Leadership

The Cloud isn't a strategy

If you asked the builder who is designing your dream home what his strategy was and he replied, 'The Binford Sawzall 9000,' would you feel comfortable? It's the same with the tool known as the cloud.

I've seen a troubling trend these past few years and a symptom of the larger malaise that strikes many corporate IT departments. Ask a CIO about their technology plan or strategy for the coming months, and their eyes light up and in hushed awe they reverently whisper: "The Cloud."

Unless you've been living under a rock, you've likely been beaten over the head with the wonders of cloud computing. It will slash your costs, alleviate all management pain, store your music and movies, and bring about world peace in our day. While the superlative machine in the marketing department of most cloud vendors has been working overtime, "the cloud" is nothing more than another incantation of make vs. buy or rent vs. own. We've been down this road before with everything from outsourcing to contract manufacturing, and the risks and rewards are identical. Presumably an external third-party vendor can perform an activity more efficiently and cheaply and allow you to quickly adjust capacity as needed. There's certainly some marvelous technological wizardry that makes it all happen, but at the end of the day, you're renting a service from a third-party vendor.

The cloud is a tool

Moving applications and services to the cloud may cut your costs or may impart more risk into a process, but in either case, the cloud is nothing more than a tool that should be accomplishing some business objective. Imagine if you hired a renowned builder to complete your dream home. When you sat down for your first design meeting and asked the builder his strategy and vision for your property, if he replied "The Binford Sawzall 9000," would you feel comfortable or begin reconsidering your choice in builders? When you as CIO cite "the cloud" as your strategy, you are doing the exact same thing, citing a tool as a cornerstone of what should be a plan that accomplishes some business objective.

A decade ago, outsourcing was the "IT ‘strategy' du jour," and yet another case where IT referred to a tool as a strategy. There are myriad pros and cons for outsourcing certain activities, but in most cases where a tool was substituted for a real strategy, the results were disastrous. Cloud will experience the same fate unless you build a true strategic plan that just happens to include cloud services, rather than trying to build a strategy around a tool.

The cloud as a cost reducer

Reducing costs is certainly a valid strategic imperative, but it's also a one-way ticket to commoditization and should not be the sole foundation of your cloud initiatives. Most organizations are willing to pay for people and groups that can solve business problems, and a life as a trusted adviser is usually far richer than constant demands to extract another few percent in cost reductions.

Study the problems facing your organization and spend some time with other leaders listening. You may be surprised to find that cost is not the sole driver to most of the organization's actions; otherwise you could just fire everyone and live happily ever after. Your peers are likely struggling to enter new markets or speed the delivery of current and future products. There may be sales opportunities that are left "on the table" or thousands of hours wasted supporting crap processes that could be reallocated toward revenue generation and make a far larger impact than reducing some segment of IT expenses.

At the end of the day, no tool should be the core of any strategy, whether it's building a house or stating the strategic plan for a Fortune 500 technology department. Thinking beyond the tools makes spending money on technology more palatable to the organization, since that spending is tied to a business objective rather than yet another mercurial technical tool or buzzword. Separating the strategy from the tools also allows you to adjust your tactics should technology or environmental factors change, without completely rethinking your strategy. In short, thinking beyond the tools gets you to true strategic planning, rather than being co-opted as a technology salesperson.

About

Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. He has spent ...

19 comments
Dr. Frumious Bandersnatch
Dr. Frumious Bandersnatch

So, you want to move to the cloud? What you're really saying is "this is too hard to figure out, let someone else do it". Lets say you move the company's data to "XYZ Storage" and downsize your IT Dept. Lets also suppose, without your knowledge, some company out there, who is a major hacker target, also moves their data to XYZ Storage thinking it's safer there but, you guessed it, XYZ is compromised. Would that be a problem for you knowing all your companies intelectual property and customer data now belongs to "supernova" and his friends? This is "guilt by association" of course, you would not have been a target if you hadn't moved you data. Also, lets remember the Internet is fragile and can be taken out by many things as innocent as bad code or a solar flare. No net, no data, no work, no profit, no job.... So, do us all a favor, store your own data, manage your own services, hire some staff and help keep America working, it really does matter in the long run!

