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Cloud Computing – another fad for the techies to disrupt the business
December 16th, 2010 Nigel Thorley
CIOs en masse are exploring the potential of the Cloud – but how much of this is to satisfy a real need, and how much is simply because this is the latest toy in town?
There is no doubt that Cloud computing will play a major part in the future of IT, in fact some suggest that Cloud will become the only method of IT service delivery – aside from specialist closed systems. With this in mind, we are seeing a push to “move things into the Cloud”, driven heavily by the need for greater agility and the potential for cost reduction. Whilst I would encourage businesses to explore the benefits associated with Cloud, fools rush in where angels fear to tread, and Cloud is not the default answer to all questions.
In the world of Cloud, CIOs and IT managers must show clear leadership within their businesses in order to:
- demonstrate the value they add (and there is plenty) to business users wishing to put services into the Cloud
- show how resources need to be managed in the Cloud scenario
- ensure that the service can be performance managed as part of the wider portfolio
If they do not – they will undoubtedly be perceived as slowing the business down. Worse still business users may march ahead and procure Cloud services, independently of IT – an outcome that could actually increase rather than reduce costs.
In preparation for Cloud adoption CIO and IT managers must work with their business counterparts to understand the likely candidates for Cloud, ensuring that the appropriate governance mechanisms exist such that these decisions are made on firm foundations and do not unduly attract risk or that any risk is understood and hence can be managed. Consideration needs to be made with respect to:
- overall security and information policies
- criticality of services – not all are the same
- operational impact, including benefits and dis-benefits
Clearly a great deal can be achieved through Cloud adoption – but those embarking on it must understand (fully) what they are signing up to or risk losing credibility in following a fad.
Categories: CIO Agenda, Strategy & Innovation, Technology, Trends
Nigel Thorley
Nigel is a member of the IT Leadership Practice and is part of the Atos Global Cloud team leading Cloud computing within the UK business consulting practice. He is experienced in business change and transformation specialising in the development of business cases and programme start-up. Nigel also has a wealth of experience in establishing and working in multi-vendor teams. Nigel is part of the Atos Global Talent Management Program in conjunction with Europe's top business school (HEC).
One the better webinars I’ve heard on the subject on-premise vs. cloud-based solutions comes from Picturepark. It’s specifically about Digital Asset Management, but the information they present is pertinent to any field. Experts on each side of the question are given the opportunity to explain why they chose the system they did. http://youtu.be/WlXpT6vgPJQ
I do not believe that Cloud is so much about the infrastructure that sits behind it but about the service delivery mechanism and commercial models that it implies. Servers, storage and networks are the same for both models, however, the Cloud presents the potential for users to use only the resources they consume, only when they need it at a uniform price. The challenge however is in integrating the various Clouds into a single service so that end users are unaware of the organisation providing it. As the market develops, contract management is likely to become as important as the infrastrucure technology
CXO’s are not rushing to the cloud because its a fad (hula hoop, farmville, wombles…)
We need to credit them with more intelligence than that.
They are being drawn to it because it allows them to innovate faster and cheaper.
The point is that organisations risk security breaches if sensitive information is stored in the cloud. To help improve the situation, some organisations are investing in ‘private clouds’, where they establish a cloud environment using their own (private) hardware and software systems. Whilst this offers agility and flexibility with added security, the capital investment needed to establish their own cloud architecture can negate, or certainly reduce, potential cost saving benefits.
Isn’t that called a data centre??
The other side of this is that if you have a datacentre then should you not be using your spare capacity to offer a “secure cloud service” either as SaaS or PaaS especially if you are in the IaaS game already.
With the data protection act effectively ruling out the current offering by Microsoft for uk businesses and with the other main (visible salesforce) party offering a “storage cloud” solution based on their hardware, the enterprise market/public sector is begining to look for alternatives that are closer to home.
These are indeed interesting times
With regards to the DPA there is an interesting thread on the uk-crypto mailing list of interest.
The first large scale deployment of OpenStack is happening and with RedHat positioning itself with its deployable PaaS service it looks like the other caveat of “what to do with your data when your cloud provider decides to switch off their offering” is begining to recede.
