Cloud CIO: The Challenges of Competing with Cloud Computing Providers
There is no question that corporate IT departments need to change their cultures and their organizational structures to compete with cloud providers, but doing so introduces a variety of practical challenges--including convincing the CFO to embrace a new funding model for IT.
Fri, August 26, 2011
CIO — In discussions about cloud computing and in comments readers leave on my blog posts, I commonly get statements along the lines of "Yeah, this cloud computing stuff sounds great, but at the end of the day, you have to have an IT guy solving problems like they've always done." In personal interactions, I often hear this sentiment portrayed as, "Public cloud computing is fine for the SMB and startup market, but enterprises aren't ready to move to that model." The tone of much of this feedback is that anyone who advocates cloud computing is at best naive or at worst incapable of understanding the real details of IT.
So it was bracing, to say the least, to read two blog posts by executives at EMC—surely the most "enterprisey" of technology vendors extant—. Their posts present a stark perspective that cloud computing is a watershed dividing the old from the new in the way IT operates. One post is by Chuck Hollis, vice president of global marketing CTO at EMC. I always look forward to Chuck's posts—they're thought-provoking and reflect real-world feedback from his daily interaction with EMC's customers. In his post linked here, he discusses a post by Jon Peirce, vice president of Global Infrastructure for EMC IT, which presents his thoughts on what cloud computing means for the future of IT. I was not familiar with Jon prior to reading his post, but feel it is incumbent upon any senior IT executive to read and assimilate his message.
Essentially, Jon makes the following points:
- IT has traditionally been given a fixed budget and decides which of the many business unit demands it will satisfy with that budget. Because it plays a rationing role, IT seeks to reduce demand for IT resources. Said another way, unlike businesses, which see demand as an opportunity to expand market share, IT has traditionally seen demand as exacerbating its rationing challenge and therefore something to be resisted. Thus, IT's reputation as "The Department of No" emerges. Rationing also means that business units are dissatisfied with IT service levels and have a strong motivation to find other ways to satisfy their IT requirements. In the past, it was extremely difficult to find those other ways, but with the rise of public cloud service providers, there is now a convenient way to bypass IT.
- IT needs to change its self-image from a project manager mindset to a service provider mindset. It needs to welcome business unit demand and view itself as a service provider, ready to deliver resources to any and all that desire computing power. For sure, it needs to step away from the role of arbiter among resource demands, because that's a losing game now that IT is no longer a monopoly supplier.
- IT needs to adopt chargeback based on granular services. Business units need to have accurate signals about how to evaluate their use of services versus the benefits derived by deploying those services. Cost is the signaling mechanism used in businesses, so IT has to be prepared to offer chargeback. Jon put it this way: "Business leadership needs to be held accountable for IT service consumption." In some very mature organizations, this may be achievable with "show-back" of costs to the consuming business units, but in most enterprises, "charge-back" will be a necessity."
Jon's larger point is that IT needs to transform its culture from an insular, technology-focused monopoly provider to that of a market-serving, demand-generating, business enabler based on delivering IT service capabilities.
