Pitt Ohio CIO and CFO Scott Sullivan says he’s judicious about determining which applications are migrated to the cloud, and when. The transportation and logistics solutions company, which has adopted a hybrid approach to cloud, says that waiting until vendors can offer mature products at a competitive price point has been key.
We spoke with Sullivan about his hybrid cloud, the role that ROI plays in decision making, and how hybrid coincides with the company’s digital transformation goals.
The Enterprisers Project (TEP): Can you share what Pitt-Ohio’s approach to cloud is today?
Sullivan: We use a hybrid approach: We have a data center that’s fully paid for and constantly has to be upgraded like any data center. Our strategy with the cloud has been a twofold approach: Wait and see, then hop onboard. We started utilizing the cloud with utility-type products, like a fax server, spam email filtering, or web filtering. There were instances in which we had in-house products and the vendor over time had switched and developed good cloud offerings versus continuing the in-house approach.
In the last two years, we’ve been migrating vendor applications and business applications that were hosted internally (ie HRMS). We wait until the vendor gets to a mature state and can provide a price point that makes it competitive, versus not doing it in-house.
[ Need help explaining hybrid cloud pros and cons to colleagues? See our related article, 4 hybrid cloud misconceptions, examined. ]
TEP: What were the factors that led you to this type of approach?
Sullivan: One of the main factors is the ROI. We run a relatively lean shop, so I don’t have people dedicated to these applications or to these infrastructure pieces. When you start talking about the ROI with a vendor, they tell you about cost savings and people and things of that sort. But there’s really not a cost savings of people; it more relates to future opportunities for leveraging resources for growing the business, not just support.
For us, it came down to continuing to wait until the vendor matured and the service had a price point where the ROI was worth the challenge. These changes do save me future resource costs to help manage the infrastructure inside my four walls, so there’s a benefit down the road versus an immediate benefit that you’re going to receive internally.
Working with the cloud, though, isn’t a cookie-cutter approach. Even the standard applications aren’t cookie-cutter for everyone. You have to really understand your internal environment and how that environment is going to fit into the cloud. That takes time, research and energy.
TEP: Are there any examples where you’ve seen a good ROI and it’s allowed you to invest in other areas or free up staff to work on other things?
Sullivan: One was our HRMS product that’s probably used 0.25 of resource a year. We’ve been able to free up that time now with it being in the cloud. HRMS includes the whole payroll piece of it – and there’s tax updates every quarter. By just removing that component, we’ve been able to free up resources so we can look at convergence and other longer-term infrastructure plays that we want to set up in our data center.
We don’t think that one of those infrastructure plays will be our core ERP, though. It’s a homegrown system, so we’re not really sure that there will ever be a cloud fit for that. If your applications are homegrown, or if you don’t have a package-type ERP, that’s going to drive your strategy, too.
TEP: How does hybrid fit with Pitt-Ohio’s digital transformation goals?
Sullivan: We’re finding that our infrastructure is probably the most important consideration as we move into a digital world. The increasing use of APIs to communicate in real time with each other is continuing to grow in our space.
We’re finding a big need for providing information in a real-time environment. I refer to it as the “Amazon effect” in our industry. We deliver over 14,000 shipments in the B2B manufacturing goods space overnight. Amazon is setting the stage where people want to know when a shipment is coming, down to an hour or two for their planning purposes. Scenarios like that are driving the infrastructure and technology sides, that we’re able to provide those types of solutions via API or and various other communication strategies.
