Does Cloud Foreshadow the Death of IT Innovation?

I’m sure that some have asked the questions in the past few years as cloud has matured from a vaporous concept to viable sourcing strategy for much of a business’ IT needs.  What will I be doing in five years?  Will I still have a job? Chances are pretty good that if you are asking these questions, you probably aren’t doing anything innovative for your business today and you might want to start polishing your resume or enroll in night school.

Why such a cynical outlook? Perhaps the folks at Adaptivity have become part of the cult of Nicholas Carr (Does IT Matter)?  That answer couldn’t be farther from the truth.

First of all, cloud is a delivery model, not a technology.  As such, it’s simply an evolutionary step in IT outsourcing.  Did the proliferation of IT outsourcing in the 90′s signal the end of IT Innovation?  There are certainly examples where it did for some, but those examples are hardly poster children for effective outsourcing…they were more likely what the industry refers to as the “your mess for less” deals.

To better understand this issue, let’s step away from technology for a moment and consider the general trend of business process outsourcing in the past 10 years.  The first step down that path begins with understanding your business; creating a map to understand what each group does and how your groups interact.  Does a particular function differentiate your business, or is it an activity you must perform but has no particular value on it’s own (e.g. accounting)? 

If it’s not core and differentiating, how much does it cost compared with similar industry benchmarks?  If the answer to those questions were “no” and “expensive”, you have identified low-hanging fruit for business process outsourcing. Does that mean the business stopped innovating?  Hardly, in fact, moves such as this likely help the business by promoting focus on those critical activities that remain in house (in addition to generating cost savings).

As we return our attention to IT, the analogy should be clear.  However, cloud does have some nuances that must be considered.

• If you opt to purchase IaaS services from a cloud vendor, that’s simply a decision to remove the non-value added parts of your IT operation engaged in ordering, racking, and stacking new servers and storage.  You are still entirely responsible to develop software, architect systems, and configure and support those IaaS resources in a manner that meets the needs of the particular function being performed.
• If you purchase a PaaS, you are simply moving further up the stack.  Now your role is one where you must develop software, deploy to the PaaS environment, and monitor performance to ensure business requirements are met.
• Lastly, if you opt to go with a SaaS solution, you’ve simply made a decision that business process delivered on that SaaS function is not core or differentiating—that making that IT application / system run better delivers no business benefit.

What do all three of those scenarios have in common?  They require you to understand your business—what’s core and differentiating and what’s not.  They require you to map your application portfolio to the business, so you can quickly identify what truly matters—where IT investment dollars should be spent, and where cost reduction should be the priority. They also necessitate a clear understanding of the costs of these systems in depth. Not gross allocations, but itemized views of equipment, software, facilities, rack and stack, operations, engineering, architecture, and development.  This is key, because if your analysis shows outsourcing to a cloud is warranted you must be able to determine the cloud services that best fit your goals.

Your sourcing strategy for fulfilling IT’s needs does not imply more or less IT innovation. The addition of cloud options simply adds another dimension to the decision matrix.  If this sounds complicated drop us a line—we have the tools to help you get started.

Tags: Featured

Category: Business Alignment, Cloud Computing