The year 2012 brought a significant amount of growth in enterprise use of cloud services but did it fulfill our expectations? With just five weeks left in the year, it’s time to reflect on our predictions for this market in 2012. Back in November 2011 we said that the cloud market was entering a period of rebellion, defiance, exploration, and growth, not unlike the awkward teenage years of a person’s life. The market certainly showed signs of teen-like behavior in 2012, but many of the changes we foresaw, it appears, will take several years to play out.
I’ve been speaking to more and more clients lately who are not just saving money with cloud computing — they’re using the principles of the cloud to completely transform how they source, build, and deliver all IT services. Savvy I&O leaders should look beyond the per-hour savings promised by the cloud to the core tenets of cloud computing itself. How do the public clouds do it? Why can’t you?
Well, you can. You can transform your IT operating model from that of widget-provider to a true service-oriented business partner. Forrester writes extensively about how to make the IT to BT (business technology) transition. I recently spoke at length with the IT management team at Commonwealth Bank of Australia (CBA) about their multi-year IT transformation to what they call “everything-as-a-service.” I was put in touch with them by one of their primary suppliers, cloud service management and automation vendor ServiceMesh.
We’ll be publishing a complete case study soon, but I wanted to share some of the basics here because they outline a strategy anyone can achieve, regardless of your current level of cloud maturity. The bank started by establishing six core tenets to be enforced across all I&O services moving forward, whether hosted internally or externally. These guiding principles neatly summarize the core value dimensions of cloud computing itself:
Pay as you go. Business customers only pay for products and services actually used, on a metered, charge-back basis, under flexible service agreements, as opposed to fixed-term contracts.
When I moved to India about two years ago, I arrived with my own expectations regarding emerging markets. One of them was that the lack of legacy IT applications and infrastructure would make these markets an ideal place for new technologies and delivery models like as-a-service to thrive. In other words, organizations in emerging markets would “leapfrog” to new technologies without going through some of the prior technology investments witnessed in developed markets. Unfortunately, the reality is not that simple.
One of the key takeaways of my recent reports (Australia, China, India Set The Pace For Asian IT Services and The Changing Face Of ASEAN IT Services — to be published in January 2012) is that most of the growth in emerging countries will come from traditional IT services such as ERP implementation, infrastructure deployment, and system integration. Against common belief, emerging services — including cloud and mobility — will represent less than 20% the total annual growth in emerging markets in 2015.
I see several reasons for this:
Lack of governance and planning. An IT department’s role is merely one of provider of applications and infrastructure, whose main objective is to react to business needs.
Lack of internal skills. Client organizations do not have the adequate skills internally to take on complex transformational projects involving new technologies such as virtualization, business analytics, and mobile enterprise application integration platforms.
Lack of IT services culture. Most client organizations in emerging markets leverage external skills to help them with basic tasks such as hardware maintenance and software deployment.