Tag: next generation IT

Notes from the Interop NYC 2011 Carrier Cloud Forum | Gaining Altitude in the Cloud

I had the good fortune to participate in a lively panel discussion at this week’s Interop NYC Carrier Cloud Forum on the topic of Enterprise Expectations for Cloud Services. My co-panelists were Troy Angrignon of Cloudscaling, and Charlie Burns of Saugatuck Technology, and the moderator was Carol Wilson from Light Reading. We covered a pretty broad waterfront, discussing everything from the state of enterprise cloud adoption to enterprise perceptions of telcos/carriers as potential cloud service providers. Some of the more interesting exchanges focused on the following points:

  • The market noise is getting deafening – one of the biggest emerging obstacles to enterprise cloud adoption is actually the market confusion being created around what cloud is (and isn’t). Every enterprise IT vendor, including hardware, software or services, is pitching a cloud story, whether it actually has capabilities or not. The vendor marketing onslaught is making it extremely difficult for CIOs to separate truth from fiction, and in many cases is slowing down efforts to drive migration. The good news? This is a purely self-inflected wound from a cloud industry perspective, and it should sort itself out over time. The bad news? In the short term, some CIOs are starting to tune out, or at least very skeptical in engaging in yet another vendor discussion around cloud.
  • It’s all about business agility – on the topic of what ultimately will be the primary driver of enterprise cloud migration, there was some healthy debate around the importance of the cost efficiency value proposition to enterprises. While we all generally agreed that business agility and flexibility was going to be the dominant theme, there were differing perspectives on how important a compelling cost reduction component was going to be. Some think agility alone will be enough, while others (including me) believe that overall cost improvements of 30+ percent will be required to get the attention of enterprise CIOs and to drive wide-scale transformation, particularly in infrastructure.
  • Cloud security is often more about IT job security – Charlie Burns made the great observation that enterprise concerns around data security often have more to do with IT executives’ anxiety about their future roles, and less to do with actual cloud security. Major cloud service providers have matured quite a bit when it comes to security, and the major enterprise issue now has more to do with transparency than the actual security policies and practices being implemented by providers.
  • Significant market “white space” still exists – we agreed that enterprises view the network as a critical component of cloud services and that carriers have a strong “card to play” as enterprise cloud emerges. Rather than focusing on horizontal IaaS services, carriers may be better off identifying specific solution areas and use cases where network ownership could create strategic differentiation and advantage – for example, use cases in which high availability or bandwidth are critical. While we all recognized the challenges of carriers entering more horizontal IaaS or PaaS markets from scratch, Troy gave an interesting example of how Cloudscaling has recently helped KT launch cloud IaaS services in Asia that were priced 30 percent lower than Amazon AWS.

Thanks again to Troy, Charlie, and Carol for a great discussion!

Photo Credit: Interop Events

It’s Not You, It’s Not Me – Recognizing When You and Your Service Provider Have Grown Apart | Sherpas in Blue Shirts

I am an avid golfer, and it consumes more of my thought, time, and finances than I am willing to quantify. The first round of golf I ever played was during the summer between eighth and ninth grade, and I was hooked. When I started high school, I immediately joined the golf team – although I must admit I was the last man selected for The B Team, as I was absolutely terrible at the game.

On the first day of practice, I met Harry, a member of the country club at which my high school golf team was allowed to practice and play. As a passionate golfer himself, Harry volunteered as an assistant coach for the team and took me under his wing. For two years, he taught me the basics of the game based on Ben Hogan’s Five Lessons: The Modern Fundamentals of Golf. In addition to the swing, he instructed me on things like etiquette and golf course management. With his guidance, I was a bogey golfer within a year of first picking up a club.

I was reminded of Harry during a recent client engagement. This organization has a managed services agreement for IT services with a service provider that has lasted nearly a decade. During that time, the client grew quickly through organic growth and acquisition (nearly doubling in size every two years), dramatically increased its geographic footprint, and went public. By the end of the most recent outsourcing contract term, it had become one of the largest companies in its industry in the United States.

During this same time, the IT service provider remained focused on serving the client’s industry. But as few clients in the sector were as large as our mutual client, the provider found more success growing its business with small- to medium-sized firms. Many of these new accounts looked more like our mutual client a decade ago, small and private with simple IT needs more necessity than anything else.

Our mutual client, however, has grown to the point of using IT as an enabler. It is using technology to standardize processes and drive efficiencies, benefit from scale and centralized technical design, and leverage new cloud-based solutions to take advantage of new IT economics. With the service provider consistently investing in capabilities for a different type of client than this one has become, both parties need to take a step back to understand each other’s direction. There’s nothing wrong with either organization, it’s just time for a recalibration of sorts.

I probably could not have experienced the growth I had without Harry’s expertise, but at some point his focus no longer correlated with my needs and I made the tough decision to part ways. That did not make him a bad instructor or me a bad student. There were other students who could better benefit from Harry’s time, and there were other instructors from whom I could learn more.

The situation is similar for my client and its IT service provider. Identifying that the organizations have grown apart is a crucial first step in deciding how to move forward. This may be an excellent opportunity for the service provider to invest in new capabilities it can leverage for its existing client base, allowing this particular client to continue to leverage the service provider’s industry expertise. Or, the client may be better served to go through a potentially challenging transition to a service provider that is a better fit for its current needs. Understanding your IT service provider’s already-made investments and its investment plans is a good way to assess fit with your organization.

