Andy Waroma, VP for Business Development, Logicalis Asia, looks at why the region’s IT Managers and CIOs still have a preference for hardware, and so far resist a move towards software and services.
I moved to Singapore over fourteen years ago and one of the things that struck me almost immediately when doing business here, and elsewhere in Asia, was the preference for concrete over abstract, value over valuation and now, over future.
Let’s start by elaborating on the first point. The richest people here have built their fortunes on property, manufacturing and trading. Why? Because partly those are tangible things that can be valued easily and they can be valued now. This is very much in contrast to the United States where many of the billionaires have become rich by inventing new concepts that are often really difficult to put a price tag on.
Secondly, there is a clear propensity here to understand what the value of any action is, at any given time. Again, in the United States, the collective perceived valuation often takes precedence over actual value.
Now what does this have to do with cloud or even IT? Well, the concrete, and tangible hardware still has a special place in the heart of the IT managers and CIOs over software and services. Owning hardware is to be in control of our business and is something, which people cannot take away from us easily, just like a piece of property or a stupendously expensive car. But it’s also more than that – it’s a status symbol for the company and the person who manages those IT assets.
The cloud does not fare well in this comparison because it’s exactly the opposite of any of those things – intangible, abstract, and a utility (while a nice watch is a subtle way of displaying status here, it is not as common for us to ‘hype up’ our electricity bills).
The returns from using the cloud are often difficult to measure or justify on pure dollar value. The value provided by the cloud is about whether or not an enterprise can achieve certain outcomes by using cloud services. One outcome might be to save money, but the value of the cloud comes in many forms. Trying to measure the ROI of using the cloud is a lot harder than it is for a piece of hardware or software.
If the cloud is understood at all, it’s mostly reduced to three components: compute, storage and virtualisation. But that is as if we were to claim that a car only consists of a chassis, engine and tyres. What makes a car an ultimate driving machine are all those other neat little things like seats, suspension and air-con.
The very same is true for the cloud. What makes the cloud are all the services built on top of the hardware, consisting mainly software. Automated back-ups, high-availability and scalability are the equivalent of the on-board comforts we enjoy in modern cars.
Private cloud in enterprises, and public cloud for SMEs, are probably as successful in Singapore as anywhere else amongst the leading countries in the world, led in a large part by governmental efforts to increase the country’s competitiveness. However, cloud adoption by enterprises for their mission-critical applications on the public cloud has been slow in Singapore, compared to what we hear from the West.
Large multinational companies are lifting and shifting thousands of their core enterprise applications to the public cloud. This is not done just because of cost savings but also because these companies have realised that seeing the “lights blinking” on premise no longer creates any differentiation over the competitors. Quite the contrary; remaining on premise will hinder the speed of change and ability to innovate.
Large companies in Singapore need to learn, as the song from the movie Frozen puts it, to “let it go, let it go”. By putting old values and beliefs aside, enterprises here can also start bringing their infrastructure to its inevitable destiny. Any decision-maker who is now considering major IT investments needs to think carefully about whether they want to be on the “right side of history”. If a company is doing a data centre refresh now and the IT management is proposing ordering cardboard boxes full of “boxes”, it should probably revisit its HR policy.
While the current public cloud offering is still very much in its formative years, there is no longer a justification to choose the horse over the automobile or an oil lamp over electricity. In the past 10 years or so, infrastructure-as-a-service has become mature enough to be the preferred choice for many of the very large multinationals. It should be the same for us here.
Connectivity and latency are probably some of the last valid objections moving to the public cloud. But, thanks to the best-in-class public infrastructure we have in Singapore, we cannot make those excuses anymore. Security is probably the other pet excuse that tends to be brought into every conversation; people who have never studied security offerings from public cloud providers mostly make these assertions. Few if any companies here can afford the elaborate security mechanisms that the leading cloud providers can provide. And even if they are able to, they may not be able to put together a team with the requisite expertise to manage them. The cloud companies are scooping up the best and the brightest in the industry.
So what can enterprises in Singapore do? Enterprise decision-makers, IT managers and CIOs in Singapore must start recognising that the value of the cloud comes in many forms. The cloud has had such a massive impact on how IT is delivered that many of the metrics and KPIs that are typically used by enterprises do not capture or justify it. The value derived from the cloud can be found in both soft and hard measures. For example, how does one measure agility, efficiency, improved quality, greater collaboration or better customer service in ROI cost savings?
Singapore enterprises should stop worrying about the boxes and start loving the newfound focus on supporting the companies’ true business aspirations. The cloud is not taking the importance of the CIO away – on the contrary, it is liberating the whole IT department to become an integral engine of innovation and business differentiation.