge required to understand the marketplace.
“The range of cloud solutions in the marketplace today exceeds the ability of many corporate IT staff to keep abreast, just in the way the number of financial investment instruments available often exceed the ability of a personal investor to track,” Jackson says. “Even successful financial investors don’t work by themselves. Cloud is simply the next industry that will greatly benefit from brokerage models.”
Whether your cloud strategy is to use an internal cloud strategy broker composed of your own team of experts or an external team, understanding the marketplace is just as important as understanding needs.
Always Look Beyond the Back of the Card
Baseball is a game so finely audited you’d think it was sponsored by the IRS. Every pitch is carefully indexed; every swing recorded. The results of everything from defensive positioning to pitch type to seemingly what flavor bubble gum the left fielder prefers are cataloged and then analyzed like the human genome.
But, with apologies to ex-NFL Coach Bill Parcels’ brutally earnest assessment that you are what your record says you are, in baseball and cloud computing you are not necessarily what your numbers say you are.
Effective general managers, like CSBs, know how to look beyond the publicly available statistics and determine organizational fit and future benefit.
Any armchair GM could propose a trade for a player hitting .300 in AA, but an effective general manager looks for the story behind the numbers. Is the player simply getting lucky on balls in play? Is he performing well against other top prospects or simply crushing pitchers on the way out of baseball? Is he age appropriate for the level?
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Similarly, a CSB can look beyond the promised statistics of a cloud solution and understand how advertised performance baselines measure up in a real-world environment, and how the solution will benefit your entire IT enterprise. Any effective CSB understands there’s more to cloud strategy than just vendor promises.
Work Effectively, but Behind the Scenes
General managers, like CSBs, work as architects. The on-field management is handled by the team’s manager, and most decisions are approved by an owner or team president. Similarly, a CSB helps provide leadership and strategy; a  company’s day-to-day management is handled by its own IT department.
“The goal of a cloud services broker is to supplement your expertise, not take your IT sovereignty,” Jackson says. “There may be some reluctance with cloud because its solutions often take IT off-premises, but it’s not a solution about lack of control, it’s a solution of efficiency.”
Cloud services brokerage holds many of the benefits of travel brokerage services, like Travelocity or Kayak. CSBs won’t tell you where your vacation spot should be, they’ll simply ensure you get to destination as efficiently as possible.
Full IT sovereignty belongs to the company and the IT manager.
Avoiding A-Rod and Vendor Lock in
On the flip side of the trade deadline was Rodriguez.
The once-and-future clean home run champion, Rodriguez now faces suspension through the end of 2014 for his part in a performance-enhancing drugs scandal, is a declining talent and at 38, locked in to a 10-year, $275 million contract through 2017. The heft of Rodriguez’s contract makes even to the money-printing Yankees, baseball’s financial equivalent of a merger between Richie Rich and Daddy Warbucks, cringe.
In baseball’s world of guaranteed contracts, player agreements are as unbreakable as a .400 batting average, an aluminum bat or a Royals’ losing skid.
In the wrong circumstances, IT can be just as painful.
Paying for current performance without anticipating future needs can be a serious problem for any company. Like aging third basemen, IT solutions that provide best-in-class service today may not in five years. Technologies evolve, and often the most difficult part of corporate IT can be managing with creaky legacy software. Granted, IT tends to be more predictable than people (except printers, of course), but an effective CSB can help your IT strategy avoid lengthy vendor lock in and lack of agility .
Matched with the ability to look beyond the back-of-the-card stats and a real-time understanding of a dynamically priced market, an effective CSB, like an effective general manager, can maximize your IT budget and achieve your primary goal—increasing efficiency while reducing cost.
As baseball’s trade deadline and Rodriguez’s purgatory tells us, it isn’t simply understanding that it’s time for a change in strategy, it’s identifying the right team to execute it.
In these first days of August, when it comes to your cloud strategy, it’s probably time to make a trade.

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1 Comment

  1. Samuel Drake on September 18, 2013 at 4:43 am

    The legislation would also direct the SEC to tailor its rules governing M&A brokers in light of the limited scope of their activities, the nature of privately negotiated M&A transactions, and the active involvement of in Merger and Acquisition Brokers those transactions.