Category: Gaining Altitude in the Cloud

The Consumerization of IT may be a Bigger Problem for Business than IT | Gaining Altitude in the Cloud

King Cnut (Cnut the Great) of England, Denmark, Norway, and parts of Sweden once famously instructed the tide to refrain from rising, only to hours later find its disdain for his royal decree. Today’s CIOs find themselves faced with similar limits on their power and influence as Androids, iPhones, and iPads flood the workplace. The power of the purse cannot control these new and disruptive technologies as they are funded directly by employees. Corporate policies and other traditional control mechanisms are also being eroded or washed away in the rapid adoption of these easy to install and attach devices. Even more worrying is the ocean of ready-to-use, high-power business applications that are only one click away from installation. As enterprises find themselves waist-deep in this new reality, they are forced to accommodate these new technologies, user expectations, and business certainties.

Without belittling the significant technological and security questions this new reality poses, it is the challenge to the way enterprises do business that may have the most far-reaching implications. One of the key challenges these technologies and capabilities present is the effect they have at the interaction points between parties. Employees expect to have instant access to HR support systems and be able to conduct their interactions through mobile-enabled self-service applications. Customers have instant price look-up and competitive information at the point of purchase. Patients have their medical records on their iPhones and expect healthcare providers to be able to utilize this information yet conform with the right to privacy. Payment systems are only a Bluetooth click or barcode swipe away. The point is this: even small changes to how parties interact can create significant and sometimes surprising impacts on a firm’s structure, controls and completive models, sales channels, and governance. When these changes are imposed by the broad scale adoption of new technologies – as is the case with mobility – the question is not how to control or gate them but rather what to do now that they are here.

To further explore the extent of this impact, let’s use a major healthcare institution as an example. Healthcare is covered by strict laws that regulate how key information and data is captured, shared, and utilized. This web of regulation has contributed to the slow adoption of new information technologies across the healthcare industry, and resulted in most healthcare institutions adopting closed networks with tight controls on new devices and applications. The existing structures and polices are under attack. Patients arrive with instant access to their own data, stored on their own devices or resident in a host of cloud-based vehicles, with the reasonable expectation that clinicians utilize this information to avoid duplicate tests and take advantage of patient history. At the same time, clinicians face uncertainty on efficacy of the data, yet encounter far more educated and interactive patients. Patients are able to receive second opinions from a variety of qualified and unqualified sources in real time. When combined with changes in how clinicians (who are often independent of the provider networks) expect to interact with healthcare institutions and further complicated by payment systems that are shifting to real-time mobile-enabled devices – it is easy to see that mobility will and is changing the way medicine is and will be practiced across the entire supply chain. The organizational and business model implications look to be huge and all because nearly everyone today has the power of the Internet in their pockets.

Live from Bangalore – the NASSCOM IMS Summit, September 22 | Gaining Altitude in the Cloud

Hello everybody! I’m back, reporting from day two of the NASCOMM IMS Summit in Bangalore. Today’s conference was focused on discussing alternative models of cloud computing and what works best for who.

First, Adam Spinsky, CMO, Amazon Web Services (AWS), told us his view of what happening out there in the cloudosphere. An interesting factoid to chew on – as of today, AWS is adding as much data center capacity every day as the entire Amazon company had in its fifth year of operation when it was a US$2.7 billion enterprise.

Even more compelling proof of the fact that the cloud revolution is really happening were Spinsky’s examples of the types of workloads AWS supports – SAP, entire e-commerce portals that are the revenue engines of companies, and disaster recovery infrastructure…all are hosted on the cloud. Fairly mission critical stuff, rather than “ohh, it’s only email that’s going to go on the cloud,” you must admit.

Next up, Martin Bishop of Telstra spoke of the customer’s dilemma in choosing the right cloud model. This segued nicely into the panel discussion, “Trigger Points – Driving Traditional Data Center to the Private Cloud,” of which I was a part.

M.S. Rangaraj of Microland chaired the panel and set the context by talking about the key considerations of cloud implementation. According to Rangaraj, the key issues are orchestration and management, as the IT environment morphs into new levels of complexity with multiple providers delivering services across a multitude of devices.

