By Tom Kelly, Managing Director, Logicalis UK
Tom Kelly, Managing Director, Logicalis UK, believes cloud computing points to a supply chain model for ICT and a change enabler role for CIOs
There is still a great deal of talk about the ongoing ‘stellar’ growth of the international cloud computing market. To pick out one prediction, Forrester tells us the market will reach a total value of $241 billion by 2020. From a starting point of $40.7 billion in 2011, that equates to an annual growth rate of over 17%, and basic maths tells us that’s equivalent to doubling in size roughly every four years (not quite Moore’s Law, but not far off).
Of course, in the real world, adoption growth does not follow a linear path and, behind those headline numbers, there is a much more interesting story emerging. It is a story of what happens after some key short term barriers to adoption are overcome – and fundamental change in the way businesses view, use and access ICT.
The short-term issues will be familiar to many. In the great scheme of things cloud is still in its infancy, so the technology industry remains very much engaged in educating the market and removing barriers to adoption.
1. The cost/benefit model: Cost comparisons between cloud and ‘on-premise’ solutions are still very often misunderstood. Many CIOs evaluating cloud solutions compare cloud OPEX with the CAPEX associated with a more traditional alternative – without also factoring in ongoing operating costs associated with ‘on-premise solutions’ (mainly because the costs like cooling and power fall outside their remit). This oversight often makes cloud appear a more expensive solution, which is rarely the case when a true comparison between the two is applied.
2. Proven, repeatable solutions: There is still a great deal of work to do in helping CIOs to understand what cloud really is, how it can and should be used, what the benefits beyond cost might be and what the risks are. For a kick-off, it is pretty clear already that public cloud solutions are never going to be appropriate for the enterprise, but cloud remains deeply associated with off the shelf solutions from the likes of Amazon and Google. Even so, the industry can learn from the public cloud model’s clarity of proposition – by bringing to market repeatable enterprise class hosted and private cloud solutions which can be closely tailored to individual cases.
Both of those issues will be addressed in pretty short order in my view, and addressing them will undoubtedly accelerate cloud adoption – which leads me back to those interesting long-term developments. Behind those headline numbers from Forrester, it is no surprise to see Software-as-a-Service ( SaaS) predicted to dominate the cloud market – it is a natural consequence of the direction in which cloud solutions are driving enterprise technology strategies and, by consequence, the role of the CIO.
A supply chain management model for ICT
Taking retail as an example, it is not a stretch to predict that major retailers will move entirely away from direct ICT ownership. In common with most businesses, retailers want all the benefits that technology brings, but buying and maintaining technology, as well as acquiring and continually developing the skills required to do so, is not their core business.
As a consequence, within ten years (possibly sooner) they, and other organisations, will move to a model based on the flexible acquisition of technology and services through service level agreements with a number of partners – a development that can only be enabled through cloud deployment.
Clearly, this is a provisioning model that retailers (and manufacturers for that matter) are already entirely comfortable with – supply chain management most certainly is a core business competency, so it seems likely that this is where the shift to a similar model for ICT will begin.
But, it will not be limited to retailers and, as cloud adoption grows, supply chain management will become a dominant model for the acquisition of ICT – which has far reaching consequences for CIOs and IT departments. For their part, IT departments will naturally become increasingly focused on service definition and management, with architectural and business engagement skills coming to the fore.
CIOs meanwhile will increasingly be asked to operate as ‘change enablers’ and cloud computing will be the single most significant change agent – not just in terms of ICT provisioning, but in how businesses go to market. CIOs then, by getting to grips with cloud computing and enabling the change it can deliver, will play a pivotal role – one that may ultimately see enterprise computing come of age by allowing businesses to focus all their creative and organisational energies where they matter most.