Right Size IT 1

Mainframe…Client Server…ERPs…SOA…Cloud…

What’s next?

Great technical advances and concepts. How do you keep up with them? And more importantly how do you know what is right and optimal for your business and organization culture? When I was in business school, my professor always use to draw a triangle to explain organization theories and how the balance is created by using a bridge between opposing forces. That analogy is a very relevant today as well.

Example 1

Business models are changing very fast. Social media has completely changed how marketing strategies are formed. There is not one person who has ever heard of crowd sourcing who has not done so without spending a dime to make this change. Organizations (people) and cultures are still very slow to adopt these changes. The gap between changing business models and its existing organization is growing continuously. This is where today’s CIO has the opportunity to provide the right solutions to bridge this GAP – as shown in the illustration below.

Example 2

Another common problem phased by business today is that consumer expectations are getting higher. Consumers are expecting more for less. Businesses thus have more pressure to improve the bottom line. Most businesses are either commoditized or on their way to be commoditized. So the only differentiator left is really the efficiency of the organization. CIOs have an important role to play in this scenario as well. The right IT solution can provide that differentiator. Wal-Mart’s inventory control system, for instance, provided the right differentiator for that particular organization. A differentiator in highly commoditized business is illustrated below:

Example 3

This last example is for the businesses that are involved in highly innovative products. When a company launches a successful product which is innovative in market and meets a consumer need, it is challenging for businesses to keep the focus on innovation and not to get distracted by the “success pain.” IT has an important role to play here too in order to allow the organization (company) keep its focus on their mission while IT keeps the supporting processes running and to scale as business grows.

All three of these examples describe how IT must now focus on solving business problems. All too often I see IT starting with the solution without looking for the problem. This was true, during the Dotcom days and it is equally true in today’s Cloud Economy. I am very big on Cloud Services because I think the Cloud is truly going changing how we consume IT and communication services. However, CIOs still need to carefully evaluate the business’ fit into the Cloud. It is not easy to access and there is no one-size-fits-all formula or solution. Gartner has published many guidelines and best practices that are good references, but there is no substitute for one’s own due diligence and finding the specific answer. It’s your discrimination after all. I call this methodology “Right Size IT!”

Business in the Cloud is not for everyone or everything Reply

ImageSome people are confused about what is meant with the expression, “business in the Cloud.” Some think it is new technology. It is not. It is really about services, the type of services you want to use, and how they are delivered.

What people call the Cloud is nothing more than really putting the cost of licenses up for payment over time. Think of it like a utility—water or gas—that is delivered to the home. You pay only for what you use like a utility. The true cost is not there to support it. The Cloud, therefore, allows you to pay for a license on time and pay only for what you use.

So, when is it in your interest to use the Cloud? That depends on what you want to achieve. Some people want to do something in the Cloud just because it is what they have heard and they do not want to miss out on new technology.

Through careful inquiry, I help my customers determine if doing business in the Cloud is right for them. Sometimes it happens to be cheaper or better to do business the traditional way rather than do it in the Cloud. Each situation should be carefully evaluated. Think about your systems, how much control over the content you want, how proprietary it is, the risk/benefit  profile, the cost, and the type of information shared.

For example, one of my customers was not a good candidate for business in the Cloud. His content was his differentiator and it was critical for his business to have complete control over all aspects of the content—they were successfully doing it using fairly cheap hardware and open source software.

Before choosing to use Cloud services, specific considerations must be given and every application must be evaluated carefully. The Cloud industry is still in its infancy. There are no standards that provide interoperability between Cloud environments. Applications developed on force.com platform cannot be transferred to Google platform or brought in-house to be able to run on traditional Microsoft/Oracle platforms. I do think industry will evolve and come up with solutions, but until then, it is up to the business to perform due diligence for their Mission-critical and proprietary applications and determine if they are candidates for cloud services.

On the other hand, if there is no differentiation in the technology, the benefits of the Cloud could reduce the costs. Mail servers, document storage, email, calendars, and communication programs are well served in the Cloud.

It is important to look at each item or function separately and decide on an individual basis which functions are best served and more cost-effective if they are done in the Cloud. There is a way to calculate TCO (Total Cost of Operations) for the Cloud and compare it to the traditional model to help make the decision. TCO for the Cloud should include not just cost, but other non-cost factors. In some cases, many businesses will find that cloud services are more expensive over a period of longer horizon.