Enterprise Cloud Migration: What if We’re All Wrong? | Gaining Altitude in the Cloud

This blog originally appeared on Sandhill.com. Read the original post.


Current conventional wisdom suggests that enterprise adoption of cloud services will accelerate as service providers and offerings become more “mature” and “enterprise friendly.” Adoption will grow and extend beyond initial test/dev website, and backup use cases as enterprises become more comfortable with cloud services. The common belief is that, over time, cloud will in fact become a strategic component of most IT environments but that it will be a decade-long (if not longer) transition. Most also believe that data security, privacy, and audit issues significantly constrain some verticals such as healthcare and financial services from effectively migrating in the near term, particularly to cloud platform and infrastructure services.

But as we discover far too frequently, conventional wisdom often turns out to be quite wrong. While adoption rates for new technologies tend to be overestimated in the short term and underestimated in the long term, it’s an interesting exercise to think about the factors and unexpected developments that could dramatically accelerate enterprise migration to the public cloud.

Let’s consider some of the basic assumptions many in the market make around enterprise and the cloud.

What if enterprises architect around SLAs?

The terms of many current cloud service provider SLAs are effectively meaningless. The burden of proof often falls on the user to fully document service interruptions and outages. Even if proven, compensation for violations often equates to a slap on the wrist at best. But what if enterprises come to the conclusion that SLAs are the wrong way to think about ensuring availability?

The highly visible Amazon outage in its Northern Virginia data center in April resulted in significant interruption and service degradation for users of Quora and FourSquare, while other websites and companies appeared to suffer no impact. The reason? Availability through redundancy. Rather than relying on SLAs, many unaffected companies simply architected redundancy through failover approaches that rolled to other Amazon data centers or service providers. What if enterprises decide that pushing cloud service providers on SLAs is akin to beating a dead horse and, instead, simply decide to take the SLAs as a given and architect around them?

What if enterprises standardize to conform to cloud service provider offerings?

Enterprises historically have been addicted to IT customization – both in what they buy, and how they buy it. Service providers that weren’t willing to modify offerings, pricing, or contract terms for large enterprise buyers were quickly shown the door. Many believe that enterprises will never migrate to cloud services that are essentially “take it or leave it” propositions to the customer.

Yet in many cases, enterprises have driven customization in processes, applications, and services that in fact add little or no business value. Cloud is opening many enterprises’ eyes to the fact that there may in fact be significant value in using cloud services as a lever to drive standardization across the organization, particularly for non-strategic applications and processes.

What if enterprises learn to live with standardization and limited configuration, and dramatically streamline support for non-strategic applications and assets?

What if data security and privacy issues are mitigated?

Data residency, security, and privacy issues are providing significant cloud migration constraints for some global enterprises, particularly those in compliance-sensitive verticals like healthcare and financial services. But what if these barriers were significantly reduced or fully eliminated?

Salesforce.com recently gave a glimpse into one way this may happen through the recent announcement of its Data Residency Option (DRO), which gives customers the ability to keep data on-premise behind their firewall while providing encrypted access to the Salesforce.com cloud application. Some cloud infrastructure service providers, like Savvis and Rackspace, offer dedicated hosting and private/public cloud services in the same data center, enabling hybrid models that support data “ownership” and the benefits of dynamic bursting into public cloud models.

While enterprise customers are seeking more transparency, Amazon has in fact achieved compliance with FISMA, HIPAA and PCI DSS and other standards. Some in the audit community are also discussing the need to reexamine common policies and controls in light of cloud services and architectures. The net net? Data security, privacy, and residency issues may end up being addressed faster than expected. What would happen to adoption if these concerns were taken off the table?

What if pricing for common IaaS services drops by 50 percent?

To date, cloud service providers have very effectively used private cloud economics as a pricing umbrella for their public cloud services. The result? Highly attractive margins for current cloud providers and an onrush of new providers. If microeconomics holds here (and I don’t know why it wouldn’t), pricing for public cloud infrastructure services will begin to drop, and potentially dramatically. Amazon has already established a pattern of driving consistent reductions in pricing for its core cloud services. What will happen when new entrants get aggressive in trying to grab share? The enterprise business case ROI for cloud service migration could be much more compelling in the very near future.

What if mission-critical applications migrate first?

The assumption is that adoption of cloud applications starts at the edge with line-of-business and functional applications and then, over time, migrates to more strategic and mission-critical applications. But what if CIOs determine to go in the opposite direction?

Examples exist of large global enterprises that have migrated to cloud service providers that offer hosted private cloud SAP ERP services in conjunction with community cloud spiking environments. While the common belief is that mission-critical apps will be the final frontier for enterprise cloud migration, what if it turns out to be the first?

All of these scenarios are unlikely to play out as described, but we can be sure that the conventional wisdom will be wrong in a market that is evolving as rapidly as enterprise cloud. Current expectations for the rate and pace of adoption are based largely on past trends in enterprise technology, which is probably a bad assumption in itself. It is increasingly clear that adoption curves for new enterprise technologies are actually accelerating.

I bet my money that the pace of enterprise cloud adoption will surprise many … it will be interesting to see what unexpected scenarios might open up the floodgates.

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?

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