Mark Hurd is on target in How Cloud Computing is Revolutionizing Business, but let’s be honest — the cloud is really allowing someone else to own and manage the infrastructure that supports your data needs. While there are variations on where cloud computing resources are located (private, public, or a hybrid combination of the two), it is not something magical that exists in the ether and that you just throw out there on the internet. Someone manages the hardware and infrastructure “stuff” and then you pay them a service fee to leverage that infrastructure. In return they agree to maintain it in accordance with certain expectations you need to make that a risk you’re willing to take, either as a business or personally.
The National Institute of Standards defines cloud computing as available, flexible, and scalable access that can be turned up/down quickly and self-service provisioned by the folks that need it. From a business perspective it must be reliable and secure and, importantly (and often glossed overlooked) just as any other corporate project, money spent on the cloud should have a definable ROI — otherwise there is no reason to spend the funds in the first place.
The real change that Mr Hurd talks to is taking place more around the comfort level the C-suite folks have in letting someone outside the company own the infrastructure they rely on to run their business. As they begin to walk that risk management comfort line, the obvious first trial balloons were non-mission critical functions, such as marketing and HR, for all the reasons that Mark points out. As that business case begins to pans out, the C-suite guys more and more begin to understand that owning an IT infrastructure is not a core-competency of most of their businesses. When that light bulb comes on the next business discussion in the board room is to determine what the remaining internal IT infrastructure contributes to the bottom-line and how to smartly shift that infrastructure support to the cloud, paying someone else to manage that service as well.
It’s important to understand what’s really changing. Mark Hurd’s background is running companies that sell the hardware and software “stuff” that are the infrastructure of the IT domain. They sold/sell it directly to end-user companies that want to better leverage the data and information needed to improve the business and gain a leg up on understanding their data better than the competition. The real change for the NCR’s, Teradata’s, HP’s, and Oracle’s of the world is that CEOs have begun to say that owning an IT infrastructure is not a core competency of our business and, in fact, if we can get someone else to own it, run it, and provide us with the end result that will still help us analyze and understand our data (and the world of all the other potential data) we’re very happy campers indeed. So they’re no longer as willing to spend big bucks to buy the boxes and infrastructure, but instead look for a cloud broker to manage it in their “cloud.”
On-one-hand, that’s not so good news for the folks that sell boxes, SW, and technology that makes the infrastructure run better and faster. On-the-other-hand, the infrastructure supporting the cloud actually has to exist somewhere and that leads to the rise of a whole cloud infrastructure industry that runs the vast server farms and data centers (both actual and virtual) needed to support the changing need. So the HW and server box vendors need to shift their sales focus to a new customer class and, if they’re smart, also figure out how they can stand up their own mega-centers that support the cloud SW as a service, infrastructure as a service, analysis as a service business that will ultimately replace the high file value they currently rely on and pull in from ongoing customer service support.
Mark Hurd’s insight is shared as much with his own internal team as with the industry around him. If you don’t shift to a service oriented mind-set, you’re not going to be around in the long run. The customer base is changing and the end-users that you’ve been dealing with for 10 or 20 or 40 years want to leverage someone else’s infrastructure with applications that tie into whatever the business team needs to stay ahead of the marketplace opportunities. It is no longer good enough to keep an internal data mart, data warehouse, or data infrastructure that tracks ERP transactions about what happened yesterday. To stay in-touch and ahead of business opportunities you have to channel the (big) data wherever it is — the web, mobile, social, GPS, the internet of things, yada yada — and plug it into applications that cut, sort, analyze, and help make better decisions faster before the competition knows the opportunity even exists.
The good news is that someone is still buying the IT “stuff” — it’s just not the guys you’re used to selling it to and the margins on the HW side are shrinking fast. The other good news is that the customers that you’ve been engaging still want to leverage information to improve the business or mission — they just need a different group of professionals that are more in tune with analysis as a service, are agile enough in advance analytics to sync your internal information to the rest of the world’s data, and are business savvy enough to get the big picture around using data to improve the business. This is also a good news/bad news story for system integrators whose business model is essentially butts-in-a-seat to support those internal corporate IT infrastructures. The business community will still need their services, but as data scientists and advanced data analysts rather than as system integrators and code writers. A lot of BD and HW sales with decades of business insight will be in career transition and competing with 20 – 30 somethings with technical chops but limited business know-how.
In the end, changes in the cloud still requires businesses to understand what they expect from the dollars they spend on information and data. Know up front what business improvement you expect from the dollars spent, whether on an internal IT plan or for SW/Infrastructure/Platform/Analysis/Data/Pick-A-Name service in the cloud.