I spoke of the business case for a hybrid cloud model. While private cloud is good, and current levels of public cloud pricing provide slightly better business value, a combination of the two enables clients to reduce the huge wastage of unused data center resources they now have to live with. Today, infrastructure is sized to peak capacity, which is utilized once in a blue moon. The dynamic hybrid model enables companies to downsize capacity to the average baseline. Associated savings in energy, personnel, and maintenance imply dramatic cost advantages over both pure public or private models.

Kothandaraman Karunagaran from CSC took up the thread and spoke of the role of service providers in this new paradigm. While outsourcing may not “die” as a result of the cloud movement, it’s jolly well going to be transformed. Service providers will need to spend far more time in managing, planning, and analyzing usage and consumption data, and less time on monitoring and maintenance. In other words, service providers’ roles will evolve from reactive to proactive management.

Some of my key takeaways from the conference include:

  • Everybody agrees that there is no silver bullet model, meaning that there are no clear winners in a cloud environment, and the hybrid model will keep getting traction as the world becomes increasingly, well, hybrid.
  • Until not long ago, we spoke of the need to simplify IT. Well, the only part of IT that’s going to get simplified is the consumption bit. If you are a CIO reading this, we’ve got bad news for you. Management of IT is going to get more, not less, complicated. Multiple service providers, networks and devices, reduced cycle time, and self-provisioning means that management just got a whole lot tougher.
  • Service providers need to rapidly engage with this new reality and figure out business models can adapt to it. The unit of value is no longer the FTE. It’s what the FTE achieves for the client, or even more complicated, what the consumer actually ends up using. We live in interesting times, and they will only become more interesting as time goes on.

That’s it from my end. I enjoyed the conference, look forward to more illuminating discussions next year, and, hopefully, to seeing you there!

If you weren’t able to attend this year’s conference – or even if you were – you can download all speaker presentations at: http://www.nasscom.in/nasscom/templates/flagshipEvents.aspx?id=61241

 

Live from Bangalore – the NASSCOM IMS Summit, September 21 | Gaining Altitude in the Cloud

CIOs, service providers, analysts, and the business media rubbed shoulders on the power-packed first day of the NASSCOM Infrastructure Management Summit (IMS) in Bangalore. This year’s conference has the twin themes of Enterprise Mobility and Cloud Computing, with one day dedicated to each, which seems to lead to a more focused set of discussions than a super broad-based event that leaves you struggling to absorb all of what you just heard.

After the welcome address and keynote speech from Som Mittal, President of NASSCOM, and Pradeep Kar, Chairman of the NASSCOM RIM Forum, we settled in for a series of insightful presentations and panel discussions with global technology leaders.

BMC CEO Robert E. Beauchamp spoke about how the parallel paradigms of cloud, consumerization, and communication (yes, I am in alliteration mode today) require CIOs to think of a unified approach to service management. Of particular interest were Beauchamp’s insights on how different service providers are trying to interpret the cloud differently in an attempt to a) disintermediate the competition; b)  avoid being disintermediated; or c) both a and b.

IBM’s interpretation of the cloud: The cloud is all the bundled hardware, software, and middleware we have always sold to you, but now you can buy the whole stack yourself instead of us having to sell it to you.

Google’s counter: Who cares about the hardware anyway? We will buy the boxes from Taiwan – cheaper and better. It’s about what you do with it, and that’s where we come in…again.

VMWare chips in: You already own the hardware – and we will tell you how best to make use of it.

Beauchamp sees more than one way of “belling the cloud cat,” and CIOs need to figure out which direction to take based on their legacy environments, security requirements, and cost imperatives. (“Belling the cloud cat” is my take-off on a fable titled Belling the Cat. It means attempting, or agreeing to perform, an impossibly difficult task.)

As for service providers, he also foresees successful survivors and spectacular failures as the cloud conundrum disrupts traditional business models.

Mark Egan, VMWare CIO spoke about how consumerization and cloud computing are nullifying the efficacy of traditional IT management tools. According to Egan, IT needs to move from a “we’ll place an agent on the device” mode to a “heuristics” mode of analyzing data in order to prevent every CIO’s security nightmare from coming true in a consumerized enterprise.