I’m also going to mention the need for protection against virtual memory hacking techniques in a cloud offering though if you have someone that determined to access your data then it is presumably worth so much to them then any competent risk assessment wouldn’t have you storing it on a cloud anyway.
This article provides goo food for thought in resepct of cloud computing. There is no doubt that the trend of current thinking associates the use of cloud technology with two business imperatives of greater agility and reduced costs. Cloud computing can offer greater agility and flexibility in terms of scaling and adapting IT services to meet the ever changing needs of an organidation and can help to reduce IT costs because dedicated applications and servers are no longer required. By helping to meeting both these business imperatives, cloud computing ranks highly in the ‘desireable’ ratings.
However, there is a darker side to cloud computing that organisations must be aware of before embarking on a cloud computing strategy in the hope of achieving greater agility and cost reductions in the battle to win competative advantage and relates directly to the ability of the organisation to protect and secure information vital to its survival. By using cloud based servers and applications, the organisation may be offering up its intellectual property, financial and key operational information and strategies to cyber hackers that might then chose to sell the information to competing organisations. Taken to an extreme, this could mean that using the cloud could result in competitive disadvantage ! The recent issues created for governements by WikiLeaks provides a well publicised example of what can happen if sensitive company (or government) information finds its way into the hands of hackers determined to publish information that was not intended for general distribution.
So, whereas the use of cloud certainly can help to increase agility and reduce IT costs, a thorough risk assessment must be made in order to compare benefits to be gained with the potential dangers of sensitive information getting into the wrong hands!
Andy,
Your point about cloud security is well made but I think the wikileaks example is eroneous as there, I believe it was caused by an insider leaking the information rather than a hacker penetrating the system. Not sure any system can prevent the former if they are really commited to breaching security!
Interesting article, a big problem for many industries (especially public sector) is the governance around the storage of corporate data, i.e. where will my data end up? In the USA the government seeks assurances that cloud providers will only store data on US territory, so already for many organisations understanding more about what makes up the cloud they are subscribing to is important. Cloud providers in the UK will need to provide similar assurances especially for government departments (it will be interesting to see how G-CLOUD develops and addresses this).
Also, I think that for many CIOs the cloud concept is just getting over the peak of the hype cycle and we will start to see more solid examples of where forward looking CIOs are making the cloud platform pay off by reducing TCO and improving agility.
I can identify with the “latest toy in town” comment.
I have just been working with a client who wanted cloud but settled for something else which was much more utility.
What became apparrent was that they and others do not want to pay up front. My view is that during the recent recession companies sweated their assets and these assets are now creaking but they dont want to have a big up front investment to replace them.
Bruce do you see the end of the recession as and when it happens (I’m being optimistic) triggering a huge demand for cloud services or do you see organisations looking at the capital outlay for hardware and the actual length of time they’ve kept it going, as opposed to what they were told about it’s shelf life making home grown solutions the next fad??
Matt
For me the recession has provided the opportunity to look at a different delivery model and cloud has fitted in nicely. If by the end of the recession (whenever that is and however you determine it) suppliers have got cloud based offerings sorted out then I think companies will stick with it. However if cloud offerings are not perfected and companies get a bit of cash then who knows they can afford to go for something else.
So for me the buyers are looking and if the suppliers can get the cloud product right then who knows.
Bruce
So the onus is on the suppliers to determine whether cloud is to stay beyond the recession. The next point to consider is whether the suppliers will want it to continue. The continuing pace of change and the “latest toy in town” will drive the world on to new offerings, and the other determining factor may well be the amount of money suppliers can make out of the cloud. If it turns out to be not very lucrative for them then they will want to find the next bright shint toy.
I think the key to the bedding in of cloud is demonstrable value, as you rightly say whilst cash is tight it offers a seemingly straight forward way to reduce costs. The key though is realising those savings whilst retaining a workable infrastructure, IT governance and resilience. It will be interesting to see what happens as the cloud matures.
