Why IT should stop trying to compete with outside cloud services

Why IT should stop trying to compete with outside cloud services

Summary: More than ever, enterprises need IT managers' brains, not brawn.

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TOPICS: Cloud, IT Priorities
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Many IT leaders are concerned about how they can compete with cloud providers such as Amazon Web Services and Rackspace. Often, cloud providers are able to offer capabilities such as storage at a much more favorable price point than internal IT can deliver.

As a result, says Bernard Golden, executive with Dell's cloud computing group, says it's high time IT leaders stop trying to compete with the outside services. In a recent CIO post, he says "the rapid rise of cloud computing means corporate IT may no longer be the cheapest purveyor of application hosting, infrastructure, storage and other services."

As he put it, the cloud challenge "threatens to topple [corporate IT's] position as monopoly supplier of computing to the larger enterprise."

And he has a message for corporate IT leaders: the sooner you come to terms with this, the better.

Golden is on to something, of course. The dedicated cloud providers have gigantic economies of scale they can bring to engagements. They have armies of specialized talent who can keep things humming with the latest software and security tools.

What Golden is telling us cuts right to the heart of corporate IT's role in the world. It isn't just rolling out machines and doing the coding. It's about understanding what the business needs to move forward. It's about researching and understanding the most cost-effective and secure solution to accomplish that. That solution may still be in the corporate data center, or it may be available from a third party. Amazon and Rackspace have a lot of incredibly smart people, but they know very little about your business. Enterprises need their own IT people more than ever to make the right calls.  

The key takeaway here: IT is not a "competitor" to outside cloud services. It is a guide to finding the best path for the business. And, sometimes, the enterprise becomes a cloud provider itself, but again, not as a competitor to the big cloud combines, but as specialized providers within industry niches or customer networks. But that's another story for another post.

(Thumbnail photo credit: Joe McKendrick.)

Topics: Cloud, IT Priorities

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9 comments
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  • Is that so...

    **the sooner you come to terms with this, the better.***

    An understandable comment from one of the big boys...

    The practice of an IT department continuing to lord it over the business as they have in the past is to be relegated to history and then.....
    So in a way I agree with them but not to the extent they propose especially this early in the piece as the global space is still fractured with laws from yonks past.

    Business should be the centre with IT, adapting to for fill the needs of the users.
    The article hints at another role to play for the new age IT people within business. But.....

    *that's another story for another post.*

    Do not wait to long....
    ahanse
    • The role for new age IT people

      I think you are SO right in this respect. I also think it's relevant to discuss it in this context.

      The time will come when either one of two things will happen: 1- The days of dedicated SAN, Mail, VMware and other functions of IT being filled by 15 or so people will come down to 3 people because of Cloud hosted storage, email and other functions and/or 2- IT folks will basically become consultants in their own company...liaisons at it were between the business and the Cloud provider.

      Either way, I wholeheartedly believe now is the time to re-position if one's life currently centers around data center operations. Re-position to what - that is the question.
      tallbruva
  • Coud services shouls stop trying to compete with IT

    Frankly, I think that you have it backwards. Cloud providers are unable to provide sufficient security, reasonable performance metrics, their service level agreements are a joke, and they refuse to accept any accountability at all.

    Given that network outages are commonplace, their inability to secure the data they host, and their constant refusal to offer any sort of warranty on either their performance or accessibility... why on Earth would anyone trust them with securiing our proprietary data or supporting our daily operations.

    Local IT -versus- Cloud? Its not even a contest. The cloud is just as much vapor as what it is named after.

    Regards,
    Jon
    JonathonDoe
    • Couldn't agree more... at the moment

      I'm glad someone else brought up SLAs. Nothing's consistent. And even if there is an outage, the are some loopholes that don't hold the hosting company responsible (such as if the outage is caused by the Cloud hosting company's network provider, the hosting company doesn't have to pay because "their" equipment didn't cause the outage).

      It's still early on, kinda like the web was in the mid-90's. But just like the web, it will mature to the point where local IT just won't be cost effective.

      The bigger problem I see is that when that change happens, IT jobs are going to demand more and more (than it does now) with less money because there will be fewer jobs with so many people clamoring for them. Like a pack hungry wolves with the last bone.
      tallbruva
    • The solution is easy.

      My company has both an I.T. department and uses an outside Cloud, I personally host all my files in the Cloud, but keep a back-up for all the important and provisional data I need at the moment, you're overstating the dangers of the Cloud.