Next up, Brian Pereira, Editor, InformationWeek, and Chandra Gnanasambandam, Partner, McKinsey, inspired us with real stories about how mobility is transforming the lives of unbanked villagers, saving billions of dollars worth of healthcare expenditure, and improving and optimizing the enterprise supply chain.

Here’s a gem of an insight: Do you know what most urban workers in the Philippines, Vietnam, or India do if they need to transfer money to parents living in rural areas? They buy a train ticket. Then they call Mum and Dad, share the ticket number, and ask them to go to the local railway station, cancel the ticket and collect the refund (minus a small cancellation fee). Wow – that’s what I call consumer-led innovation!

To summarize today’s sessions:

  • While many discussions highlighted the correctness of what Everest Group analysts are already predicting, it was invaluable to get validation on what we suspected, complete with more live examples.
  • Cloud and enterprise mobility are here to stay. With the momentum behind them – unlike other hyped up technologies – these are being demanded by the consumer, not dumped on them. And that is always going to mean something.
  • Service providers and CIOs need to evolve. In themselves, cloud and mobility do not represent a threat. But it’s a lot of change. And the threat lies in how CIOs, and their service providers, gauge the pace of the change, and react to it.

That’s it for now. Tomorrow, I share a panel with CSC and Microland to discuss “Trigger points – Driving traditional datacenter to private cloud.” Right now I’m heading off the gym in an attempt to burn all the calories I’ve put on during the day, thanks to the excellent food. Stay tuned!

The Consumerization of IT and Business Processes: Why the Shift to End-to-End Processing Puts Power in the Hands of the User | Gaining Altitude in the Cloud

Service Delivery Automation (SDA) encompasses cognitive computing as well as RPA (robotic process automation). Software providers that provide SDA come to market with an enterprise licensing structure that basically requires the customer to license a number of agents for a specific length of time. But in using this licensing model, service providers unintentionally constrain adoption and open the door for competitors’ differentiation. Along with the average Joe becoming increasingly accustomed to downloading an app to a smart phone in seconds and receiving immediate gratification utilizing powerful, easy to use technology comes uncomfortable questions for corporate IT. “Why can’t you do this? If it only cost me $5 to get this from Apple, why does it cost me millions to get a much worse product months, if not years, later from you?”

Behind this new sense of entitlement is the growing reality that these new apps offer dramatically increased levels of automation, allowing for activities that were previously the providence of experts but are now self-service, giving the user far greater control. Even more profound is the complete reorientation of perspective as technology is developed and deployed from the consumers’ ease-of-use rallying cry, increasingly far away from delivery organizations’ focus on efficiency and corporate control.

These same secular forces that are creating a profound change in IT are also beginning to drive change in shared services organizations and how they address business processes. Think end-to-end processing for talent management and learning in HR, and purchase-to-pay and record-to-report to name in F&A. As with their IT counterparts, these processes are increasingly being automated and shifting toward a self-service delivery structure. This not only reduces costs but also places increased power in the hands of the user community.

Now those internal groups that deliver IT and business processes are facing a harsh reality. They are no longer dominated by stovepipe delivery organizations designed to capture the efficiency of specialization, centralization and labor arbitrage. Rather they are quickly turning into flatter organizations that are delivery-oriented around a user’s view of the process, with emphasis on the transparency of information flow, and process designs that prioritize ease of use over traditional corporate command and control.

As these changes rework the business process landscape, they portend coming shifts in how third parties will be utilized. It is likely we’ll see a reversal in the current trend that allows for increased provider control of processes, with firms increasingly choosing to design solutions that place control within the firm and wherever possible in the user community, thereby also reversing the current provider push for outcome-based pricing. And increased levels of automation may diminish the amount of labor arbitrage which is utilized.

All of this is best summed up by a client who recently told me, “I am no longer looking for a delivery vendor that provides high quality silent running. I am now looking for a transformational partner that will help me implement my new vision and then play a supporting role.”

Cloud: The Network Itch | Gaining Altitude in the Cloud

During the past several weeks, Everest Group’s ITO team has had multiple debates about the various levers that govern the cloud services industry. The growing consensus has been that service orientations, *aaS (BPaaS, SaaS, PaaS and IaaS), are the strength levers with which the cloud service providers will play. So, for example, a Rackspace (IaaS) will host a Salesforce.com (SaaS) on a Microsoft Azure (PaaS) platform, completing the cloud landscape. Just one glance across the *aaS firmament and the stories appear similar. The cloud portrait seemed complete and nailed to the wall for posterity.

