Once you realize that cloud computing is mostly a matter of connecting pieces of external functionality with international users and systems, the cloud becomes far more understandable and pragmatically useful.
Much has been made of the wonders of the cloud, and while I consider the majority of the hype to be overblown, there is promise in the cloud. Frankly we have barely scratched the surface of what cloud computing could accomplish should all the bloviating translate into functional, reliable, and available products.
To this point, the majority of cloud applications have been about commodities. There's cloud storage, cloud-computing power, and rudimentary applications that replace basic nuts and bolts IT functionality. While cloud-based storage or a foray into the current generation of cloud-based applications might save some costs and perhaps provide a higher standard of service than providing these applications in-house, it is unlikely to revolutionize your IT environment or make you a C-suite hero anytime soon.
Where things start getting interesting is the as-yet unrealized concept of the cloud combining an alphabet soup of other half-realized paradigms like Software as a Service and a Service Oriented Architecture to allow one to source business applications and functionality "in the cloud." Rather than taking a fairly benign and uninteresting service like e-mail and placing it in the cloud, imagine connecting your supply chain systems to cloud applications that had real-time links to suppliers. Taken to its logical conclusion, at some point an organization could theoretically take pieces of business functionality from the cloud, marry them together, and create what amounts to a customized, best-of-breed enterprise application suite in weeks or months rather than years.
While this dream is not yet a reality, there are things CIOs can do today to prepare for this eventuality that will both get them ready for the future and provide measurable benefits today. The task is conceptually simple: Understand your IT and business processes and ensure they are well-documented and portable.
There are myriad methodologies for capturing and recording business processes, and if your organization has paid any attention to the management doctrine of the past decade, there have likely been process capture and reengineering efforts under the auspices of Six Sigma, Lean, or any number of methodologies. For our purposes, the output is more important than the methodology that went into producing the documentation.
Validating that these process "recordings" are accurate is usually quite simple from an IT perspective. We are generally not intimately familiar with a business unit's process, so following along as a transaction occurs, process diagram in hand, will allow us to readily identify discrepancies. Pay particular attention to handoffs between business units, data entered into an IT system, and data interfaced between systems.
Critical to portable processes is understanding these handoffs and simplifying them. At the macro level, the ideally portable processes acts as a mysterious black box: you enter a well-defined set of data into the black box, and then a well-defined set of data is returned on the other end. When you understand your business and IT processes at this level, it's quite easy to consider insourced, outsourced, or cloud providers for each of the "black boxes." Should one of the black boxes no longer meet your needs, it is easy to seek a replacement. Rather than a convoluted "stew" that would be virtually impossible to separate into its constituent parts once mixed, your processes should resemble a bicycle built of discrete and replaceable components. You generally cannot turn a beef stew into a chicken stew, but you can replace a wheel on a bicycle with a lighter component or change the gearing should the needs of the rider change.
With portable processes, you are no longer married to an outsourcing provider "till death do us part," and you can reallocate the various "black boxes" that make up your enterprise application suite as capacity, economic conditions, or strategic direction warrant. In short, you become a conductor of a symphony, rather than the guy who tunes up the French horn.
While cloud functionality may not exist for many of the components of your business, once you understand how processes operate at this level it is easy to optimize an individual "black box" and to prepare it to be moved to the cloud when appropriate. An organization with a deep understanding of how it operates is far more nimble and easily adapted to a changing environment.
Like most worthwhile and beneficial efforts, gathering your processes and ensuring they are portable is conceptually easy but time consuming to actually implement; however if you wish to fully leverage the promise of the cloud, well-understood and portable processes are the baseline cost of admission. When you realize that cloud computing is primarily a matter of connecting pieces of external functionality with international users and systems, the once-mercurial cloud becomes far more understandable and pragmatically useful.