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Cloud computing calls for rebuilding enterprise IT

Bernard Golden | March 22, 2012
For all of the buzz about cloud computing, there remains confusion about its real implications for an IT organization.'s Bernard Golden argues that to take full advantage of the cost savings and efficiency improvements of the cloud, CIOs have to rethink their approach to IT.

Everyone's had the experience of discussing a concept with someone and suddenly seeing the look of understanding appear on their face as the meaning of the concept sinks in. I engage in a lot of conversations with IT managers about cloud computing, and have encountered many interesting reactions.

It can be intriguing to observe how IT executives perceive cloud computing will affect their organization's processes and people. Most seem to regard cloud computing simply as a technology development that will affect one or perhaps a couple aspects of their organization. For example, some CIOs think of cloud computing as something that supports developer agility by providing the self-service of virtual machines. Others think of it as an infrastructure improvement that will reduce the cost of supporting legacy applications.

In short, most executives think of cloud computing as a drop-in replacement for some aspect of the existing IT environment, but don't view it as a transformative technology with an overarching impact that will affect the entire organization. That perspective is understandable. IT has a long history of absorbing innovation and slotting it into the existing environment, swapping one existing element for a new one that provides better functionality or performance. Virtualization, the foundation of cloud computing, is one such swap-in. The genius of virtualization is that it can be inserted between servers and the supported operating systems, disrupting very little of the existing environment while providing tremendous financial benefits.

It's a mistake, though, to think that cloud computing will conform to the established adoption pattern of IT innovation.

The reason is straightforward: Cloud computing brings automation to the mix, and in every industry that automation has touched, profound disruption has followed. IT will be no different. Those who think of cloud computing as a segregated innovation, like virtualization, fail to recognize how profoundly it will change enterprise IT as we know it.

As background for this profound disruption, consider that IT funding is going to remain under pressure, but that pressure is going to change. In the past, it's all been about cutting costs. In the future, there will still be cost pressure, but as business units realize that IT can enable business initiatives (think mobile and consumerization), there will be plenty of money available for IT investment linked directly to business outcomes. The challenge for CIOs will be to respond to this revenue-oriented demand while addressing the cost-cutting pressure that will remain.

Cloud computing is not going to solve legacy application challenges and costs. I recently talked with the CIO of a large media company who commissioned a study of his legacy apps to determine how many could operate in a cloud environment. The results: 10 percent. That means that 90 percent of those applications will go forward with the same inflexibility and high costs that they've had in the past. There is no cloud dividend available to make existing applications cheaper and free up money to invest in business-focused initiatives. This also means that the pressure to reduce costs in the legacy environment will continue unabated.


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