However, a statement by Steve Caniano, VP of AT&T Hosting and Cloud Services – “What is key for us is the ability to leverage the cloud as part of a network service experience – without a network you don’t have a cloud” – took our debates in another direction.

“Without a network you don’t have a cloud”

While the services side of the cloud has dazzled the industry, the infrastructure side – consisting of data centers and network – has seemed dreary. After all, network and storage are considered hygiene requirements for the cloud infrastructure. They also appear to have been relegated to commodities, as both the network and storage markets have experienced intense competitive and pricing pressures. Our feeling is that saying there cannot be a cloud without a network is akin to taunting a Ferrari owner that his or her sports wonder car is no good without Michelin tires. True, the owner may have a momentary nightmare of the beaming red Ferrari’s chassis lying flat on the ground. But it isn’t a real worry, as Bridgestone, Goodyear, and other tire brands are also options. So, can I pat myself on my back and say I nailed this “cloud without a network” debate with this repartee and sign off on this blog?

A growing tribe of telecom firms thinks otherwise. Verizon, CenturyLink and AT&T have all recently made big investments in cloud – acquisitions of Terremark and Savvis are still fresh, and AT&T has put up a US$1 billion corpus fund for its cloud initiative. Additionally, the cloud-focused consolidation happening in the telecom industry has coincided with the growing activity in the cloud services industry. The next generation of networks (4G and 5G) have enticed many new cloud initiatives. Apple’s iCloud is an example.

In the debate that ensued within my team on this topic, a colleague reminded that the whole concept of cloud comes from telecommunications, and that public telephony was the first cloud ever. With this legacy in mind, can we assume that control over network and bandwidths will help telecom companies define the rules of the cloud?

Taking this debate external, is network:

  • Just a part of the cloud (and the real money lies with systems integration and advisory)?
  • An enabler of the cloud?
  • The cloud itself?

We’d love to hear your thoughts on this.

Time to Call the Real Experts – What We Can Learn from Ants about Cloud Governance | Gaining Altitude in the Cloud

IT rarely loves end users, and for good reason…they constantly invent new problems. They customize their laptops, creating unmanageable software Frankensteins; they bother IT with all kinds of new whims; they want to use all types of new mobile devices, each scarier than the previous one, etc. But the biggest reason of all is that end users always think they know better than IT what tools they need to conduct their business.

But IT can fight these battles with a mighty tool – centralized governance. The less control IT gives end users the better and more stable the system architecture will be, and centralized IT control always produces more efficient results. . Right? Actually, it’s no longer true. While centralized IT governance works well in a traditional IT ecosystem, it quickly fails in the new generation IT environment. The powerful promise of cloud computing is that any user can get easy access to a diverse set of IT resources – not just those available from the internal IT group –for the precise period of time they are needed, and shut them down once the project is completed. But all this requires a new type of governance – decentralized – which allows every user a choice of technology tools and operational flexibility, while still enforcing integrity and consistency of the IT architecture.

Is this even possible? Is there any precedent that shows this can work? There sure is, but not exactly where we would expect to look for it.

Introducing Governance, the Ants Way

Ants solve very complex problems everyday. A few of them include:

  • Conducting comprehensive project management of building large anthills capable of accommodating the whole colony
  • Running sophisticated logistical optimization exercises of finding food for the whole colony day after day
  • Administering a complicated supply chain of anthill maintenance and repair, food storage, and perimeter security per major environment changes (e.g., rain), and constant competition (e.g., other ants)
  • Managing HR – or rather AR, (Ant Resources) – of ~40,000 ants

What’s most striking is that they do all this under conditions of completely decentralized governance!

Ants

In fact, every ant has total operational flexibility to select its own tools, make optimization decisions, and manage its own work. The only guidelines they follow are their direct job responsibilities (e.g., worker, soldier, queen) and the overall goal of the colony.

This type of decentralized governance is what IT today must adopt and embrace to successfully manage cloud-based IT delivery. Business users will need to make IT decisions every day, and there is no way they can run every one of these decisions through IT for architectural approval, procurement for buying authorization, finance for budgeting, etc.