david_terrar
david_terrar

By dismissing Cloud as "yet another mercurial technical tool or buzzword" you are demonstrating a fundamental misunderstanding of the technology shift that is going on. We've had technology shifts before like the move from mainframe to minicomputers to distributed PCs to the era of Client/Server. If I wanted my company to make use of the new technology, I needed a strategy in place so I could capitalize on both the new tools and the new business opportunities that those new tools facilitate. You talk about Cloud in terms of IT cost reduction. That's focussing on one piece of the Cloud toolset, Infrastructure as a Service when there is a lot more to the "cloud stack" than just that. If I look at this as a software provider, in the shift from developing on premise applications to Cloud applications I have to change every single aspect of the way I do business. My business model changes from selling licences to monthly subscriptions. I have to change the way I incent my sales force, the way I approach the market, the way I do my billing and administration, the way I implement new customers, the way I service the customers. Suddenly the balance of risk has changed so that I have the lion's share of the risk - I need my customer to be satisfied so that they stay with me and grow their customer base - it's all about helping people buy from me rather than just selling to them. Putting myself in my customer's shoes, the way they buy and use applications is completely different. I can try and buy where before I had to build a cost justified business case. This topic is so much more that just about saving IT costs, so the smart companies need a strategy on how to adopt and shift from the old way to the new and the new opportunities it opens up for their supply chain and the way the work with their customers. This is all made more important because the shift to Cloud is happening at the same time as two other big shifts - mobile and social. Smart CIOs can see how the strategic nature of the way their job is changing. By the way, I speak as someone who proudly owns a Binford Tools polo shirt. Actually going back to your builder analogy you are absolutely right that you wouldn't expect to discuss the particular tools or building materials he was going to use. However, you would expect to sit down with the architect and agree a style for building your dream home, like "ultra-modern with lots of glass and an emphasis on green technology" (or some other choice).

ggbyrne
ggbyrne

Bravo, Patrick - you hit the nail (gun) on the head. The "Cloud" is nothing more than what used to be called time-sharing or co-location or hosted services. The only difference is that rather than having a private network with leased lines for access, application or physical hosting is now accessed more flexibly via the internet. It happens that competition has driven down the costs of hosting so that the decision to host or buy is more frequently "host". The equipment still exists and all the issues of privacy, security and availability are not avoided - only hidden and therefore more difficult to monitor and control. It used to be part of any hosting agreement to care, deeply, how well the host would manage their data centers for high availability. Calling something a "Cloud" does not eliminate the need for such due-diligence. Some particular applications lend themselves to being hosted by a specialty software company, as with the overworn example of salesforce.com, but it is the quality of the application that is being purchased, not the delivery mechanism.

trevorcsr
trevorcsr

I am not a tecnician I just run the company I work for. I don't understand the main reasons for the "Cloud" I can buy storage very cheaply to keep my data and not rely on Internet servers owned by someone I have no control over. I have a programme that backs up my files automatically and have unlimited storage for about $50 USD a year. If I went that route I would assume I need it in my own country so a government could not turn off my access and bankrupt a country. I am in the UK so i assume we will not go to war with the USA but a terrorist attack on the buildings that internet servers are would be a disater beyond belief. How may times is the data backed up to I assume different building in different regions of a country. What happens if the company hosting it goes bankrupt?. If the data is lost and I don't have a copy it normally means a company say after a fire lasts about 6 months without an emergency plan. I assume i am being silly and not understanding the principles but I find it worrying if people just use the "Cloud" as their whole storage facility. I sometimes work in areas when I am at a clients consulting which is 60% of my time where no internet connections are available such as basements, metal framed and clad buildings. I use an Acer W500 tablet with Word and a CAD programme. These are cheap so I don't need Google apps etc. Can someone help me and explain to me what is my benefit using the Cloud?. I could see the benefit for us if Iran or other country of similar status using the cloud on USA servers as turning it off would have saved us a fortune in sending planes etc.

iiagdtr
iiagdtr

Finally some sense has come to light. Marketing people wear togas for a reason. :) The cloud is a tool and makes tools out of those who think it isn't.

