Cloud: The key changes for senior business leaders
By James Newson, director at Sansom IT
Cloud computing is a concept that needs three key attributes to achieve its classification (self-service, seamless scalability, delivered over a wide area network) however there is still confusion at a senior business level about how the concept transforms the enterprise. Here’s the thing, Cloud in itself is not the catalyst for change. It is the IT industry producing compute services approaching an industrial scale that means the enterprise is now consuming, rather than delivering IT services.
This blog outlines the changes that senior business leaders should be aware of and debunks some common misconceptions.
The single, biggest change is IT is now provided as a working solution, or “as a service”. This is different from the traditional approach where internal IT teams were responsible for the whole technology stack. When using a 3rd party cloud service, the customer only needs to provide the skills necessary to administrate the application or platform.
This means the following for your internal IT team and management:
- No need to buy or allocate data centre space
- No need to invest in hardware and software
- Management tasks such as capacity management are not your responsibility
- Support for the whole technology stack (hosting, network, storage, server, virtualization) is not your responsibility
- Upgrading associated infrastructure and software is not your responsibility
- Sourcing high-end technology skills to deploy and support the solution is not your responsibility
- IT staff have more time to spend on technology that is core to your business activity, and that directly affects revenue
This last point is key to the cloud versus traditional on-prem investment/ ownership model of IT argument. Opportunity cost, how much time is spent analysing the loss of alternatives in IT. If business IT staff are committed to supporting, maintaining, managing and operating the majority of the technology stack, which in most enterprises is not core to business activity. What opportunities get missed that could help reduce overheads and drive revenue and growth? An internal IT team focused on technology initiatives that support core business activity undoubtedly adds more value.
Funding IT has also changed. An OpEx pay for use model is replacing the CapEx investment and ownership model. There is a common perception that this model is prone to over provisioning and running up extra costs. However, the CapEx, investment/ ownership model is just as likely, if not more, to over provisioning and high levels of waste. It is just until recently we have not metered infrastructure resource consumption, so we could not easily understand or communicate utilisation levels. Also, there is more visibility into the cost of a 3rd party cloud service. How many internal IT services come with an accurate pricing schedule, underpinned by an SLA, support processes, and terms and conditions?
The one size fits all out-sourcing model is also becoming obsolete. Technology suppliers are innovating at a fantastic rate, and the landscape of service providers and products is changing just as quick. If you have all your eggs in one basket, you risk missing out on the innovation that can really transform the business. Service providers are specialising and are delivering solutions quicker, cheaper and with more functionality than ever before. Now is the time to multi-source based on the needs of the organisation not out-source to an all-rounder managed service vendor.
IT infrastructure is a commodity; it supplies no point of differentiation for most businesses. Moreover, there is a mechanism in place to make it a fungible commodity. Essentially this means infrastructure can be purchased and traded in a like for like unit of measurement, the kWAC hour. Commercially we can now treat IT infrastructure like we treat other utilities. There should be very strong reasons justifying the investment into server, storage, and network assets when infrastructure is available as and when needed.
Lastly, the business case for Cloud vs the traditional on-prem investment/ ownership model of IT deployment is not straight forward. Most IT managers have been conditioned to plan ahead for years in advance to right size your on-prem IT delivery. This perception needs to change, or your Cloud business case just won’t stack up.
Senior business leaders should give careful consideration about the objectives of their business when agreeing on an appropriate IT strategy. Cloud offers a sustainable, predictable alternative to the traditional on-prem investment/ ownership model of IT.