Monthly Archives: May 2010

IT Disintermediation and The Cloud

On a fairly regular basis I get into a discussion with people that starts something like this:

Hey John, with the cloud is IT even necessary anymore?  I mean, if I can buy computing and storage at Amazon and they manage it, what will happen to all of those IT guys we’re paying?  Do we just get rid of them?

Well, no, not exactly.  But their jobs are changing in fairly meaningful ways and that will only accelerate as cloud computing penetrates deeper and deeper into the enterprise.

It’s no big news that most new technologies enter the enterprise at the department or user level and not through IT.  This is natural given the disincentive for risk taking by IT managers.  As a rule, new things tend to fail more often (and often more spectacularly) than the mature stuff that’s been hanging around the shop.  And this is not good for IT careers (CIO does often stand for “career is over” afterall). 

This departmental effect happened with mini computers, workstations, and eventually PCs.  Sybase and Sun got into Wall Street firms through the trading desk after Black Monday (Oct. 19, 1987) because older position-keeping systems could not keep up with the volume (effectively shutting down most trading floors).   IT does not lead technology revolutions.  Often times IT works to hinder the adoption of shiny new objects.  But there are good reasons for that…

For many years, these incursions were still traditional on-premise systems.  In most cases, over time, IT eventually found a way to assert control over these rogue technologies and install the governance processes and stability of operations that users and executive management expected.

More recently, in the SaaS era, Salesforce.com’s success hinged on getting sales reps to adopt outside of the official SFA procurement process supported by IT.  Marketing apps often come in through the marketing department with no IT foreknowledge, but then are partly turned over to IT when integrating them with existing systems proves to be no simple matter.  I say partly because the physical servers and software running SaaS apps never gets into IT’s sphere of control.  Often, the level of control turns into one of customization, oversight, monitoring, and involvement in the procurement process.

Like it or not, in a SaaS world, a fair bit of the traditional work of IT is forever more disintermediated.  But how about in the IaaS world??

As we move to IaaS, the level of disintermediation actually diminishes – a lot.  Most people assume the opposite without stopping to think about it.  

As shown above, however, in the IaaS world IT has a HUGE role to play in managing everything above the hypervisor.  Vendor management, ITSM, monitoring, configuration, service catalogs, deployment management, automation, and many more core IT concepts are still very much alive and well – thank you!  The only difference is that IT gets out of the real estate, cabling, power, and racking business – and most would agree that is a good thing. 

What else changes?

First off, the business process around provisioning needs to change.  If I can get a virtual machine at Rackspace in 5 minutes, don’t impose a lot of overhead on the process and turn that into 5 days (or more!) like it is in-house at many enterprises.  But do keep track of what I’m doing, who has access, what my rights and roles are, and ensure that production applications are deployed on a stack that is patched, plugged and safe from viruses, bots and rootkits. 

Second, IT needs to go from being the gatekeeper, to the gateway of the cloud.  Open the gates, tear down the walls, but keep me safe and we’ll get along nicely (thank you).  IT will need to use new tools, like newScale, enStratus, RightScale, Ping Identity and more to manage this new world.  And, IT will need to rethink their reliance on decades-old IT automation tools from BMC, HP, IBM and others. 

Lastly, the cloud enables a huge explosion in new technologies and business models that are just now starting to emerge.  The MapReduce framework has been used very successfully for a variety of distributed analytics workloads on very large data sets, and is now being used to provide sentiment analysis in real-time to traders on Wall Street.  Scale out containers like GigaSpaces enable performance and cost gains over traditional scale-up environments.  And there are many more.  IT needs to develop a broad knowledge of the emerging cloud market and help their partners on the business side leverage these for competitive advantage. 

If there’s one thing that the cloud can change about IT, it’s to increase the strategic contribution of technology to the business.

The Real Cloud Action is Innovation, not Economics

I have no doubt in my mind that Thomas Edison, were he alive today, would instantly spot the real value of cloud computing. Most people think it’s the economics. To one of history’s most prolific inventors, cloud computing would mean innovation.

You see, cloud isn’t just about how cheap you can make a VM, or how much less money Amazon costs than your internal infrastructure, even though it’s absolutely critical to the success of cloud computing that this is the case. Instead, the real value being created is how cloud computing dramatically lowers the barriers to experimentation and new models of delivering capability, thus increasing the chance that true innovation can occur.

Consider the following. Cloud computing is still way more prevelant in the U.S. than elsewhere in the world. There are relatively few non-U.S. clouds, even in Western Europe, though the pace of new cloud investments there appears to be increasing. All VCs now tell their Web-based portfolio companies to save their capital and use cloud computing to launch their service. Why? Because it reduces the amount of capital required to get to market. If the U.S. has a more vibrant cloud ecosystem, it has a positive impact on the level of start-up activity driving new innovations to market. Cloud computing, therefore, increases start-up activity.

Here’s another example. There’s a new pre-market company in the complex event processing (CEP) market called Cloud Event Processing (disclaimer – I am an advisor) using cloud instances, Map/Reduce for massively parallel computation, and a lot of other techniques that are becoming more prevelent in a cloud environment (e.g. no SQL databases). This is a new model that promises to dramatically change the face of the CEP market. Founder Colin Clark’s blog is incredibly open and forthcoming about why he feels that cloud-based CEP is a great and disruptive innovation. His post on Why CEP in the Cloud Makes Sense lays it out for all to see.

When Eli Lilly needed lots of processing power to drive drug discovery, they too turned to the cloud to generate a large map/reduce cluster in a matter of hours vs. the hundreds of days it would have taken through traditional provisioning. As pointed out in this Information Week article on Eli Lilly’s cloud success, the key value is the enabling effect that this cloud project has had on innovation (a word used 5 times in this article).

Have you ever had to go in front of your company’s capital committee to ask for money? This is one of the more painful things most companies put people through. Sometimes it takes months of analysis, justification, and back room lobbying to get a capex request approved. What do you think that does to innovation?? Imagine that tomorrow, instead of asking for $1m for your new speculative project’s infrastructure, you ask your boss for a few thousand dollars of expense budget to try out this new idea. If it takes off, you’re a hero. If it’s a dud, at least the company is not out $1m. That’s how cloud lowers the barriers to innovation and encourages experimentation.

While cost does matter, the cloud is about eliminating the opportunity cost, and the opportunity lost, by discouraging innovation. Next time someone argues with you over “cloudonomics,” change the discussion. To borrow from a famous campaign office sign from Bill Clinton’s 1992 presidential campaign – “It’s the Innovation, stupid!”

Follow me on twitter for more cloud conversations: http://twitter.com/cloudbzz

Notice: This article was originally posted at http://CloudBzz.com by John Treadway.

(c) CloudBzz / John Treadway

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