Cloud Computing: IT's Driving Again

If it was once true that non-IT departments led a company's decision-making on adopting cloud, that predominance of shadow IT is no longer the case. Not only has the enterprise spend on cloud grown by 38% over the last year, IT's share of that spending now reaches 80% of the total. 

Not only is spending on the cloud growing, but it represents a rapidly increasing part of the overall IT budget. Organizations adopting cloud services expect to spend "54% of their IT budget on cloud in the next two years.

The debate over public versus private cloud "is now moot, without necessarily making it clear exactly what the outcome had been. Debating the merits of one versus the other "is insufficient to describe the complex decisions that companies are facing when selecting a delivery model," it said. In other words, companies don't expect all their needs to be met by one or other. If anything, they're mapping out a future that will include both. 

While infrastructure-as-a-service is viewed as an implicitly efficient way of running computing, only 14% of those contacted said that saving money was a primary motive for using cloud computing. Rather, 32% said the primary perceived benefit of the cloud was agility, not cost savings.

Enterprise spending on cloud has grown 38% in 2014, and IT now controls 80% of that budget, finds Verizon study.

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CLOUD COMPUTING -- WHERE DO YOU START?

Cloud computing is a disruptive phenomenon, with the potential to make IT organizations more responsive than ever. Cloud computing promises economic advantages, speed, agility, flexibility, infinite elasticity and innovation. How will you phase your organization into cloud computing?

Key Challenges to overcome in Cloud Computing:

Cloud computing forces you to wrestle with three key strategic, operational and people challenges:

• Governance:

Cloud computing enables speed, agility and innovation. You need to move from the drawing board to deployment. Is your organization ready to adapt? You need a clear vision and effective processes, skills and organizational structure to drive cloud innovation in your enterprise. 

• Cloud Computing Environments:

You need to choose a cloud computing environment that's right for your organization. Should you consider private cloud, public cloud or a hybrid cloud solution? More and more organizations are moving services, storage, email, collaboration and applications to the cloud. You need to decide whether to choose to support private, public or a hybrid cloud mix. What's the right mix of infrastructure (IaaS), platform (PaaS), and application (SaaS) environments for your organization.

• Security & Privacy:

If someone else is running your computers and software, you need strategies to stay secure. Your security policy depends on how many pieces you control – the more you own, the more you control. Are you ready to extend your enterprise security policy to the cloud? You need to break through the resistance and increase confidence that cloud is safe. You need to keep your data safe from prying eyes. You need your security team to buy in to your cloud initiatives. That's a tall order.

By 2015, at least 20% of all cloud services will be consumed via internal or external cloud service brokerages, rather than directly, up from less than 5% today. (source- Gartner)

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Software-as-a-service (SaaS) and Cloud Computing have become fixtures in the enterprise.

Organizations are beginning to realize how profoundly a Cloud-Centric IT architecture differs from their legacy on-premises architectures and, with that, how different their management and monitoring needs will be.

Software-as-a-service (SaaS) and cloud computing have become fixtures in the enterprise, and that trend is sure to continue for a long time to come. But the reality is that, to date, those gaining real benefit from the cloud at the enterprise level have been limited largely to isolated pockets.

These include software development and operations teams leveraging infrastructure- and platform-as-a-service (IaaS and PaaS) to slash costs and improve agility; sales teams licensing their own SaaS CRM systems; or lines of business "going rogue" and sidestepping IT by using apps like Dropbox to facilitate easier file sharing inside and outside the company.

There are still some fundamental obstacles to widespread adoption of cloud apps. The two biggest are security concerns and a lack of confidence in app or service performance and availability. Recently, a study was conducted asking IT teams about their current and planned use of cloud apps and services within their organizations. A few particular points stood out:

• Fewer than 20% of the survey respondents felt that their tools were doing a good job managing their cloud-based apps. The rest were at best ambivalent; more than 20% said their tools just aren't up to the task.

• More than 40% of the respondents had no tools at all to monitor and manage their cloud apps.

IT teams adopting cloud apps often find themselves in a challenging position. Their users and business management still look to them to "own" application availability and performance, even though they no longer own the application hosting environment.

The tools that they have used to manage their on-premises applications don't give them the same visibility and control in the cloud. Most of these tools have evolved alongside the on-premises applications, operating systems, server, and network infrastructure they have been used to managing.

As they adopt more cloud applications and services, organizations are beginning to realize how profoundly a cloud-centric IT architecture differs from their legacy on-premises architectures and, with that, how different their management and monitoring needs will be.

For businesses to fully embrace the cloud, they will need management tools that are designed from the ground up to support the remote, distributed nature of cloud apps and services.

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Four sourcing strategies from automakers, companies will be better able to foster innovation and efficiency in their IT outsourcing

As many companies have discovered, much to their dismay, IT outsourcing doesn't always go as planned. In case after case, the lower costs, better service quality, and greater agility everyone was expecting turn out to be elusive. Looking for lessons in failed engagements has become a virtual pastime for the IT sector, yet the disappointments continue. Perhaps it is time to draw insights on outsourcing from another sector -- specifically from one that does a better job of it, the automotive industry.

By following four sourcing strategies from automakers, companies will be better able to foster innovation and efficiency in their IT outsourcing. Just as important, it will spur companies to manage IT as a core component of their business. 

1. Retain expertise: Rebuilding IT expertise will take time, so companies should get on their way. They can decide if any outsourced services could be taken back in-house, and add technical experts to their procurement teams. They can prioritize emerging key technologies, such as virtualization and the cloud, and gradually build skills by hiring or developing the necessary talent. Finally, sourcing and vendor management must become integrated parts of an IT career path and not treated as an end station, as is sometimes the case.

2. Pay attention to processes that provide an edge: In IT, all outsourced processes -- whether a "differentiator" or a more commoditized task -- tend to be handled in the similar, hands-off fashion, with the company relying on the vendor to get things right. The automotive industry approach would let companies' in-house IT teams focus their efforts where the payoff would be greatest. For instance, at a logistics company, one differentiating process might be the routing of trucks. The IT application that supports that routing should be flagged for special treatment, such as stepped-up collaboration or supervision. For here, improvements aren't just beneficial, they can bring competitive advantage. 

3. Challenge suppliers to deliver improvements: In many engagements, ambiguous contracts, hands-off management, and difficulty switching providers (or a reluctance to do so) give vendors little reason to focus on improvements. To get closer to the automobile model, IT organizations should move to standardized environments when possible, particularly in the cloud. They should also consider the "champion-challenger" model, where one provider does the bulk of the work, but another does some of it (and can step in further if necessary). Another approach is to assign one provider the execution of a task, but give another a quality control role, making sure the work gets done. 

4. Emphasize transparency: IT organizations, which typically pay for services on a volume-centric measure -- be it MIPS, terabytes, or number of transactions -- rarely have such an inside view. To gain such a view, they could devote procurement staff to better understanding costs, as well as promote more dialogue and information sharing with providers. As procurement staff members develop more expertise, they'll be better able to evaluate the pricing and quality of the services they are sourcing.

There is a reason IT organizations embrace outsourcing: It can really deliver benefits. But to see them, companies need to get back in the driver's seat, creating the right incentives, and balance, in their sourcing relationships. By embracing these four lessons from the auto industry, they can do just that -- and enjoy a smoother road ahead.

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