      The Cloud-industry is in its early terms (although being as old as the internet itself), it develops and by late 2014 it'll be the de facto standard, afterwards it means evolving or failing, and only the most consumer-friendly and most secure cloud-networks will remain.

      By 2016 taking a Cloud for your company is as natural as seeing the ACTUAL Clouds in the sky.
      Agosto Nuñez
  • Great development.

    My company went to the Cloud, and our profits increased by large,
    I'm optimistic for ANYONE taking ANY Cloud.
    Agosto Nuñez
  • The "Question" is too Absolute

    It's a mistake to approach the argument as one requiring an all or nothing response.

    Some services might be ideally suited to the current cloud environment, but other factors should be considered when determining *which* services qualify. Data security/integrity, intellectual property concerns, SLAs, internal accessibility during network interruptions-- all are factors we keep in mind when evaluating the benefit of moving a service from local/on-site to a 3rd party.

    Above all, any IT group must be willing to re-evaluate/assess the benefit of any functional model as systems evolve. What's an appropriate response today may not be the best answer in 12 months.
    jon.kilcrease@...
  • How can it be beneficial to use external cloud providers?

    Very interesting article Joe. In my role as a consultant to Fortune 500 organizations on IT Strategy and IT Planning, I see the Cloud topic coming up more and more.

    That also means that more and more organizations are asking themselves the exact same question: "Should or can internal IT compare with external cloud providers?"

    I think this is really not the right question to ask and we have seen similar discussions a few years ago when the big outsourcing discussions started. A better question to ask would be:

    "How can it be beneficial to use external cloud providers and what do we better keep in house?"

    From a high level point of view there are four perspectives every organization should look at before taking a decision on moving some of your business applications to the cloud or not. These are:

    * Cost Analysis: You have to have transparency of your current cost portfolio of of your application(s). Is the majority of costs on an infrastructure level (storage, server, networking etc.) or is it software licencing or maybe staff?. How do these costs vary from the average cost spread of your applications? If there is a high portion of these costs in infrastructure - IaaS could be an offering you should look at. If it's the software licences IaaS will not help much but maybe a chat with the vendor about a different licensing model.

    * Business Support: You have to have an understanding of the business processes and capabilities your application supports. Ask yourself if these are critical to the business, are they a market differentiator for your organization. Where is the application used? Globally or only in a specific subsidiary or country. What is the specific business requirement for the business process or the capability this application supports? Is it beeing very agile, implementing new features all the time, is it about managing seasonal peaks like X-Mas Sales etc? The later one would be a good example for IaaS again where IaaS could help you with what it is called elastic capacity.

    * Compliance: This is a perspective organizations shouldn't overlook. You have to understand what kind of data the application stores. Is it customer data? What's the data classification level? Is this application affected by any regulations? SoX etc. Are there any interfaces to other applications and what are they? Which kind of data will be transferred throughout these applications. Very often the compliance topic is one where organizations understand about all the benefits of using technologies like virtualization and the cloud offers, but then prefer building a private cloud instead of moving into a public cloud.

    * Technical Fit: Get an understanding what the application requires to be able to run. What technologies like webservers, operating systems etc. are currently used. Are these up to date versions? This is important to understand as this will heavily impact your decision for a public cloud provider or the technology you need to build your private cloud.

    The biggest mistake one can do, is making a cloud decision only looking at one of these perspectives (Costs, Business Support, Compliance, Technical Fit). Look at your applications from an Integrated IT Portfolio point of view. Be prepared to have these information at hand and you are ready to make the right decision.

    I would be interested on your feedback on approaching the topic like described above.

    Best regards,
    Thomas

    If you are interested in more detailed information about this approach, have a look at: http://alfabet.com/en/offering/services/cloud-strategy-assessment/
    Thomas Gregg
  • Start with end-goal in mind

    Great article and comments. In my experience working with Global 2000 enterprises on their cloud initiatives, it’s become incredibly clear to me that the organization must start with the end-goal in mind, working backward to select the cloud model(s) that work best for the organization to achieve its goals. Far too often I see companies ‘ripping and replacing’ their initial cloud implementations as they were selected based on price, vendor relationship, or other factor unrelated to the ultimate strategic goal of faster product releases and the business agility that results. Joe is right – we need IT’s brains in assessing whether a public, private and/or hybrid cloud approach is the best answer. http://www.servicemesh.com/resources/transform-it-blog/blog/hope-is-not-a-strategy-achieving-the-economics-of-a-cloud-operating-model/
    - Shawn Douglass, CTO ServiceMesh
    Shawn Douglass