A hidden cost to cloud services; maintaining your IT edge.

A hidden cost to cloud services; maintaining your IT edge.

Summary: What is the value, to your business, of the IT intellectual capitol that you could lose by outsourcing IT services?


I had a series of tweets pop up on my screen today linking a vendor response to my blog about IT management understanding the value of the personnel potentially lost with a move to cloud computing. Like a number of folks that responded to the initial blog, I believe this cloud services vendor missed my point.

I never said there was no competitive business advantage for a move to cloud services. The question I asked, which is in the context of the blog entry, is how do you use technology to gain a competitive advantage, one of the goals of a good internal IT department,  once you no longer have that IT intellectual capital within your company?  Once you've moved the need to have those IT people on-staff, those who really understand the way your business can integrate with potential IT advances, how do you effectively leverage those advances to fit your specific business model?

The Claris blog compares the adoption of cloud computing to the adoption of electric power, and I think that is way off base.  The concept of "utility computing" may, on the surface, bring to mind the utilities on a Monopoly board, but the reality is that the companies that can creatively integrate IT processes that include cloud computing will be more successful, in the long run, than those that simply treat them like the electric company.  Cloud service vendors are in business to make money, and if they are able to work with your business to find an innovative way to use their services, it's in their best interest to offer that technique to their other customers. Leveling the playing field sounds good at the EEOC, but it's not likely something your business wants to do with your competitors.

In the short term, there may be a business advantage in being able to lower costs and add capabilities via cloud computing and managed service providers, but in the long term my basic question still stands. How do you maintain that intellectual capital that enables the effective utilization of information technology, especially if you outsource IT and treat it like the electric bill?

Topics: Hardware, CXO, Cloud, Servers, Virtualization

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  • Simple

    You work closely with your cloud services provider. If he is any good, he will provide EXACTLY what you need, on an ongoing basis. If your IT is valuable IP, make sure the contract stipulates the necessary safeguards.

    Ultimately, this is where the cloud needs to go to be successful.
  • Not simple

    Good IT people understand not just IT but how the business works. They are able to see the synergies between technology and business; it's part of their job.

    When you don't have those IT folks in place, who makes the suggestion that there are more things that can be done with technology; things that will affect the business bottom line? And how does that get communicated to a generic cloud servies provider?
    David Chernicoff
    • Spot on!

      This is the same reason companies like IBM have started focusing more on the IT side of the equation. Computer scientists are not equiped to make this connetions, and neither are people that are not directly involved in the business. IT is the gap filler.
    • Myopia


      I believe the author says he is the CTO of a start-up using the cloud. Using the cloud does NOT mean you do not have people with IT vision, who understand the importance of IT to the business, quite the contrary.

      If you are an ignorant consumer of cloud services, you are probably ignorant when it comes to your in-house IT also.
      • Exactly; his perspective is that of a

        startup. There is no existing IT infrastructure; no investment in IT resources. So there initial IT model is to use the cloud and they build their business around it. They will build a business and, for now, limit themselves to what is available from the cloud.

        That perspective is of zero use to an existing business with a significant IT investment and a history. Are you suggesting they simply start from scratch and give up their investment, both intellectual and real property, in their IT infrastructure?
        David Chernicoff
        • You are changing your argument

          The title was "hidden cost..." and now you argue "well he's a start-up and does not have the infrastructure".

          I get that problem. Over time however, those who can provide better IT or IT for less will prevail and you will go out of business. The blog on the industrialization of IT yesterday put this into a sharper focus for me.
          • Not changing..

            This is a followup to the original blog, which started with what do you do with your current staff. The start-up is a completely different business case.
            David Chernicoff
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