Great Debate: Cloud Computing: SMB's only IT department?

Summary:Will the cloud eventually enable smaller companies to do away with their IT departments?

Christopher Dawson

Christopher Dawson

Yes

or

No

Heather Clancy

Heather Clancy

Best Argument: No

The moderator has delivered a final verdict.

Opening Statements

The solution? The cloud

Christopher Dawson:  If you run an SMB, chances are you’re all too familiar with the many hats you wear. Manager, CEO, CFO, CIO... Even for medium-sized businesses that have more established roles and staffing, IT tends to be an afterthought until it breaks. No matter the size of your organization, though, doesn’t it usually run better when your time can be devoted to strategic thinking and growing the business instead of bothering with software licensing, hardware rollouts (or fixing old hardware), and the security of your expanding stores of customer and supply chain data (to say nothing of intellectual property and other digital assets)?

Yes. Yes it does. The solution? The cloud. Leveraging hosted software-as a-service on whatever devices are affordable and keeping your employees happy means your attention is on the business while cloud providers deliver everything you need online. Pay the Internet bills and go change the world.
 

Adult supervision required

Heather Clancy: Just because cloud infrastructure and applications can be provisioned easily by line-of-business managers and be paid for outside of regular IT budgets doesn’t mean your SMB can eliminate its IT department as you take them on. The role of the SMB IT manager actually becomes even more strategic and complicated as SMBs invest more deeply in cloud services. Some small businesses that have relied on outside IT services companies in the past may even want to consider bringing someone on staff to manage the big picture.

There are three big reasons: 1) Moving to the cloud requires disciplined data management. 2) As different services are adopted from different cloud service providers, someone must maintain a holistic view of a company’s entire IT footprint. 3) Someone needs to figure out how cloud services should interact and integrate with remaining on-premise applications.

To be truly strategic, cloud investments require IT management oversight.

The Rebuttal

  • Great Debate Moderator

    Thank you!

    Chris and Heather will post their closing arguments tomorrow and I will declare a winner on Thursday. Between now and then, don't forget to cast your vote and jump into the discussion below to post your thoughts on this topic.

    Posted by Josh Gingold

  • Great Debate Moderator

    Who you gonna call?

    If there is some sort of problem with a cloud-based service, who within the SMB is most qualified to actually place that call to the provider for support and guidance?

    Posted by Josh Gingold

    Depends on the SMB

    For my small business, it's me. For others, it's the project manager at your outsourced service integrator. For others still, it's the skeleton IT staff with those dual roles we identified above (e.g., social media strategy, web content and design, etc.). When it comes down to it, many small businesses can't afford dedicated staff; in 2012, part of running a small business is having a degree of IT savvy. For medium organizations, when flexibility is the name of the game, the right service provider who can take that call at 1am is the best person to handle critical needs most cost-effectively.

    Christopher Dawson

    I am for Yes

    Your IT manager

    Your IT manager or the person who is accountable for the contract. It doesn't really matter if that person is "on staff" or an outside integrator you've hired to handle this on your company's behalf. Sure, the promise of the cloud is that it can be provisioned by the line-of-business. But do you really want your top salesperson spending hours with CRM technical support?

    Heather Clancy

    I am for No

  • Great Debate Moderator

    Striking a balance

    Is there a balance that SMBs can strike between cloud and traditional on-premise technology?

    Posted by Josh Gingold

    Sure...

    Every business doesn't need to issue their employees a regulation Chromebook and expect everything to happen in the cloud. However, core services like communication/collaboration and web hosting don't really have any business sitting in the back office a small business. Cloud providers for these core technologies are too cheap and too good to justify managing an Exchange server. Similarly, many businesses will have specific on-site computing needs like workstations or POS systems that can't be 100% cloud. Again, this is where the service integrators step in and ensure that staff are trained and empowered. For small organizations with IT focused business, chances are, employees know just what they need to order from Dell.com to get their job done. If they don't, you probably shouldn't hire them. It's better to empower than to spend time dealing with IT issues with dedicated in-house staff; it's both ineffective from a cost perspective and painful for savvy users.

