The cloud gives CIOs the opportunity to take a different approach to applications. Rather than buying and running enterprise software in-house, IT leaders can help the business to source and use tools and services on-demand.
Transitioning to the cloud, however, is not a straightforward process. Many CIOs will find that key production systems are associated to legacy platforms. The cloud, meanwhile, will not provide the right answer for every business application, due to a range of security and governance issues.
As CIOs consider the future of enterprise applications, how can they evaluate which applications should be kept in-house, which should be dumped and which should be moved to the cloud?
Here IT experts provide their best practice advice for making software flexible and effective.
Light-touch apps, staged migration
Geert Ensing, former CIO at ABN Amro, says that, despite the declarations of industry experts, the cloud has not reached a tipping point. While some commodity services can be pushed beyond the firewall, progress in other areas of IT provision remains limited.
"The flexibility to scale resources up and down on-demand represents a great opportunity for CIOs," says Ensing. "But many contracts still include constraints in regards to how the business can change its use of such resources. And, in some cases, going to the cloud can mean more expense."
Ensing says many businesses still rely on legacy technologies that contain a vast amount of data. He says supporting old technology is not easy, due in most part to its inherent complexity. And CIOs need to be careful they don't make the same mistake again.
"You have to be careful that the systems you introduce today are not simply tomorrow's legacy platforms," says Ensing, who advises that IT leaders looking to create a more flexible and effective application estate should avoid bringing too many systems within the traditional enterprise firewall.
"CIOs should take advantage of innovation," he says. "They should look to position new technologies around the outside and use the cloud to service the fast-changing needs of the business. A light touch is essential. Systems that are not so tightly embedded might be easier to replace over time."
Colin Lees, CIO at BT Business, says his firm has a simple model where the use of any enterprise application must be accompanied by a strong business case. It's not as common a strategy as might have been believed. In the digital age, too many businesses and their technology departments are fixated on simply swapping old for new.
"My personal view is that 'legacy' is a state of mind," he says. "A lot of people decide that their old stack is out of date and that they need to move to the cloud. These people then spend hundreds of millions of pounds going on-demand. And if they're not careful, they'll discover that the new approach doesn't work properly -- and worse -- that the applications are no longer fit for purpose."
Lees advises CIOs to take a step back and to question the value of IT. Think, for example, about how long the business can expect to keep its current application estate running and at what cost.
"If you ask the right questions, you might discover that you're able to sustain your legacy estate for longer than you thought. You can then focus on building your new products on your new estate," says Lees.
"When those applications are ready, and the legacy estate needs to be retired, you can then embark on a staged migration. That's how we're approaching transformation at BT Business, rather than embarking on a big-bang switch to the cloud."
Cultural change and governance concerns
Andrew Agerbak, associate director at The Boston Consulting Group, says the behavioural change associated with a move to on-demand represents another significant factor for CIOs considering the future of enterprise apps. More and more line-of-business executives are eschewing the IT department and using the cloud to make their own technology purchasing decisions.
Such decentralisation increases the options for using IT in a flexible manner. But devolution also requires a careful balancing act. Agerbak says that, without a careful approach to application management, the potential gains in effectiveness from on-demand IT can be negated by cost concerns.
"It is no longer IT's responsibility for budgeting, capacity, and supply and demand," he says. "When that's the case, the business needs to know how things will scale and how much it will cost. It's OK building a private cloud and being able to scale-up at any time, but someone needs to cover the cost."
According to Agerbak, internal virtual private clouds, for example, require a funding bucket for unused spare capacity. Grey areas are unacceptable and will lead to a big hit as far as application effectiveness is concerned. Moving to the cloud, he says, must be allied to clear boundaries around who is responsible for which areas. Businesses must assign accountability for core issues, such as load balancing, resilience, service monitoring and management interfaces.
Security and governance also remain key concerns for businesses considering the future of their enterprise applications. Richard Norris, head of IT and business change at Reliance Mutual Insurance Society, believes the rules and regulations surrounding the storage and use of data remain the one major stumbling block for many executives looking to move to the cloud.
"The requirements are there for a good reason," he says. "I think they're relaxed enough as they stand right now. As a business, we don't want the financial service data associated to our customers to leave the EU and to be processed by another organisation somewhere else in the world."
As Norris recognises, dismantling in-house systems and using global service provision involves a major decision. A move on-demand for anything involving production processes is still a move too far for many CIOs. "Without going to each location, and doing due diligence on the provider and who is likely to interact with the data, it is very difficult to feel safe and secure," he says.
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