AUTHORS: Eric Ledyard and Michael Hubbard
It seems that every day we get asked “What is ‘The Cloud’ and should we be looking at it?” We feel the very first challenge in answering the question is the fact that the question references a thing and not a method. What we mean is that there is no such thing as the cloud and it isn’t a place. Even more importantly, Cloud is a Means and not an End. Without a business-impacting end state or benefit statement, (prepare to be shocked) you actually don’t need cloud! Cloud computing is a way of running your IT organization that makes you more agile and efficient in order to improve the quality and value of services that IT provides to the business. Where in the spectrum of IT projects and budgets could/would agility create revenue, competitive advantage and customer service? Conversely, where are the areas where efficiency (capital, operational, or organizational) could reduce the cost basis of IT? The need for this change arose out of the fact that IT’s role is changing in the modern business world. Many of us feel that there are 3 catalysts for this change: The first is the overwhelming desire for the commoditization of IT services. The second is the social technology impact that is permeating everything around us causing business to take note at what is available in their personal and daily lives and seeing a gap between those technologies and services and those that are available in their day-to-day business world. The third is the exciting yet ominous market effect of “fine-grain choice.”
As it pertains to the commoditization of IT services, businesses want to see more options available to them when they are looking at acquiring IT services and are tired of the expensive, hard-to-manage, custom services they have had to build internally for so long and are eager for this to change. There is a significant barrier to entry of any company wanting to get into business for themselves having to first acquire IT services for their organization. It isn’t just IT services that are the target of this, either. One of the types of “Cloud” services that Gartner highlighted in a presentation a year ago was the creation of “Business-Process-as-a-Service” companies that they said would pick-up considerably as a result of the “cloud” movement. Many new companies instinctively look to procure services for functions such as accounting, payroll, and tax services from 3rd party providers or brokers today, rather than building those organizations internally. Nicholas Carr made these connections in his books ‘Doesn’t IT Matter’ and ‘The Big Switch’ when he discusses the fact that IT in the modern era is perceived as a commodity input from a business perspective, in the same way that electricity and telecommunications are. In his books, he ties together the concepts that because of the fact that IT is seen as a commodity, the modern company would never want to build their own IT environment and datacenter if they don’t need to.
The second major pressure that is facing business IT in the modern world is the explosion of technology adoption throughout society as a whole. Smart devices and on-demand services are training young generations that access to information should be ubiquitous and on-demand from any location at any time. When they get to the business world, there is a dramatic gap in the way these people perceive how business is done and there is typically a negative reaction as to why the company does not operate like many of the services they are used to in their personal lives. A very strong example of this is how the iPad and iPhone have permeated society. You can walk into a café anywhere nowadays and overhear people saying: “Oh, I have an app for that… you should get it.” Then, the other person goes to their app store immediately and downloads the app so they have access to those services. Then, that same person goes back to the office and someone says to them: “Oh, you need an application for that.” And then that person has to go to IT, fill out a request form, submit that form, wait for managerial approval, schedule a time to have their laptop sent into IT so the application can be installed and then get their laptop back. Once this happens even once, those people begin to ask: “Why can’t our company operate in the same fashion as my phone provider?”
Third, how does “fine-grain choice” impact the consumption of IT services? And are IT organizations (the suppliers) adapting to the associated consumption behavior transitions? Quite some time ago, a company’s IT Organization was the ONLY game in town; IT had to meet ALL the needs of the business. In more recent history choice began to emerge and a bevy of firms and consultants cropped-up to provide extremely rough-grain choice via full IT outsourcing and then business process outsourcing. These were long term contracts, of huge commercial value. Each decision to outsource changed the financial balance sheet of the business, and each contract award changed the balance sheet of the outsourcer. Today, consumers and corporate IT both have “fine-grain choice.” We have choice between what application services we will run ourselves or subscribe to a service run by someone else (Salesforce.com, SiriusXM, iTunes, for example) Even more fine-grain, we can choose to run and manage our own application, but allow someone else to provide the application platform and infrastructure (cloud foundry for example). We can even continue to own everything except the physical infrastructure and consume empty, unmanaged VM or physical capacity (think Terramark, Amazon EC2 or Rackspace). Of course, the CIO is a provider of choice as well, where all aspects of the service are safely controlled and delivered by the corporation itself.
Because of these pressures, most CIO’s are now trying to figure out how to change their practices and operations to function as a service provider to their respective businesses. A CIO told us recently that a Line-of-Business president recently shared with him “find a way to become a service provider to me, or I will find a service provider that can.” This is what most organizations mean when they say they want to “do cloud” but they don’t necessarily know this is what they mean. That is where our Vision organization can provide help by providing a roadmap for how they can go from where they are today to where they want to go tomorrow. At the end of the engagement it will be clear what it will take to transform the IT organization into what the business needs it to be.