LocoLobo
LocoLobo

That used to be a term for a device where you put in something and receive results. Don't ask how it works just take your results. That is one of my problems with the term, "The Cloud". "The Cloud" is being advertised as more than a tool. Just put it all in the cloud and you don't have to worry. Don't worry, be happy. Sure

Alpha_Dog
Alpha_Dog

The cloud is not a tool that fits every need, nor is every cloud the same. Your builder really shouldn't use the sawzall to drive nails, and a cloud is the wrong tool when it comes to serving applications to a rural area with spotty broadband coverage.

trs789
trs789

HUH? I woke up this morning and walked outside-oh no! Someone may kill me. Run back in. I guess I'll scrap my cloud idea for our product because, according to you, there's a good chance I'll be compromised in a cloud, and assuming I'm safe in "my home". What nonsense.

erh7771
erh7771

...in your comments. That's the usual for those advocating cloud computing

sbarsanescu
sbarsanescu

What you say is true. But it all comes down to money. You made the analogy of Mainframe/Distributed computing... the shift happened... because of money. It's more efficient to do it that way. A business changes because of money. It is more profitable to do it like that. Things made in China are made in China because they're cheaper. Same with the Cloud. A change in Business model, in strategy, accepting a risk is all about money. And yes, having one more option on the plate may change the model. But, let us not forget one thing. Technology is not there for it's own sake. The one that makes it is the one which helps the bottom line. As simple as that. And, in reality, the sales pitch of the Cloud is the cost reduction. No one would accept that hey - we spend the same, take on some risk and it ends up costing the same as before. Back to your analogy - this seems like a storing money in a banks (or even better as bonds). All is much safer and efficient until the banking system crashes. Then, your bonds lose value. Still, if nothing bad happens, bonds are safer than storing money under the mattress. But are they safer than gold in a private safe? That is the question: Is the Cloud the reason why we MUST rethink our processes to accomodate it? Or should we use the Cloud when appropriate?

spdragoo
spdragoo

His point was that "we'll use the cloud" isn't the strategy itself. It may, as you point out, *result* in a new strategy being developed to implement the *tools* (i.e. "the cloud"), or it may result in the current strategy being adjusted to incorporate necessary changes due to the change in tools. However, that can happen with *any* change in tools. Say, for example, a corporation decides that it's time to upgrade the OS on their PCs, which are currently running XP -- and to avoid any arguments, they've decided to stay with a Microsoft OS to minimize staff retraining. Whether their strategy will be to upgrade now to Windows 7, or wait until Windows 8 becomes available, could be in large part affected by how new their PC hardware is: fairly new hardware (i.e. acquired within the past 1-3 years) would probably run Windows 8 just fine, but older hardware might need to be replaced. They'll also have to make decisions based on application compatibilites -- not merely on prewritten or "canned" software, but also anything developed in-house. And should they decide they want to choose a "cloud" tool approach, that will mean major changes to their hardware & infrastructure strategies: do they have enough bandwidth in their backbone to provide connectivity to the cloud servers for their app needs? Does the particular cloud solution they're considering have the right apps for their needs? How do they handle integration of in-house-developed apps into the cloud solution? Do they start an IT project & spend the money to convert their in-house apps to apps that can be deployed by their cloud provider, or even just convert the data for use by a prewritten cloud app? And it all boils down, then, to cost. Not just how much will be spent now, but how much down the road? Are there any up-front costs associated with *not* changing...and how long will it take for the projected monthly savings to recover the up-front expenditures? Assuming there *are* any monthly cost-savings?

r_rosen
r_rosen

Another thing to consider. What will it take to move to a different vendor. Vendors have staff to help you get on their service. How many people do they have to help you get off? Especially critical if you live in an environment where low bid gets the business.

