In a recent survey conducted by 2nd Watch, 93 percent of
enterprise business units are using the cloud, while a substantial 61 percent
of them are bypassing their IT departments and doing it themselves.

2nd Watch, a cloud IT operations firm and Amazon Web Services (AWS) partner, released its 2013 Cloud Adoption Rate survey in January 2014. Matt Gerber, 2nd Watch’s EVP Sales and Marketing, said in our interview that the survey, which involved 133 companies, was
originally intended for internal purposes.

2nd Watch was trying to understand client needs
better, and was surprised by the amount of “shadow IT” the survey revealed: 61
percent of business units circumventing their own IT shops and going directly
to the cloud. The ease and agility of the cloud, along with the limited
resources IT departments suffer from, are working to make this a reality.

In the cloud adoption survey, the challenges faced by IT to
deliver cloud services include: a lack of staff or finances, 22 percent;
concerns about security, 16 percent; and a lack of corporate standards, 12

2nd Watch conducted the survey in December 2013 via
an independent online service. All 133 respondents were in U.S.-based companies
ranging from fewer than 200 employees to more than 10,000, and had titles
including CIO, EVP, and IT manager. The largest number of companies, 37
percent, were in the high tech industry.

To gain more insights into the survey and its implications
for enterprise use of the cloud, TechRepublic spoke with 2nd Watch’s
Matt Gerber.

Key takeaways:

  • 2nd Watch
    at first believed provisioning workloads in AWS would be the priority for their
  • After the survey, they
    concluded that governance and compliance needed to be the focus.
  • The company believed that not
    enough people were thinking about shadow IT, nor knew how to govern it.
  • Agility and ease of
    use with the cloud, along with a lack of resources for central IT, are what is
    driving business units to make their own deployments.
  • IT can bring business
    units back into a corporate framework by creating a brokerage or “services
  • Gerber agrees that the
    goal is to “govern and secure cloud offerings” and not chase shadow IT.
  • 2nd Watch
    Atlas helps clients create, deploy, and monitor cloud architectures; its Insight offering helps to manage cost and billing with AWS.
  • Matt Gerber sees an
    ongoing need for clients to figure how to consume cloud services effectively,
    and expects to do more surveys.
  • Over the last six to
    nine months, the company has seen enterprise interest in cloud adoption increase.

At the beginning of our talk, Matt Gerber
described how the Cloud Adoption Rate survey was at first an internal effort to
clarify their understanding of what their enterprise clients needed to improve
use of the cloud.

Matt Gerber: To give you some background on why we
did it, we were trying to get a sense of what stage of adoption our customers
were at. Part of what we do as a company, we build out products that help them
migrate and manage workloads in AWS. There’s a sequence of working through our
road map on what’s more important, and we were initially thinking that
provisioning workloads in AWS was the first priority as part of our 2nd
Watch Insight and Atlas products.

Thinking that would be next on the road
map when we did the survey, it really blew our hair back (for lack of a better
way of describing it) and forced us to change direction with that product road
map. We were thinking if there’s that much shadow IT out there, the bigger
issue the CIO has is how to get that stuff under control. Governance and
compliance for existing workloads was where we shifted our focus to, and as a
result that’s what we’re introducing with Atlas. It’s a pretty big shift for us.

TechRepublic: What led you to release the survey results

Matt Gerber: It was such an eye-opener
that we felt we would share it, but the self-interest on our part is we don’t
think enough people are thinking and talking about the issue. And being able to
go into and speak with a CIO and say, hey, we got a platform and a suite of
products that allow you to get shadow IT with the cloud under control—we felt
that would work in our favor. So between sort of saying, hey this is an
eye-opener for the world out there and our self interest, we decided to release

TechRepublic: You are quoted in a article saying that the amount of shadow IT that the survey uncovered was the biggest surprise for you. 93 percent of enterprise business units in the survey use the
cloud, but then 61 percent of them bypass central IT. That to me is a huge gap.
Why is it so large?

Matt Gerber: It was a shocking number of business units
using the cloud and a shockingly small percentage of those workloads and
applications that were being supported by the central IT department. We think it’s happening because it’s so easy now for a business
unit to provision a workload in the cloud, and we see this a lot
with our customer base.

A real-world example: we’ve
got a customer with a North American marketing business unit. They work with a
bunch of agencies for their campaigns. And they’ve said they’ve given up on
central IT being able to respond as quickly as they need. They’re now going to
this stutter-type approach where they launch a site, keep it up and running for
two weeks, pull it down, and launch another site. And central IT’s inability to
react that fast has driven them to provision this stuff outside of the
corporate IT network.

