It's Not All About the Cloud: Why Hybrid ITSM is Here to Stay
'Cloud-based' might be the most overused marketing term of 2012. Vendors of all stripes seem to believe an edict has been handed down to enterprise IT management who now want all cloud all the time.
Mon, December 24, 2012
Network World — This vendor-written tech primer has been edited by Network World to eliminate product promotion, but readers should note it will likely favor the submitter's approach.
"Cloud-based" might be the most overused marketing term of 2012. Vendors of all stripes seem to believe an edict has been handed down to enterprise IT management who now want all cloud all the time.
There's one problem: It's not true. While cloud computing certainly makes sense in certain situations for certain applications, the fact is most companies will employ a hybrid model that combines cloud and premise-based applications for years to come, if not forever.
OUTLOOK: 2013: Year of the hybrid cloud
This is certainly the case in the IT service management (ITSM) market. According to a survey of 95 IT executives conducted by IDG's CXO Media CIO Peer2Peer Research Panel, 55% prefer a hybrid ITSM model, 33% prefer a premises-based solution and only 13% opt for a pure cloud offering.
Gartner doesn't see the trend reversing anytime soon. In its August 2012 report, "How to Decide Whether SaaS ITSM Tools Make Sense for Your Organization," Gartner predicts 30% of companies currently using cloud-based ITSM tools will switch back to a premise-based solution by 2014.
For companies that use some cloud-based applications, or need to cover branch offices and other sites that have few or no IT resources, a cloud-based ITSM offering may well make sense. But for enterprises that run the vast majority of their applications in-house, or that have lots of custom requirements, an in-house ITSM offering is likely the better choice. To cover both, then, enterprises need an ITSM solution that can deal with both worlds; in other words, a hybrid ITSM strategy.
Understanding cloud economics
One reason companies are unlikely to stick with a cloud-only solution is it gets expensive as the years go by. Yes, cloud reduces your upfront capital investment because there's no hardware or software to buy or install. But if you run a good TCO model, you'll quickly see the benefit is short-lived. It's the same as leasing vs. buying a car. If you're going to own the car for 10 years, it's a far better deal to buy it than lease.
Say you have 100 users and you're going to spend $250,000 on a perpetual license for your ITSM solution. You will have an initial expense but you'll own that license forever. Now consider covering those users with a cloud-based ITSM solution instead. Maybe that costs you $100,000 in year one. But then you pay another $100,000 in year two and again in year three, and so on. Depending on the TCO model you use, you'll likely find somewhere in year three, around 30-32 months, the lines cross and the premise-based option becomes less expensive.