    Christopher Dawson

    I am for Yes

    Sure, but you need to manage it

    I think many SMBs will have a hybrid approach that combine cloud applications and services with on-premise infrastructure. In fact, I think a hybrid model will be the most common model. That will require SMBs to hire integration experts and managed service providers that can ensure that the on-premise and cloud infrastructure works as seamlessly together as possible. For example, a cloud CRM service should "talk" to the company's back-office invoicing, inventory and accounting applications. Or a cloud-based travel planning application would feed into the company's travel and expense system. What's the point of managing them separately?

    Heather Clancy

    I am for No

  • Great Debate Moderator

    The big complaint among IT professionals

    Are we over-commoditizing IT services and overlooking the business-specific knowledge of in-house IT professionals?

    Posted by Josh Gingold

    In large businesses, perhaps...

    Even in medium businesses, especially those in niche areas and highly specialized industries, there will be value in in-house IT staff to, at the very least, manage outsourced IT and cloud deployments, if not handle actual coding or on-premise hardware. However, for most businesses in the retail industry, there are COTS tools that will generally serve them well, many of which reside in the cloud. In education, same thing. In service and hospitality? Yup, plenty of tools that require little in the way of customization. Are you manufacturing high-precision parts in zero-gravity environments for the latest in telesurgery approaches to spinal repair for paralysis victims? OK, you probably need to have some in-house expertise on the computer systems you develop and deploy. You've got me on that one.

    Christopher Dawson

    I am for Yes

    It's a natural evolution

    The cloud will force IT professionals to better understand the business implications of the applications and technologies they are deploying, integrating and managing. They can't do their job in a vacuum anymore. If someone is working as part of an in-house IT department, the days in which he or she can be ???just??? a technical expert are numbered. I think the cloud is having exactly the opposite effect that you suggest: It allows IT professionals to better correlate the speeds-and-feeds of the technology they are managing with specific business impacts. That makes their value far more strategic.

    Heather Clancy

    I am for No

  • Great Debate Moderator

    More compexity?

    Might a wholesale migration to the cloud create more complexity and the need for additional oversight in a small or medium business?

    Posted by Josh Gingold

    Isn't that what those service providers are for?

    Point being that even managing that complexity can be contracted quite handily to other organizations whose expertise is, well, managing IT complexity. A move to the cloud doesn't need to be a Christmas tree approach to IT, either (you know, keep adding ornaments over the years until you have a bit of green covered by junk and tinsel). Choose the right services for your needs. Communication/collaboration, CRM, possibly an industry-specific integrated solution, and you're done. For most organizations, especially the smaller SMBs, there are only so many systems that you need. The cloud and related outsourced service providers will rarely add extra complexity unless they're bilking their customers. If a move to the cloud starts feeling too hard or too complex, then, chances are, you're getting screwed.

    Christopher Dawson

    I am for Yes

    Possibly ...

    Right now, few cloud providers have really sophisticated management tools -- the sorts that midsize companies used to running in-house infrastructure might have come to expect. It is almost certain that your organization will have to manage multiple service level agreements whereas in the past it might have had a more holistic view. But how you get this view isn't exactly clear. That is why every SMB needs someone on ???their team??? to be thinking about how these services work together. The other big gotcha comes if your organization ever decides it wants to switch cloud providers. From what I understand, migrating data is not a trivial project.

    Heather Clancy

    I am for No

  • Great Debate Moderator

    Size matters

    Is this concept perhaps more appropriate for smaller businesses with limited IT needs as opposed to medium and commercial organizations with more complex needs and environments?

    Posted by Josh Gingold

    Of course, but...

    Even larger organizations can often cut costs and hire staff better equipped to advance the business rather than those who are strictly IT support if they leverage the cloud and appropriate service providers. No doubt, the smaller the organization, the less likely they will be to have the internal expertise, time, or resources to manage IT effectively. However, even as the organization grows, so too will its IT needs. As those needs increase, the best way to contain costs and maintain focus on business goals is to look to contractors and the cloud. It's also the best way to maintain the flexibility the business will need to grow intelligently and sustainably and scale back when it needs to.

