Cloud computing - changing the face of IT

A few blog posts back I was talking about some cloud computing concepts and why this trend should be of interest to the IT outsourcing community. I was reminded of this again when I was out at a business lunch in London yesterday. I was meeting Sumir Karayi, the CEO of power management firm, 1E. We were naturally talking about some of the efficiencies that come about from green computing, how to save power automatically without upsetting the users – that kind of thing – when Sumir talked about the cloud in a way I found fascinating (Video Link). Fascinating, because those of us in the IT business usually think of efficiency in terms of money – how much can be saved by delivering IT in a different way – but Sumir mentioned to me that efficiency in an IT department can come in many different guises: "…such as using the right amount of hardware, not wasting the hardware you have, using the right number of software licenses – we are all aware of how much shelfware there is - the use of energy by the IT systems, and just the amount of time we spend working on the systems." I thought that was an interesting view. Waste is all around and with so many Windows 7 migrations going on, many are seeing it on a daily basis. Sumir’s focus is generally on energy use, but it’s true that waste is multidimensional in most IT departments. Take a look at the office tools most of us use today; email, word processing, spreadsheets, CRM… it’s become very easy to deliver all of those systems via cloud-based solutions. So this can encourage even more waste because there are likely to be unused software licences and over-specified hardware in offices across the world. But this brings a big change in behaviour from the business users who sign off on the budget to pay an internal IT department, or to hire an IT expert through an outsourced programme of work. Sumir summarized it to me: "The cloud is actually going to expose how inefficient many IT departments are. If you can buy a service through a cloud provider that’s significantly cheaper, and potentially better, then the business will turn around to the IT department and ask their internal department to match the price." Or they just won’t use their internal IT department. I used to run technology on a bank trading floor and I saw traders hiring Excel developers on their own budget, because the IT department was not fast enough to react to their needs. So they ran the bank on a spreadsheet because the strategists designing the bulletproof IT systems could not react to the real needs of the business. There is a danger here for organisations with very inflexible IT departments and the IT supplier community alike. Business users always call the shots, so if IT is still considered to be a cost center then the internal IT teams and outsourced partners need to be able to match service prices to what a business user can get by buying direct from the cloud. The suppliers need to consider how they can feasibly do this – competing with the price of cloud-based services and still making a profit. Many have started talking about their own enterprise services delivered from the cloud, which is an interesting start, but most users would prefer Google’s email solution or the Salesforce CRM platform, to anything a traditional IT supplier offers. Business users are waking up to the fact that they can start buying their own IT direct, cutting out the IT department and the heritage outsourced suppliers. For many in the supplier communities, this cloud is not going to have a silver lining. *View all IT Outsourcing blogs by Mark Kobayashi-Hillary

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