Goldman: CIOs Don’t Want Cloud – Well, Duh.

Goldman Sachs & Co. recently released the results of their latest survey of CIOs which showed that enterprise IT is contracting spending a bit and that cloud computing is at the very bottom of their priority list. This shouldn’t come as a surprise to anyone, nor should it be seen as a needle inserted into the cloud computing hype balloon because CIOs aren’t the target market for clouds. Like other disruptive innovations in the technology space, such as cloud collaboration, software as a service (SaaS) and the iPhone, cloud computing targets the tech savvy business developer, startup and interactive marketer. These business innovators don’t take their technology cues from the corporate standards set by infrastructure & operations professionals. They seek solutions that enable their ideas faster and cheaper. And cloud computing is the extreme programming of the IT deployment world.

The encouraging news in the Goldman survey was the strong prioritization on server consolidation and virtualization which has been in evidence with Forrester clients for the past twelve months. Investments in these efforts are moves to make IT more efficient and the proof is coming through. Recent interviews with Forrester clients showed significant improvements in capital expense savings and time to market are being achieved. Many Forrester customers are reporting 50 percent or greater savings per application deployed via virtualization. Application deployment times as long as 4 weeks to 6 months before consolidation and virtualization are down to less than a week due to virtualization.

Through greater efficiency, IT is showing its responsiveness to the business need for speed and flexibility. But clouds take these values further, in ways IT may be unable (or unwilling) to follow.

While virtualized IT may match the speed of deployment, it can’t yet touch the cost of deployment or the scale clouds can deliver. What enterprise IT shop is going to create an internal cloud composed of hundreds or thousands of servers where the business can test new apps that don’t yet have a business case? Even with a good chargeback model in place, this still would be a difficult service to justify – especially in today’s recessionary environment.

And it’s this contracting market that is fueling the cloud computing opportunity. No one can afford to be buying more assets today and a way to try new things, expand your customer base and improve customer relations that doesn’t involve buying new assets becomes increasingly attractive; if IT can fulfill this need with virtual servers, all the better, but in many cases the economics will favor the cloud. Cloud computing may not be a CIO priority but you can bet it’s on their radar.

By James Staten

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Comments

[Marc Byrd]

There will come a day when CIO's ask project managers not why the wish to use cloud computing, but why they would use anything else. Project managers will be asked to justify why they are not using the much less expensive and much quicker to market cloud computing infrastructure and services.

[Ryan @ Appirio]

CIO's should be attracted to cloud computing, especially after last week's price increases by SAP and Oracle for bloated on-premise enterprise software? Isn’t the attitude reflected in this survey the equivalent of reacting to a gas price increase by postponing your purchase of a Prius, and driving your Hummer for awhile longer?

More on this analogy on our blog....
http://www.appirio.com/blog/index.php