    Christopher Dawson

    I am for Yes

    Cloud works for every size of business

    I think the cloud is appropriate for companies of all sizes, as one component of a bigger IT infrastructure plan. A midsize organization that has legacy applications probably will need more IT management to help ensure the cloud applications and infrastructure services (such as excess capacity for backup and recovery) behave well in tandem with anything that is on-site. Smaller companies can focus on teaming up with a technology expert who can help them evaluate the best cloud options for their individual business, or that can walk them through potential pitfalls.

    Heather Clancy

    I am for No

  • Great Debate Moderator

    Customization challenges

    This is slightly related to the earlier question regarding in-house expertise but doesn???t customization require some specific line-of-business expertise that can only come from within your organization?

    Posted by Josh Gingold

    That's why you hire a good IT firm

    It's their job to harness the in-house business expertise that better be there in the company's staff and translate it to an appropriate IT solution. As I noted, it's useful to have someone onsite who can "talk tech" but a good IT project manager or analyst from a reputable consulting firm is going to be able to distill requirements from even the most un-savvy of business people. The cloud also just happens to beg for agile approaches to development and rapid prototyping delivered over the web to customers for review and approval. Gone are the days of massive customization projects that end up costing boatloads of money and then don't meet customer needs. That, after all, is why Agile workflows and processes were developed. Sometimes, in fact, that in-house "expert" know just enough IT to be dangerous. Let the SMB focus on its business and let the IT consultants and SaaS providers focus on the tech.

    Christopher Dawson

    I am for Yes

    In a word, yes

    It is misguided to think that the cloud absolves an SMB organization of all concerns about how technology is used for strategic purposes. Certain cloud applications might need to be adapted for workflows or business processes specific to the company. Or a disaster recovery plan will need to designed together by the cloud provider and someone within the SMB. (And then tested and adapted on an ongoing basis.) The cloud elevates information technology management to an even more strategic role within your SMB.

    Heather Clancy

    I am for No

  • Great Debate Moderator

    Security

    Doesn???t the security of some types of information really belong on-site where you can control it?

    Posted by Josh Gingold

    Have you seen the average SMB's server room?

    Often, it's underneath someone's desk. Or in a closet. Without a vent. Sure, large businesses can justify datacenter investments (or at least investments in private and hybrid clouds), but small businesses will almost never be able to provide the physical security or appropriate conditions for data and computing needs. The cloud actually represents a far more secure solution than what virtually any SMB can provide, particularly as cloud providers begin looking at multi-factor authentication and deliver incredible redundancy and uptime compared to cost-effective on-premise solutions.

    Christopher Dawson

    I am for Yes

    Again, close management is the answer

    This is another reason why an SMB needs to maintain some element of IT management. Any company that places data in the cloud needs to have a hand in data management planning and strategy to make sure that data (of any type) isn't stored in a place where it shouldn't be stored, for compliance reasons. Its also the reason that some companies pick a private cloud option for certain applications rather than public ones.

    Heather Clancy

    I am for No

  • Great Debate Moderator

    In-house expertise

    This is a tough question because every business is different but, roughly speaking, how many qualified people would be required to manage a modest SMB portfolio of cloud-based services?

    Posted by Josh Gingold

    Actually, 0

    This isn't to say that it's an ideal approach, but technically, even the management of the services can be outsourced. That said, at least one person in-house needs to be able to "talk tech" and interface with outsourced IT management vendors, help define requirements, etc. Again, as the size of the organization grows, so too must the techies, but generally, with the right cloud services and the right vendors, a max of 3-4 for the largest of medium businesses should be sufficient. In an ideal world, those few should also be savvy marketeers, entrepreneurs, social strategists, etc., who can be looking for the right integration points and the right cloud-based strategies to be advancing the business and carry dual roles that just happen to have an IT component (and the underlying expertise).