Our sense is that it’s the
agility these end-users want that is driving them to this shadow IT world. And
IT’s inability to react either quickly enough, or with the right resources, or
a combination of all the above, has put them in the position of not being able
to support the business requirements. The business unit is doing what it thinks
is the right thing to do, but outside of the corporate governance and
compliance framework.

TechRepublic: There was a comment regarding shadow IT in the article about your survey: “First, the goal is not to control shadow IT, as that is
a service that the IT department will never have ample cycles to provide. The
goal is to govern and secure cloud offerings.” They add that,
“Chasing shadow IT rarely works,” and that you will “get more flies
with honey.” In other words, give them a reason to come to you, add value, and
they will be more likely to show up. What’s your reaction, and how can central
IT do that?

Matt Gerber: I think that’s absolutely
right. And if you go back to the reasons the business units are doing it, it’s
for legitimate reasons. They want to be more agile, they want to be more
competitive, and they want to serve customers better. And you can’t, as a
central organization, tell them they can’t do that.

What you have to do is find
a way to enable them to do that, and what we’re doing with our customers is
trying to get their central IT shop to a point where they have what we would
call a “services catalog.” And so once they’ve established a catalog for cloud
services, they can simply pass it on to the business units and say, hey, here’s
everything you need to provision it, turn it on, turn it off, do what you want,
spend what you want, because I am now giving you what you need in an on-demand
model, and you control it.

Central IT doesn’t control
it. All central IT is doing is saying, here’s a menu. And as long as you’re ordering
off the central menu, and if the menu is the right menu, then have at it. You
do whatever you want to do from a business perspective. Spend your money—but at
least what I’ve given you on that menu complies with a corporate governance
standard, complies with corporate security standards, and complies with
corporate standards for how you purchase this stuff.

So I think the comment is
spot on, and I think central IT needs to change its organization, and change
how it serves up cloud services in order to be successful.

TechRepublic: Tell me about your Atlas product

Matt Gerber: Atlas is a product that we
have in beta right now, and it will be generally available in May.

It’s a platform that does a
couple of things for you. It allows you to build a library of AWS reference
architectures, and then very easily deploy those reference architectures and
visually see what they’re doing. Then for each of those architectures, it
allows you to establish a cost projection and capture actuals.

So it’s a tool that central
IT or a business unit can use to establish what we just talked about, which
is—here’s a library, or menu, of reference architectures, that are
corporate-sanctioned, here’s how you deploy them and deploy them easily, and
then here’s how you monitor and manage them from a cost and run-it standpoint.

TechRepublic: 2nd Watch has another offering called Insight.

Matt Gerber: Insight is part of Atlas; we do offer it separately, and it’s part of our managed services. It’s a piece
of software that allows an enterprise to monitor individual AWS workloads, and
associate costs with those, so you can internally handle costing and

TechRepublic: We are sort of in a mode where sharing quality
information gets people’s attention. At this point, do you feel any
encouragement to do further surveys? They are time-consuming and costly, but
can be beneficial from a marketing standpoint. Are you planning to do more
surveys in the future?

Matt Gerber: Absolutely. We’ve seen the results of this one,
without a doubt.

In terms of what we see
evolving, there is a real need for the enterprise organizations that we serve
to figure out how to consume cloud services, and consume them effectively. And
if you’re in a central IT organization, how to serve them up to the business

And so it’s pretty safe to
say, within that sort of sandbox, we are going to keep surveying people for
information about what they’re challenged with, what they need us to do as a
vendor, in order to step up and help deliver solutions for that issue.

Toward the end of our talk, Matt Gerber added
that: We have seen as a business a significant pickup
in interest in adoption of cloud, and specifically Amazon Web Services, by the
enterprise. And that’s happened in the last six to nine months. What I see is
that the questions that we hear have changed dramatically from “is it secure,
is it safe, is it reliable?” questions, to “how do we do this?” And we’re
getting engaged with a lot of enterprises around the country on exactly how
they migrate and manage workloads.

TechRepublic: Can you describe that rise in interest, or
perhaps give a percentage?

Matt Gerber: Probably the best way to
describe it to you is, I would say, in the last six months we have entered into
agreements to migrate at a minimum one workload, and in some cases 40 to 60
workloads with at least 10 Fortune 500 companies.

More about 2nd Watch

In October 2013, 2nd Watch concluded a $23 million funding round led by Columbia Capital, with participation from Madrona Venture Group. Matt
Gerber shared the two main goals of the capital influx. The first is to extend
its presence nationwide, expanding its Seattle and New York offices, and
opening offices in southern California, Texas, and Atlanta. The second goal is
to develop its product offerings to further enable use of AWS by the