A prediction: The business case for the Cloud will mirror the case for outsourcing.
That outsourcing is the right answer has been a constant. What it’s the answer to? That continues to evolve.
We’re already starting to see this with the Cloud. Makes sense, I guess, as the Cloud is the next generation of data-center outsourcing.
Now the Cloud does offer a couple of very major advantages over the previous versions. First, there’s the absence of opaque financial games. Cloud services come at standard prices. The popular practice of using lease/buy-back arrangements and other, even more financial-derivative-like complexities to front-end-load the benefits of a data-center outsource while back-end-loading the costs aren’t part of the Cloudiverse. Nor are expensive early termination penalties.
So Cloud computing does deliver the flexibility companies were supposed to get from data center outsources, but rarely did because these were, typically, ten-year contracts that were (and are) expensive to restructure once signed.
Nonetheless, Cloud Business Case v1.0 — that the Cloud will save money and lots of it — is nearing the end of its useful life. It won’t, and, as was the case with previous forms of outsourcing, the bigger the company the worse the financial case gets.
But that’s okay, because Cloud Business Case v2.0 is already shipping. Two different CIOs explained it to me. Even if they don’t save a dime … even if they have to pay more, in fact … putting their email into the Cloud (both used this example) is worth it because that means they don’t have to worry about it anymore.
Fair’s fair. Two isn’t exactly a statistically significant sample, and just because a couple of guys said something doesn’t make it a trend.
What makes it a trend is that these are the exact same words I’ve heard for decades when the subject was outsourcing: Put the responsibility in another company’s hands, sign a contract, and you don’t have to worry about it anymore.
With traditional outsourcing, this expectation was simply absurd. You have fewer tools at your disposal when managing an account manager backed by a ten-year contract that spells out every in-scope responsibility than when you’re managing a data center manager who’s an employee reporting to you on the organizational chart.
With a Cloud service, you don’t even have an account manager, at least, not in the same up-close-and-personal sense you did with an outsource.
Instead you have a service level agreement with a penalty clause. Maybe you have tools to let you monitor service level conformance, too. Blunt instruments, even when compared to working with an account manager; much blunter than an employee who is on-site and taking responsibility.
Cloud Business Case 2.0, then, is that what the Cloud really gives you is professional management so you don’t have to worry about it. It’s a convincing-sounding case.
Until you scratch beneath the surface, because if something goes wrong and you staff the function internally, you have an employee responsible for troubleshooting your multi-vendor environment. If you take it to the Cloud, the opportunities for mutual finger-pointing and blame-avoidance are abundant. As in, “Our servers were up. The problem must be with either your ISP, your firewall, or your internal networks.”
CIOs don’t get paid big bucks for charming naiveté. Whether you go to the Cloud, sign an outsourcing contract, or hire an employee, you’re still accountable. It’s still your worry.
Maybe when Cloud Business Case 2.0 starts to lose popularity we’ll finally hear the business case that should have been v0.9: What you can do with the Cloud that’s new, interesting, and seriously cool.
When PCs first started leaking into the enterprise, an enormous wave of innovation leaked in with them, in the form of new, cheap software that did things nobody thought of doing before, and in the form of new, cheap tools that let employees figure out things they could do for themselves that nobody had been able to do before.
The World Wide Web brought the same thing — an enormous wave of innovation, this time in the form of tools, means and styles of communicating with customers, and whole new ways of doing business that had never existed before.
We’ve added smartphones and tablets. Browse the App Stores. Look at everything you can buy for ten bucks or less. Sure, there’s a lot that’s well worth ignoring. But there are also plenty of cheap, innovative apps that let people do nifty stuff.
The Cloud? It’s all about doing pretty much the same things, in pretty much the same way, only this way you pay by the drink.
It’s like the Dos Equis guy, but in reverse — the least interesting sales pitch in the world.