    Christopher Dawson

    I am for Yes

    One, at a bare minimum

    I think it depends less on the number of employees that are being supported by the cloud and more on the number of cloud services and applications that are being used by the business. For example, if a company has decided to invest in Salesforce.com as a CRM platform and it is also using some complementary applications, you would need at least one expert to focus on making sure the integration is seamless and managed properly. One way to think about it would be to think about who is being served by the applications. At a bare minimum, you???ll need one person to focus on applications supporting your internal team and one person to ensure that outward-facing services (such as e-commerce applications) are working properly. In really small companies, this would probably be the same person.

    Heather Clancy

    I am for No

  • Great Debate Moderator

    CapEx vs. OpEx

    Is there some value to the idea of replacing capital expenditures (CapEx) with operational expenditures (OpEx)?

    Posted by Josh Gingold

    Most definitely!

    Welcome to post-recession 2012, where flexibility is king. When times are good, ramp up; when times are bad, scale back. If you've invested in on-premise hardware (whether in the back room or on the desktop), these costs stick with you, even if staff don't. If IT is an operational expense, then growing or shrinking to align with current needs is a much less costly approach. For many companies, hardware and software licensing are some of the biggest capital expenses, especially at a time when hardware is out of date the day after it's purchased and boxed software requires regular updates to stay ahead of bugs and security issues. SaaS solves a lot of that.

    Christopher Dawson

    I am for Yes

    Absolutely

    The cloud is especially relevant in today's economic climate, where it has become vastly more difficult for SMBs to get access to financing and investment capital. Cloud is a great option for start-up concerns, of course, but it also is great for organization with highly virtual staffs. But, you will still need someone focused on thinking about how these investments will impact and benefit your company. At some point, for example, would the money spent by your company on a cloud service be equivalent to what is spent on an in-house service. It takes ongoing management to be able to answer that question.

    Heather Clancy

    I am for No

  • Great Debate Moderator

    What's really at stake

    Many SMBs already outsource much of their IT responsibilities to third-party managed service providers anyway. Is this really about saving money by eliminating the need for on-premise servers and storage?

    Posted by Josh Gingold

    It's about focus and expertise

    Oftentimes, money can absolutely be saved by using cloud-based services and off-site, contracted service providers. If you only need 10 hours a week of IT support, for example, it hardly makes sense to employ someone in house. Even as an organization grows, contracted services tend to be cheaper in terms of benefits and indirect costs. The cloud, as well, tends to offer the opportunity for cost savings in software and licensing, as well as the required hardware to run applications. However, the real story is freeing internal resources from dealing with tech and allowing them to focus on the business. Many businesses would be better served by a full-time marketing team or a full-time social media strategist than by IT staff who are a dime a dozen contracted. Maintaining servers and other infrastructure on premise also tends to require more in-house support, again, making the case for moving the back end offsite and focusing on the core competencies of the business.

    Christopher Dawson

    I am for Yes

    It's about making things easier

    Businesses move to the cloud for two big reasons: to provision new applications and users more quickly AND to change the way they pay for technology ??? turning IT services from a capital expense into an operational expense. That is appealing for many smaller companies with cash flow challenges. It is also appealing from a strategic standpoint. Sometimes, the cloud is really the only option that an SMB has to use an application that might previously have been available only for the enterprise. No matter what the motivation, though, any investment in the cloud has to be managed closely to make sure it delivers on business objectives.

    Heather Clancy

    I am for No

  • Great Debate Moderator

    The most obvious question

    Okay, let's begin! The first question of the day is also the most obvious. Is it realistic to suggest that SMBs can eliminate in-house IT services altogether?

    Posted by Josh Gingold

    To some extent, it depends

    on just how small your SMB is. The smaller the SMB or the less focused on tech, the more likely that all of your IT needs can be fully outsourced and all of your computing needs can be met in the cloud. As business get toward the medium side of the spectrum, the majority of services can be placed in the cloud for others to worry about, with in-house staff spending their time focused on the use and integration of technology. Oftentimes, though, for the small business, it comes down to money. If you're already wearing the CEO, CMO, and CFO hats, isn't it better to let someone else wear the CIO hat, especially if tech is outside your business's core competencies?

