I don’t typically like perform prognostications but it is a new year and I have been thinking about what it means for our industry. Here’s what I see 2011 and beyond looking like for the IT pro in light of the impetus towards cloud based services
There is no question that cloud services are gaining momentum in many sectors. One of the interesting aspects of the uptake in cloud services is the number of small organizations that are moving to cloud services. Traditionally, IT innovations have seen early adopters in large organizations where economies of scale can help justify the initial cost of a new technology. Small organizations have typically been late adopters as they wait for the players to consolidate and technologies to become mainstream. Not so with cloud services. The fastest growing segment is small business.
It makes sense since cloud services give SMBs some of the economies of scale previously unattainable. Consider how much it would cost in hardware, software, backups, and human resources for a 15-user organization to implement Exchange, SharePoint, and Office Communicator, and Live Meeting in house. I don’t think it would be a stretch to suggest that it would cost at least $10K if not more over a three year period. My lowball costs are $5k in hardware, $2k in software, $1k in backups, and $2k in services. That works out to about $275 per month.
For the same 15 users, you could use Microsoft BPOS at a cost of $10 per user per month. That’s $150 per month. Of course there are less expensive options available from other vendors, but this is a direct comparison based on a brand new installation with no sunk costs.
The dramatic cost savings is the main appeal of small organizations that want to focus on their core competencies and minimize IT budgets.
How does this paradigm shift affect the role of the typical IT pro? The standard answer in this business is, “It depends.” In large part it depends on the type of organization that the IT Pro works for.
The cloud provides flexibility and scalability not only to organizations but also to IT pros. With the ability to connect to cloud based services from more locations and devices, IT pros will find that they can do more remote work and the “office” will be wherever (and whenever) they can get a connection.
As cloud-based services homogenize the application landscape with fewer large players providing the majority of services, this will increase the mobility of IT pros, and the ramp up time associated with a move between employers will be shortened.
While this flexibility has some advantages like reduced commuting and real estate costs, it can also mean longer work hours that are not necessarily tracked or compensated.
Organizations that help employees achieve a healthy balance between work and other activities will see lower turnover. While also true in a non-cloud environment, the increase in employee mobility should be a concern for HR departments.
Small organizations might find that they no longer need as many (or any) full time IT pros. IT might become a part-time role for somebody with another function and a proclivity for technology.
Small managed service providers
The most immediate implication is for small outsourcing and managed service providers. The value-add that they provide is eroded significantly when compared with cloud services. As larger organizations providing cloud-based solutions attract more small business customers, small IT shops will lose customers, margin, and traditional service opportunities.
This is also an opportunity for those service providers that are agile enough to transform themselves into cloud partners. What I mean by this is that there are opportunities to help small businesses take advantage of cloud services and save money either through migration services or cloud service reselling. The sales pitch is easy but the margins are low. In order to have a viable business model, volume is key. This means that small managed service providers will need to grow their customer base significantly to maintain sustainability.
So what does this mean for the IT pro at a small outsourcing shop? I would expect that there will be far less hands-on technical work and much more menial administration across many more customers. There will also be an increase in network architecture and management requirements as connectivity to the cloud will increase in importance compared to local connectivity.
Large organizations will see a splintering of their IT workforce. There will be a split between those who end up building and operating the internal private cloud and those who manage their organization’s use of cloud services (both private and public).
The private cloud team will build depth in the requisite technologies (e.g. virtualization, fabric computing, grid computing, etc.) for providing internal cloud services.
The team that manages the use of cloud services will have the more orthogonal shift in job description. They will have much less focus on operations. Their technical depth will decrease while more emphasis will be placed on technical breadth.
Additionally, a whole new set of abilities will be required. The skills matrix will include the following:
Workload Analysis & Management – Understanding which workloads can be moved to cloud services and which services are appropriate to each workload.
Procurement & Vendor Management – Managing the various cloud service providers will become important to maximizing cost savings while maintaining operations efficiency. There will be a mix of SaaS, PaaS, IaaS providers.
Business Analysis – What workloads are the most time sensitive? Can software as a service meet the needs of the business? Does it make sense to move an application server to an infrastructure provider like EC2 or is it more effective to re-architect the application to run on a Azure?
Risk Management – Identification, assessment, and prioritization of the risks associated with cloud computing will be the first step in understanding the opportunities available to your organization. The natural follow on is a coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of the identified risks. This is also a key factor in maximizing the benefits associated with the opportunities associated with cloud computing.
IT Governance – Deeper involvement in how IT is used to meet organizational objectives and monitoring and controlling its current and future use within an organization will differentiate those that succeed in moving large portions of their computing workloads to the cloud.
Compliance – Beyond conventional regulatory compliance requirements (e.g. Sarbanes-Oxley, PCI, HIPAA, etc.), maintaining compliance with regulatory standards will impact how some workloads are managed and how they can be moved to the cloud. In some cases proving to auditors that are unfamiliar with cloud services that your organization has taken necessary steps to safeguard information assets will be challenging.
Thanks for letting me make some predictions for the future of our industry. What’s your take on things?