New flexible guidelines must be designed to support end users’ IT decision making. IT will still need to maintain the overall architecture, but it should not, for example, dictate to the end user exactly which server build and OS stack needs to run the user’s email. Procurement will still negotiate deals with cloud providers, but it should not micromanage every end user’s buying decision as long as the decisions comply with the overall goals. And finance will still set the budgets for business units and business users, but it should step away and let users select their own tools within the budget guidelines. Indeed, the enterprise will operate just like a colony of humans, with every worker optimizing his or her IT decisions within the overall company guidelines. Yes, to attain the full benefits of flexibility and agility of the cloud, enterprises need to learn to govern it the ants’ way.

This approach is certainly not without its challenges. While ant colonies have no issues with guidelines enforcement as ants are “compliance hard wired,” we certainly can’t say the same about human IT end users. Hence, IT’s issue will be how to enforce policies while still enabling users to enjoy the benefits of the cloud model. This is a non-trivial challenge for which there are no easy answers…yet.

HP’s Strategic Decisions – What’s the Next Shoe to Drop? | Gaining Altitude in the Cloud

In 1729, Anglo-Irish satirist, essayist, and political pamphleteer Jonathan Swift penned a satirical paper suggesting that to prevent the children of poor people in Ireland from being a burden to their parents or country, and to make them beneficial to the public, the Irish should eat their own children. Driving toward services leadership may require HP to make a similarly tough (yet certainly less ghoulish) choice – is it time to for HP to accelerate the next generation progress of its service business by actively cannibalizing the traditional IT infrastructure outsourcing business?

The IT infrastructure outsourcing market has already moved through a state of slow to zero growth into a phase of contraction.

ITO Market

The primary force disrupting this market has been the growth of the remote infrastructure management outsourcing (RIMO) model, which has effectively replaced traditional IT infrastructure outsourcing (ITO) contracts with a more flexible and cost effective alternative, resulting in services that generate as little as 25 percent of providers’ ITO revenue. (To clarify why providers only capture 25 percent of the revenue… with RIMO offerings, hardware, software, and data center costs are retained by the customer.) This disruptive trend may accelerate rapidly as it combines with the emerging forces of next generation data centers and cloud computing.

Based on HP’s recent bold strategic decisions around its non-performing businesses including PCs, TouchPad platform, and WebOS software, one wonders if it will also take a page from Swift’s proposal in setting direction for its services business. Doing so could enable it to accelerate its positioning as a next generation IT leader by actively eating its legacy customer base by rapidly driving cloud and other next generation IT services into it. This would likely generate significantly higher profit margins but result in lower overall revenue levels. So why should HP contemplate such a painful move? In short, if it doesn’t, someone else will! In fact, reports are that IBM is already snacking within its customer base, significantly expanding its next generation penetration while keeping a close eye on sustaining/growing its profit pool. Additionally, some Indian service providers have specific offerings targeted precisely at replacing legacy infrastructure contracts with more agile RIMO relationships.

As the Irish would have found had they followed Swift’s satirical advice, HP will find this move extremely painful and extremely unpopular in some quarters (e.g., Wall Street). True it will find solace in higher margins of these next generation offerings, which in many instances may be two to three times higher than its current low margins, and enjoy higher growth (albeit from a much smaller base). But this will offer scant relief from the real and emotional pain of absorbing significant stranded costs while replacing each dollar of “traditional” revenue with as little as 25¢ to 50¢ on the dollar of next generation services revenue.

I read the recent announcements about HP’s strategy as increasing the probability that the company will take such bold actions. It seems willing to take strong and decisive actions such as shuttering its WebOS business, TouchPads, and phones, as well as spinning off its underperforming PC business…so why leave its services business out of the mix?