    Christopher Dawson

    I am for Yes

    Outsource the tactical, not the strategic

    I do believe it is possible for an SMB to completely outsource the tactical concerns of information technology, such as help desk, infrastructure monitoring, certain cloud infrastructure services (such as backup). But, ultimately, there needs to be someone IN HOUSE who is concerned about the strategic role of technology and who is responsible for making sure that the investments being made in IT are managed properly. And, quite honestly, for setting goals about what the business expects to get out of IT.

    Heather Clancy

    I am for No

  • Great Debate Moderator

    Mic Check

    Less than 15 minutes until we begin. Are both debaters online?

    Posted by Josh Gingold

    I'm here!

    :)

    Christopher Dawson

    I am for Yes

    Roger

    Ready when you are, Josh.

    Heather Clancy

    I am for No

Closing Statements

Vital in this economy

Christopher Dawson

The cloud is the best thing to happen to small businesses since, well, since a long time ago.  Software as a Service allows businesses to scale quickly and pull back in truly flexible ways that are vital in a post-recession economy and  allow even the smallest of businesses to build international reach and access markets growing far faster than those in developed economies. Countless service providers have built their own businesses around managing cloud deployments, allowing many SMBs to set aside the hassle and expense of capital IT expenditures and management of on-premise technologies.

Although SMBs clearly need to be able to "talk tech", they don't need to do everything themselves anymore and certainly don't need to devote significant time or capital expense to technology issues. Rather, the cloud and related services allow businesses to focus on strategic maneuvers and the use of technology to advance their businesses. 

IT become more strategic

Heather Clancy

Small companies should absolutely replace certain on-premise applications and infrastructure with cloud-delivered services. But that doesn’t mean they can cede every nuance of IT strategy to someone outside the company.

The bigger your company, the bigger the chances it must manage a hybrid IT environment that includes some on-premise technologies and some cloud-delivered services. That will require IT experts who can keep these hybrid environments running smoothly. It doesn't matter whether you tap an outside expert or someone in-house, you'll still need to assign someone to manage this function.

That's because SMBs will need to someone to provide holistic view of their IT infrastructure – regardless of where it lives. They will need someone to make sure things are working together and to address situations when there isn’t a seamless experience or when things break outright.

Certainly SMBs will be freed from many burdens of IT management, if they choose a cloud approach. If anything, that will elevate IT management to an even more strategic role within the company.

We're not ready yet

Josh Gingold

 

Without a doubt, cloud-based services are indeed replacing many of the traditional on-premise services that require more hands-on IT administration.  In some cases, it certainly is possible (and maybe even  a good idea) to move an entire SMB to the cloud. But for the vast majority of us there are still too many concerns to actually make it feasible without some sort of in-house expertise if for no other reason than strategic, business, and technical decision making.

While there are certainly many benefits in terms of reducing costs, converting CapEx to OpEx, simplified backup and recovery, providing new services, etc., many important concerns remain regarding the ultimate command-and-control of business technology and information.

The Internet (a.k.a. the cloud) is not quite as ubiquitous as electricity or telephones just yet and until that's the case, it probably isn't prudent to think of cloud services the same way we think of utilities.  The business-critical nature of information management simply demands much more oversight and strategic thinking which in-turn requires more than a tactical understanding of the business.

In this case, as in so many others, there's a big difference between what we can do and what we should do.  In other words, as much as I want to agree with Chris's point of view, I don't think we're there just yet and I have to declare Heather the winner.  Obviously, most of this audience agrees.

Topics: Great Debate

About

Josh Gingold is the Managing Editor of Business and Technology Research Libraries for CBS Interactive with primary responsibility for the presentation of key research and commentary through a combination of blogs, white papers, and Webcasts. Josh's past experiences include a variety of editorial and production assignments for CNBC, CNET... Full Bio

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