Nigel
Fully agree that some people may follow the general path into the Cloud without realising the impact on their business just because it is the latest wonder solution and they don’t want to be left behind. All companies thinking of using the Cloud need to do a thorough assessment of the three areas for consideration that you mention as an absolute minimum and think about what they want out of the Cloud. In the likely scenario where some of their systems will be suitable candidates and others not they then need to make sure that the business case they draw up is across the board. It’s no use looking at one system in isolation and saying it will be cheaper to run it from the Cloud and then find that the resources used to run it where it is, whether hardware or people, cannot be reduced because they are also used for other systems. I also like the dis-benefits element you mention – there are normally some down-sides that need to be taken into account.
Having said that, I am sure that Cloud is more than just a fad (definition: A fashion that is taken up with great enthusiasm for a brief period of time; a craze”). Cloud may not be a solution for ever but it will be around for a while yet.
Donald,
I fully agree that an Holitstic view needs to be taken and your point about the re-distribution of resources as a result of cloud adoption is well made. I can see an IT department that house a team managing in-house IT and a team managing cloud services – so I see the major cloud savings as being hardware related what do you think??
There are savings in hardware costs yes – and actually the services received will be physically superior too – but this must be offset against other costs, perhaps opportunity costs. How much does it cost to get onto these services and what are the disbenefits? Hence questioning whether to bother or not in the first place!?
The ‘cloud’ model also offers potential significant cost benefits (savings?) by virtue of the flexibility and agility (already identifed) as well as it’s extensibility – the ability to buy exactly what storage and or processing you need for the period you need it.
Indeed, but if CIOs and IT Managers are to show their worth they need to capitalise on these savings whilst not introducing compromise, i.e. they must consider the total cost of ownership, not the saving on the commodity item e.g. storage. The challenge comes when moving up the Cloud food-chain to SaaS offerings where the savings offered by storage/agility etc. may be offset (negatively) by restrictions in functionality – for example. On balance the SaaS offering could be absolutely right – but that balance needs to be considered, i.e. what are the sacrifices or opportunities?
SaaS is whole different kettle of fish. The key with selecting a SaaS vendor is ensuring that they are able to flex their offering to meet your requirements and flex their organisation to support your project implementation, once your happy that they can do both you then need to take up their references and talk to clients in detail.
You have to recognise that they are managing a leveraged model it’s not like having a team on site, which is why the balance of cost vs flexibility needs to be considered
Absolutely agree that there are further potnetial; benefits available in areas such as extensibility but shouls slways remember that these are potnetial benefits. Base the business case on the savings that can be achieved by e.g. buying exactly what is needed for today’s requirements, and then think about the diufferent scenarios for when these requirements change in the future. If in Year 2 less resource is required, what will be the costs and if more is required then the benefits probably increase further due to the flexible extensibility of the requirements for processing and storage.
The in-house team managing the cloud services would act in a similar way to those who manage an ooutsourcing contract from the inside, so there are still costs associated wioth this. If sufficient amount can be provided from the cloud then an organisation can still make a saving on people resource as well as hardware.
Interesting article, the point made regards the adoption of cloud services by the business, effectively circumventing the IT dept, suggests that we should all be articulating policies with the use of cloud services.
It also indicates that the attraction of cloud services is the flexibility some IT depts find difficult to provide. It would seem that there are types of services that cloud adoption suits (where flexibility and agility are required) and types where it doesn’t (where stability and security are required) if organisations can identify these it will help them frame a pratical policy.
Donald
A good point about what cloud is or isnt appropriate for. You might want to run email or your office apps off a cloud but would you want to run your business critical systems via a cloud? Will cloud providerrs being offering to run SAP systems for instance>
I can’t see many organisations wanting to run their SAP system via the cloud, although I suppose it would be dependant on the type and size of the organisation. Perhaps that’s a potential offering a “workplace in the cloud” giving small organisations the ability to interact with the clients and suppliers without having any kind of IT function
I don’t think criticality affect the decision too much – in fact, there are arguments that Clould is more resilient therefore critical applications could be best there. The challenge comes around what’s available, how it can be tailored and how it fits with need – if these areas can be addressed then value can be added. The issues come when these areas are not addressed. ERP aside, it’s about making it applicable and testing that applicability rather than chasing technology.
Understand the argument with regards to resilience, Andy makes the point that security is the key consideration.