“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.” Bill Gates
Introduction to the Cloud Blueprint
Cloud computing has arrived. Fast moving firms are leveraging the cloud to pull away from competition. More traditional firms are turning to cloud computing to reduce costs and shorten the time to market.
Cloud is very prominent as a strategy in the consumer space. Simply look at Amazon.com vs. Walmart in retail. Or, look at Netflix vs. Blockbuster. Or, look at Apple iTunes vs. Sony.
Cloud computing is a classic disruptive technology. It’s origin in the fringe of the IT market,
namely consumers and the small and medium-sized enterprise (SME), whose need for simpler and lower-cost or even free solutions is underserved by traditional packaged software. As cloud-based services matured, it’s penetrating mainstream enterprise customers. Now, cloud offerings compete directly with on-premise and packaged software.
In the enterprise transformation is afoot. While corporate data centers and on-premise software are not going away, cloud computing is having a far-reaching impact on enterprise IT and business in large organizations.
The Cloud as an enterprise architecture has become a new blueprint for delivering resources such as computing and storage to customers on demand.
Rather than being a new technology in itself, the cloud is a new business model driven by new technologies such as mobile tablets, server virtualization that take advantage of economies of scale and multi-tenancy to reduce the cost of using information technology resources.
As the much-hyped next big thing in IT, the cloud is often a very confusing landscape for time-pressed managers. Constantly moving and changing, impossible to pin down and the more you get into it, the harder it is to separate the signal from noise.
This blog distills in simple terms the business drivers in the Cloud delivery mechanism and business model, what the requirements are in this space, and how to make money on this trend. In this blog, I will put my consulting hat on and discuss what is happening in the marketplace.
Enterprise Cloud Strategies
I believe that the Cloud is simply the manifestation of a broader transformation trend: IT-as-a-Service. This transformation trend is being driven by executive dissatistfaction with IT in most corporations. Typical reasons:
- IT assets are underutilized.
- IT costs are too high.
- IT is too slow and not current (e.g., tablets, etc.).
- Not getting the bang from IT projects or investments.
Cloud computing is not a fad but a complex architectural evolution as shown below. Managing these multiple evolving stacks while keeping costs under control and delivering high SLAs is a big challenge.
To say that the game is changing is an understatement. As we emerge from contraction/recession to growth, business and technology leaders alike recognize they can no longer apply the same practices (e.g., labor arbitrage) and expect significantly better results. They feel many mainstream practices (e.g., cost reduction) have run their course and lost their relevance as a strategy.
The situation must change, but how? Companies must drive new methods and solutions (e.g., infrastructure-as-a-service; platform-as-a-service) by leveraging novel differentiated practices and technologies. These emerging practices must become the foundation for IT’s business contribution and the new baseline against which performance will be measured.
As we move from running one application in the cloud (experimental phase) to a running a portfolio of apps in the could organizations (production phase), I anticipate that we will require a new PMO structure and skills.
Migrating to the cloud for most large organizations, will require unique skills. Application and infrastructure separations and carve-outs create unique transition and change management challenges. Economies of scale and corporate standards mean that IT systems are invariably centralized or intricately connected. A carveout requires the setup of a stand-alone IT infrastructure in the cloud, or reconnecting the cloud’s sub-systems to the corporate infrastructure and systems of the corporation. These are significant IT projects that require time and skill to implement.
This entire cloud enabled “IT-as-a-Service” space is getting more exciting and interesting. I urge CIOs and other business leaders to look beyond the hype to address new opportunities and challenges.Ravi Kalakota Partner LiquidHub