What If the Hackers Had Attacked Sony Through Microsoft Azure Instead of Amazon’s EC2? | Gaining Altitude in the Cloud

There is widespread speculation that the recent attack on Sony was accomplished by utilizing credit card information stolen via compute resources purchased from Amazon’s EC2 cloud offering. This high profile incident has attracted attention in the mainstream press and in the blogosphere, underscoring the interconnected and anonymous nature of cloud computing, as well as the need for vigilance and improved security. Interestingly, there has been little attention paid or blame allocated to Amazon’s EC2 offering in the public discussion. Amazon, rightly or wrongly, has largely escaped unscathed, and the cloud infrastructure services sector – of which EC2 is the most visible champion – continues to enjoy increased adoption, favorable press, and commentary largely unaffected by this incident.

There are many good reasons why Amazon’s EC2 has not been vilified and cloud adoption continues at its frenetic pace. But what if the circumstances had been different? What if the credit card information had been stolen utilizing Microsoft’s Azure platform? Would the world have responded with the same collective yawn? Would there have been an attempt to hold Microsoft accountable for the nefarious use of its compute power? Would open source enthusiasts have suggested it to be another reason to move to open source from Microsoft products? To explore this, let’s first examine why it might have made a difference:

  • Microsoft plays a different role in championing cloud than Amazon. Azure is the Microsoft answer to the Windows operating system (OS) and bundled IP provided through the cloud. As such, it represents Windows and the dominant OS at this time.
  • As the dominant OS provider, Microsoft appears to be held to a different standard than most other providers; if there is a hole in Windows, we are all vulnerable (except, of course, Apple fanatics).
  • Microsoft acts as a lightning rod like no other, drawing negative attention from all quarters.
  • There seems to be a preference to excoriate past monopolists in favor of newer entrants that may yet gain similar market power, akin to market behavior that favored the Microsoft upstart over the established IBM in the 1980s.

So, what would have happened? Would the steady march to the cloud be delayed as we criticized Microsoft and questioned more deeply not only its culpability for how its service is utilized, but also the requirements for security in the cloud more broadly? Would regulators be initiating inquiries threatening further changes in compliance security laws, or attempting to add responsibility to providers of compute power? Or would there have been a similar yawn? It’s interesting to speculate… and as we do, what does this tell us about where we are headed and where we have been?

Consumerism is Driving Healthcare Organizations’ use of mHealth, the Cloud and other Technologies | Gaining Altitude in the Cloud

At an mHealth conference I recently attended, Kaiser Permanente Information Technology’s senior vice president stated, “Our integrated model, scale and technology are providing the foundation for delivering truly real-time, personalized healthcare. That is our journey and this is our obligation.”

He hit on one extremely important point – personalized healthcare. But there’s another critical reality in the healthcare industry…consumers and consumer convenience are driving the ways in which healthcare companies will support patients’ needs, and it’s all around the technologies most of us use today.

Think about it in the context of mobile technologies. Mobile is:

  • Pervasive – 91 percent of Americans own a mobile phone and 75 percent own a PC
  • Always on – Users access their smart phone more than two hours per day
  • Simple and convenient – Little or no training is required for usage
  • Location aware – in America, 150 million GPS locator devices were sold in 2009
  • Context aware – i.e., sensor technologies such as OnStar, the in-vehicle security system

With mobile being such an integral part of our lifestyle, consumers will push for increasing mobile health (mHealth) capabilities to research, access, and pay for healthcare. And consumers’ influence on how healthcare providers leverage technological capabilities potentially extends far beyond mHealth. Questions healthcare companies must consider include: Are consumers leveraging social media to select healthcare providers, learn about service prices to enable them to negotiate with healthcare providers, etc.? Will consumers push to pay for healthcare via PayPal-type services or a smart phone application, rather than by credit or debit card? Should healthcare providers establish their own online medical condition search capabilities for their patients, including live chat with medical specialists, to help retain patients and help ensure better diagnoses? Should they build consumer-friendly, self-administering applications such as diabetic patient monitors that will administer insulin as needed based on preset dietary information? Should these be free services, or should they carry a small fee ala www.justanswer.com which gives consumers access to a wide range of medical/health professionals for a nominal cost per query?

From an “inner workings” standpoint, strategic aspects healthcare organizations must consider as they relate to mHealth and use of cloud computing as a delivery platform for mHealth include:

  • To what extent should they develop applications and employ methods that will allow consumers to use personal tools (e.g., iPad, iPhone and Blackberry) to access those applications?
  • What will infrastructure platforms look like, and to what extent will cloud computing play a role?
  • Will internal “App Stores” become necessary, and how will those be managed?
  • What will be the organizational impact of migration to cloud and next generation platforms – i.e., what will internal IT, roles/skills, governance, and core processes look like in a post-transformation end-state?
  • How can organizations more effectively drive improved utilization of existing assets, while cost-effectively adding new capacity via cloud or next-generation data center models?

