How in the world does a chief information officer or information technology professional cope with the challenge of delivering solutions for the second decade of the 21st century when they are saddled with 1980s technology?
Add the issues surrounding reduced budgets and the ongoing knock on IT workers--that they do not respond in a timely manner to changes in business--and you have the setting for change. Both in how IT delivers solutions and how IT needs to change itself.
The good news is that for once in almost 30 years, software is changing. No longer are you stuck with simply new features using outdated technology. You now have an alternative technology solution. The historical technology providers are, of course, trying to maintain their hold on you and your budget dollars by marketing "internal clouds," alliances that merge hardware and software stacks that imply "infrastructure to application" environments but totally miss the point and the benefit of cloud computing. But of course you would do this, too, as part of the innovator's dilemma.
As a CIO, how does your company take advantage of this changing technology and business model called the cloud?
There are a few things to consider with cloud computing. First, a number of research firms suggest that cloud implementations can take up to 50% less time, and total cost of ownership can be up to 46% cheaper. Both of these are shown in numerous white papers provided by cloud solution providers, and for the most part are reflective of the power and benefits cloud computing can provide.
However, one caution: Should you need or require multiple integrations, go cautiously. Integrating cloud solutions to on-premise solutions still takes time. Although somewhat less expensive, it still can add to project costs. Also, ERP cloud providers have some perverse view that makes integrating their solutions with other necessary cloud solutions very difficult. This is still the throwback to the "old software model" where your vendor "knows best." Key takeaway: As you get into cloud computing, make sure your vendors not only have robust application programming interfaces, but also that they have demonstrated those integrations with other vendors you may be considering.
Another consideration in cloud computing is the vendor's openness regarding service-level agreements, disaster recovery and security. Even the larger providers have their outages, but they still deliver higher uptimes than your internal data centers. However, with newer vendors and providers, make sure they are invested in your SLA so it is not just a contract term.
Final consideration for you in exploring cloud computing solutions: customization. One of the key benefits of cloud computing is the ability to customize the solution to some degree. So you have the advantage of changing the cloud solution to your process and behavior; with on-premise solutions, you need to change your behavior to their process.
Cloud computing will change your internal business model. It allows you to significantly reduce your capital outlays for hardware and software.
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It allows you to take your IT spending and direct it towards innovation and meeting the needs of the business in a timely manner, rather than deplete your resources on support and maintenance. This is key. Most IT budgets are really focused on supporting existing technology. Your move to cloud computing allows you to shift your focus back to providing solutions within your budget and to scale with the business rather than being one of the last departments sitting on very fixed costs.
Also, cloud computing impacts your disaster recovery and redundancy spending. Good cloud solution providers have set up redundancy and disaster recovery processes that you can test without burdening your organization. As you use a wider selection of cloud providers, your risk is spread physically, as each provider likely uses different data centers in different geographies. All this allows you to focus on your most important resource, your employees. Using a complete cloud solution, if your firm has a disaster, you simply need to get your employees to an Internet access point and you are up and running.
Don't be misled by the marketing hype of the old technology providers. Cloud computing will have huge benefits for your company. It will be the way businesses run their infrastructure, and it will evolve much faster than the 30-year software cycle we have just lived through. Start slowly, experiment, be critical of your suppliers, but start now to move your IT business model to cloud computing.
Steve Cakebread was chief financial officer at Salesforce.com and Autodesk.
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