What is Cloud computing?
Cloud Computing is massive amounts of computing capacity that is available to users as a service, on demand, elastic and scalable, charged based on actual resource usage, and completely managed by the Cloud service provider. Users only need a computer to connect to and use the service. The official NIST definition of Cloud Computing can be accessed here.
Several major developments over the past few years have made this model of computing not only acceptable, but also highly preferred by companies. There are many advantages with this model, and some concerns and risks as well. I will focus primarily upon the public cloud for the rest of this post.
What has been the impact of Cloud Computing?
- Lower costs of technology deployment due to sharing of large-scale capacity acquired by the Cloud service provider at wholesale prices.
- Conversion of fixed costs to variable costs makes it much more appealing to CFOs and business leaders.
- Rapid scale-up and scale-down is possible, and this greatly improves agility of the business. It makes it suited for highly variable or periodic workloads.
- Simplicity of the cloud model to deploy/manage makes it easy for shadow IT or developers to manage. The business side is understanding technology better and moving towards mastering it.
- A personal experience for me was the boom in IT spending by dotcoms in the late 1990s, which created a huge demand for system and network administrators. IT professionals were among the early hires in most of those startups, since they needed to design and build the systems for Engineering. In contrast, with XaaS being simple to deploy and use today, and the emergence of the DevOps trend, IT staff is among the last to be hired in today’s startups.
- There has been a gradual reduction in the size and importance of the IT department, with increased scrutiny on IT spending.
I discussed these issues in depth with the following IT executives to see how their strategy had changed due to the emergence of Cloud Computing.
Bask Iyer: Bask is the CIO at Juniper Networks, responsible for IT, but also for Business and Technology Operations. He has over 25 years of experience, with IT leadership roles at Fortune 50 companies, such as Johnson and Johnson, Glaxo, and Honeywell.
Paul Chapman: Paul is the VP of Global Infrastructure at VMware. He runs the Global Infrastructure and Cloud Ops Organization within VMware, primarily focused upon running internal infrastructure, networks, datacenters, compute, the internal private cloud, and all the traditional IT services.
Mark Settle: Mark is the Chief Information Officer at BMC Software, with responsibility for applications and Business Operations. He has been a CIO at companies within various industries, such as Oil & Gas, Financial services, Consumer products, and Hitech distribution.
Here is what they had to say about the impact of Cloud Computing.
Organizations should seriously consider moving to the Cloud, felt Bask, “If good, cheap and reliable computing is available, you’d be crazy to build out your own datacenters”. On the importance of staying with your core competency, Paul stated, “We don’t win in the marketplace because we have the best HR or SFA processes”. According to Mark, it pays to keep looking for opportunities to move applications to the Cloud, “We constantly look at our product portfolio to determine if there are other products that lend themselves to being offered in a SaaS kind of format”.
There are hurdles in moving to the Cloud, Paul said, “I think you have to have the platform, capabilities and applications in order to be able to move”. Mark thinks that Cloud adoption will happen application by application. He states that he never heard anyone say, “My strategy over the next few years is to decommission one-quarter of my installed base and switch everything over to Rackspace. I think what happens is that people find individual use cases, where to use the Cloud”. The advantages outweighed risks, according to Bask, “(The) cloud provides significant advantages—speed and agility—when combined are more valuable than cost”.
Security phobias can limit Cloud adoption for some companies, but as Mark says, “Your customer information is in the Cloud (SalesForce), and your employee SSNs are in ADP, so what (assets) are people fussing about?” Bask thinks that Cloud adoption actually helps IT departments and the business, “When Enterprise IT departments embrace Cloud, they will free up resources to focus more on delivering business value fast”. Paul thinks that rapid pace of technology evolution will continue, “Constant change is the new steady state”. More of their thoughts can be viewed here.
Cloud Computing is real and has been here for quite some time already. All of us are using Cloud based services on a daily basis, from email to social networking to mobile applications. Businesses are increasingly using the Cloud for Business applications. How will Cloud Computing play out over the next few years?
I think the following will happen over the next few years.
- Cloud services will become much more commonly used, both by consumers and businesses. Most businesses will eliminate or drastically shrink their datacenters.
- Costs will continue to decrease for Cloud services, with enhanced features offered by various vendors.
- There is going to be a huge shakeout within the Cloud service provider industry, and only a few players will survive.
- Enterprise Software vendors will face significant threats from Cloud-hosted competitors. Most of these vendors will fail to transform, and shrink, be acquired, or fail.
- IT organizations will move up the value chain by focusing on increasing the agility of business, and supporting Business Transformation.