I realize I’ve asked a lot of questions in this blog, and that was exactly my intent…healthcare companies and providers of the technological capabilities must consider these questions and many more if they are to succeed. The reality is that packaging mHealth solutions is highly challenging because of the complexities that exist in the diversity of service providers (carriers, integrators, device and appliance providers, and application developers) each of which provide vital pieces of the puzzle including network backbone, broadband, mobile integration support and maintenance, cloud computing capabilities, and application development and provision. In today’s service environment there are traditional boundaries that will have to be bridged, and success will be based on service providers’ development of an “mHealth in a box” solution set. It can be done, but it won’t be an easy task.

How Cloud Computing Is Reshaping The Role Of The CIO | Gaining Altitude in the Cloud

This blog was originally posted in Forbes’ CIO Central on August 3 as a contributed piece. Read the original post.


 

Four disruptive forces are causing executive teams to reconsider how the CIO function will add strategic value in a world where cloud computing, distributed architectures and mobile ubiquity are givens for future competitiveness.

Rising Server-to-Admin Ratios

When 25 physical servers for each IT admin was the norm, CIOs built organizational structures suited to that reality. Hiring, training, reporting lines, compensation, key success factors, annual reviews, career advancement and social norms were all built around that 25:1 ratio. Now, enterprise IT is facing the near-term reality of ratios that are 100:1, 500:1 or even 1,000:1. Google is rumored to be aiming for a 10,000:1 goal.

This massive increase in administrative density signals wholesale changes in the enterprise IT org chart. It changes who is hired, what skills they must have, how they will be trained and managed, evaluated and compensated, how they interact with and support business units, and what their long-term career paths will look like.

IT Becomes a Variable Cost

In the early 90s, when the CIO title was gaining popularity, the chief driver for bringing IT into the executive suite was the massive capital allocations required to give organizations a competitive advantage through rapidly changing technologies. These technologies demanded larger and larger percentages of the corporate budget, so a direct line to the president or CEO was paramount in justifying these spends.

Cloud and next-generation IT strategies dramatically change this. What was once CAPEX increasingly becomes OPEX, and long-term risk falls accordingly. So, where’s the strategic value in having IT in the executive suite? Arguably, it’s more important than ever.

The increase in business agility and responsiveness that cloud computing makes possible shifts the strategic value of the CIO from a technical role to a business role. CIOs must understand the functions they support, so they can help these functions quickly put the infrastructure and applications in place to support quickly moving new ideas to market, testing them, and iterating them to general release. Competitors will be doing this (and already are, in several industries).

End-User Auto Provisioning

End users are gaining a level of power that makes past demands for integration of Blackberries and iPhones seem whimsical by comparison. CIOs accustomed to pushing back against new ideas based on security threats and support burdens will increasingly find themselves cut out of the deal by end users who can go online and provision SaaS (software as a service) and IaaS (infrastructure as a service) with a credit card.

As Vivek Kundra, until recently the White House CIO, has said, “the more a CIO says ‘no,’ the less secure his organization becomes.”

Infrastructure Becomes Commodity

New — and largely uninvented — processes are required to deal with all of this change. Governance, compliance and security are all matters that 20 years of client/server policy is ill equipped to deal with. On top of this, CIOs must develop policies for the rapid growth of collaboration technologies (and, yes, social media) that employees will increasingly require in order to do the job the CEO is asking of them.

These shifts signal the need for the new CIO to bring an entirely new set of skills to the game. Yes, the new CIO’s job will continue to require an understanding of infrastructure and architecture, but a knowledge of how to turn the dials and knobs will be far less important tomorrow than it was yesterday. Tomorrow’s winning CIO will bring an MBA’s understanding of finance, marketing, operations, HR and the other functions. CIOs will understand how to say “yes” to new services that make their companies competitive, while mitigating risks and allowing for small-scale failures in the pursuit of long-term success.

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