What Cloud Computing Means For the Future of IT Organizations

At this year's Cloud Connect conference, discussion moved from defining cloud computing to discussing practical enterprises applications of the cloud. That is, until two McKinsey consultants suggested that the cloud could spell the end of IT organizations as we know them.

By Bernard Golden
Tue, April 09, 2013

CIO — It's remarkable how the tone at Cloud Connect in Silicon Valley has changed over the years. The conference has turned from cheerleading to nuts and bolts. This means it's less fun, but it's also more grounded in the day-to-day realities of implementing change instead of envisioning utopia. Many presentations focus on real-world use cases and concrete action steps, with a strong focus on hybrid cloud computing.

One fortunate element of this year's conference: There wasn't a single speaker who started off a session by saying, "Let's define cloud computing." That gets tiresome when seen in session after session, year after year, so its absence is gratefully received. This is a clear indication that the industry has moved beyond elementary knowledge-gathering and onto the practicalities associated with cloud implementation and rollout.

The dominant model presented in most sessions was hybrid cloud computing, including discussions of hardware, software selection, migrating workloads and cost management. Common to all these presentations is an assumption that the future of cloud computing will be operated by central IT, which will develop a common operating model used across all cloud environments.

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Obviously, there are significant challenges associated with the model—chief among them how to induce application groups to embrace it given that many of them have embraced public cloud computing already without any involvement of central IT. In fact, it's no secret that many of them have adopted public cloud computing precisely because it lets them proceed without IT's involvement.

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The rosy picture of an IT-led march to the hybrid cloud future received a rude thump in the form of the session by McKinsey consultants Will Forrest and Kara Sprague. They proposed a different, and enormously disruptive, scenario of the ultimate cloud adoption roadmap.

Forrest and Sprague questioned the role of hybrid cloud computing—and even the future of IT as we know it. According to them, most of the future of IT will be in in the form of public cloud computing, which may very likely be in the form of a separate IT organization, created specifically to reside outside of the existing one.

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As an introduction to their theme, they noted that much of the available improvement made possible by traditional IT has been achieved. Transactional systems have replaced large swathes of yesterday's workforce, including telephone operators, secretaries and travel agents. While additional, incremental improvement is possible, significant increases in productivity or financial savings are unlikely. For applications of these types, cloud computing can enable some cost savings, but nothing dramatic will result from the expenditure.

In fact, the greatest possible financial contribution by IT can be made by reducing IT spending to industry average levels. In other words, the greatest contribution IT can make today is to trim budgets to the minimum levels pursued by the most cost-conscious peers within a given market segment.

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