4 ways IT can rise above outside cloud competitors

4 ways IT can rise above outside cloud competitors

Summary: Increasingly, IT departments are competing directly against outside cloud providers for their organizations' business. How can they offer far greater value than a monthly subscription plan?


To survive and thrive in the coming years, information technology departments need to run as businesses with businesses. Prime competitors will be outside cloud services and they will stop at nothing to grab an organization's computing business.

Data Center at CERN 2 -photo courtesy of CERN Press Office
(Image: CERN press office)

The question is: Will decision makers be swooned by the siren song of cloud, with its low monthly payments and promises of simplicity? IT departments don't have to take this lying down; they have many advantages to offer their internal customers via private cloud. But these advantages need to be sold, and be packaged as something of far more value than the outside cloud service.

True enough, outside providers know precious little about the business. But the business may not be listening to the voice of reason as they subscribe to every service that comes along.

Scott Bils, managing partner at Leverhawk, offers four bits of advice on how to position corporate IT as a competitive business.

Offer design services

"It’s not enough to just build a private cloud and let it loose," said Bils. "Just as Amazon or Rackspace does, enterprise IT needs to identify the starting points, bundles, configurations to be offered internally that include CPU, memory, storage, network, and other services and components."

Offer competitive pricing

"To effectively compete with external vendors, internal pricing of private cloud services need to evolve beyond just 'cost-plus' models," said Bils. "Pricing of internal services need to reflect competitive market dynamics, and provide incentives to keep volumes in-house."

Adopt PR and marketing

CIOs "need to effectively market and evangelize their services internally," said Bils. As with a professional marketing agency, IT leaders need to understand their customers' "needs and pains".

Offer demand management

Demand for internal services may be difficult to predict, and this is something outside cloud providers aren't food at — they'll just try to sell the whole package. But with private cloud, "demand forecasting and management will be critical to avoid bad capacity decisions," Bils said.

Once IT develops its chops at running a successful internal cloud service, it can branch outside of the organization as well. IT can serve as a competitive value proposition that turns non-tech businesses into cloud providers themselves. But the impetus needs to come from the people directly providing the services.

Topics: Cloud, Data Centers, IT Priorities

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  • cost center

    The sad thing is IT will always be a cost center. If IT dept. can be run as a separate IT provider then perhaps the outlook will be different. We use software like Aikotech ThinServer to deploy our web services
  • Monthly payments

    that seems to be the biggest catch here. Most companies I deal with want a one-time payment, offering them a contract with only monthly payments for a service is the deathknell on the deal.

    Offer them a one-time payment, equivalent to 3 or 4 monthly fees use and they are fine, because they "own" the product.

    It is the same as leasing, they don't want to lease, they want to own the product, whether it be a car, office equipment, computer or software. Even if they replace it as regularly as a leased product, they still want to own it.
  • Enterprise Chargeback

    To compete with public cloud offerings enterprises must be able to offer comparable private cloud offerings that are competitively priced with more value. The pricing models must align with public cloud subscription pricing and the value must be developed internally around the ease of doing business leveraging technologies such as self-service catalogs and automated provisioning. BlueOSS has been providing these technologies to public cloud providers for over a decade and is beginning to see demand for these same technologies in the private cloud enterprise space.
    Cloud Cat
  • Is it really cheaper?

    I might come from a different perspective than many readers here but I would like to share my observations thus far. As a small IT department, I am finding that some cloud services not only make perfect sense, but also come with cost savings, or a slight increase that allows us to stay away from CapX and spread out our costs as expenses. In other areas, usually the more complex tiers like IaaS, DRaaS, etc, are far more expensive than providing similar services in-house. When the argument is posed to me about the number of FTE's I need to retain to manage in-house services vs. cloud, the equation doesn't change much. I still need two IT people to manage cloud vendors and administer their services to our company's needs, the same two that can manage my internal infrastructure. All that is different is the skill-sets required to do either of the two. I supposed as we grow, and as cloud vendors take on more customers, things will change but I think cloud as a whole still needs to grow up more to be of value to medium sizes businesses. Then there is the issue I keep running into…the more we push to the cloud, the greater our single point of failure and bottlenecks become, or we shift whatever we save over to much more bandwidth and redundancy (which can be difficult in some areas).

    In the meanwhile, I will keep identifying and using those cost effective services that truly do take workload off my bench and maintain a hybrid infrastructure, which is totally manageable. Taking the best of both worlds for now.
    • 5%

      Less than 5% of larger companies, and a lower percentage of smaller companies, can reasonably identify the costs of their internal services and distinguish overhead costs from recoverable costs.
      A very small percentage do chargeback, even notational chargeback.

      Few companies have structured IT so that they can benchmark the quality and cost of the services available through multi-sourcing of any sort against the services they provide.

      Fewer still have developed service-based cost accounting or service-based demand management controls.

      It is rare indeed to see acknowledgement of the Stan Shih Smiley curve and a separation of the design and management activities from the operational, production activities - and separately priced.

      Those few IT organizations that have reorganized around "running IT like a business within a business" that can offer regular demonstration of value for money, and have a business services management office that acts as stewards of the companies investment in IT are ideally re-engineered to exploit Cloud and the other multi-sourcing opportunities.
  • Some Places Cannot Run in the Public cloud

    While one provider did show a policeman and advertise that he is using that public cloud for his data, most governments know that this violates CJIS (Criminal Justice) rules and stopped at least one major contract with LAPD from going through. Even if you are a medical practitioner office, you still have HIPAA rules and most Cloud providers say they have no responsibility for your HIPAA compliance (which is usually true). When a lot of companies realize that they can read the rules of the provider on the provider's website and find that the provider does read everything you upload, then there may be some big backlash. Especially if data is governed and fines start being issued. Some places do NOT allow customer data outside of their four walls (especially if it is MY data) and that is a good thing.