by David Skinner, Partner, Morrison & Foerster

Stuck in the Cloud

Apr 06, 2010
Cloud ComputingData CenterIT Leadership

Who’d be a CIO? Even when the IT estate is operating reasonably well, you can bet that the CFO or CEO will be complaining about there being too much fat in the IT department or that their systems are not being sufficiently innovative. And that’s not all: CIOs are probably being approached regularly by “well-meaning” users about new technology and services which could improve their experience.

In short, CIOs are charged with delivering an IT ‘nirvana’: the provision of a resilient, cost-effective and creative IT service that not only meets the business’s current objectives but also its future plans for growth and investment. How can CIOs strike a balance between competing demands for resilience, scalability, innovation and cost?

Faced with these constant pressures, it’s no surprise that even the most hard-bitten CIOs became starry-eyed by the idea of cloud computing. For the first time in years the industry appeared to have moved beyond vapour and was talking about on demand computing using proven technologies. Virtualised desktops, thin clients, remote servicing, IP telephony, self service and remote helpdesks, multiple datacentres with services distributed over reliable networks appeared to offer the IT holy grail, a predictable user experience at a much lower price. Infrastructure would no longer be the problem. Instead, clients could concentrate on core applications and leave the service provider to ensure that capacity was always there when needed at a known price per user. Of course, there were still legal hurdles regarding security, whether a cloud could be private or public and whether business users would agree to a large degree of standardisation. However, we all believed that the technology was there and many commentators, myself included, predicted that cloud computing would be a big driver for outsourcing growth in 2010.

But does this cloud genuinely have a silver lining? Why am I beginning already to question the model? The reason is simple. In the past six months I’ve worked with various clients trying to procure cloud computing services from a number of tier 1 and tier 2 IT suppliers.

What I’ve seen is that although the technology has certainly moved on, the pricing and basic model has not changed materially over the last eight years. In fact, reading the proposals from suppliers and listening to their technical and commercial proposition was a déjà vu experience – I could have been back in 2002. The debate still centred on physical assets, the risk and cost of basic desktop and laptop refresh and the cost of licences. More significantly, computing on demand does not appear to be available. Instead the debate is all about the number of servers or blades and the fact that the supplier will be using designated boxes for each client and not leveraging its large data centre processing capacity. The infrastructure price also seems to be as high as ever with the price range of £2,700 to £3,800 per user (not the exciting prices that have been quoted in the media). Furthermore, this problem seems to apply to greenfield IT sites where there are no complex legacy application issues.

I’m yet to be convinced that suppliers are ready to roll out on demand computing or other variants of the cloud model and I’d advise CIOs to think twice before asking suppliers to come back to them with a cloud computing “solution”. CIOs need to be even more precise about what they want. They should be more upfront about the expected price points and possibly take out on demand computing for applications until the desktop infrastructure is competitively priced.

About the author:

David Skinner, is a Partner at Morrison & Foerster and specialises in technology.

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