AnsuGisalas
AnsuGisalas

It's just delivered over the internet. Often it will be in a bank of servers at the company providing the specific cloud service you bought - sometimes in your neighbourhood. So, yes, you lose control, but you don't have to worry about China (much), since China can't cut off your connection to a node in your part of the world. What is the benefit? If you need to scale your IT operations up and down a lot (or may need to), then the cloud has distinct advantages: you can dip as shallowly or as deeply as you want as there is no initial investment - you pay for what you use - not for what you needed to use last month. You also get the scale you need a lot faster than by ordering equipment, waiting for delivery, waiting for the setup and testing etc. etc. So it's a tool with uses. If you don't need it, you don't need it.

david_terrar
david_terrar

Hi spdragoo@... 1, Understand your explanation on IT upgrades major or minor. You're seeing Cloud as "just a tool" like Patrick. My point was that Cloud opens the door to new business models, new ways of working with clients/partners, new opportunities from aggregated data that weren't available with on premise, single tenant apps. Patrick explained you need a strategy to make the shift (like any IT upgrade). I'm trying to say it's more than just that.

sbarsanescu
sbarsanescu

Definitely agree with what you posted and how could I not? Yet, the main issue here is that it adds complexity to the landscape. AND, AT THE SAME TIME, it's marketed as a simplification. This is the big issue. Ask any IT architect, security professional, or IT pro - some will find a parrallel to Windows/Unix worlds: The Cloud (as a strategy, not as a tool) is very much like Windows - when it works, everything is swell. Nice experience, bells and whistles, nice and shiny. All so unlike Unices, which require savvy people to operate. Basically, anyone can do it. The trick is... again like Win/Unix: When the cloud-based infrastructure breaks, then the unsavvy, productive user that was king is left in the middle of the desert, not knowing which end is up. While the more expensive Unix user will start fixing up the system he/she understands the working of. That, to me, is the big issue. The Cloud, as a strategy meant to REDUCE COSTS looks good on Management Reports, yet is counterproductive in reality. The Cloud in the hands of trained people, is... well, a tool. It can't drive nails, but can make some things easier - such as Public Web/Documentation/Information dissemination. Would it be a best practice to let others manage the security of our data? Well, the same question was asked about banks about 3-4 centuries ago - it turns out that yes, money in the bank is safer than under the mat... until the bank goes belly up, that is. So, there will be no answer that fits all. The only answer that is true is: IT DEPENDS. And it's not cheaper, it is more complex.

LocoLobo
LocoLobo

Can you dumb it down for me? How is "the cloud" opening the door to new business models? Do I really need the cloud for these new models? In your first post you speak of a technology shift. I don't see it that way. This has all the appearances of a marketing shift to me. Maybe that will open new business models maybe not.

CharlieSpencer
CharlieSpencer

I don't see how the cloud differs from what we previously called 'client-server delivered via time-share' model. The old way used dumb terminals, dial-up lines, and a mainframe; the new ways uses a web browser, fiber, and a server farm. I'm missing what's new about the strategic model itself, beyond the tactical tools used to implement it.

AnsuGisalas
AnsuGisalas

Cloud storage changes already happened with Google docs - that's finding its proper place and proportions now. New payment schemes, sure. New product distribution methods, obviously. New business models? How? Having a payment scheme and distribution method is NOT a business model, it's simple a business enabler, and a prerequisite for business. It's an add-in, not a replacement. Please explain what it is exactly you see as all new, here. And not simply one more option of the old. The ways we can handle data and cooperation is changing, yes. But even that is more of a continuation of what already was. In my industry we used to send files and translation memory files in email, now they're delivered from a portal, or over a cloudservice. Little difference, really, unless you have a large team working simultaneous at different parts of a ginormous text.