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BLOG: Cloud CIO: In defense of corporate IT

Bernard Golden | June 15, 2011
Companies that treat IT like an afterthought, annoyance or unimportant backwater do so at their peril.

"eHarmony uses algorithms to analyze 29 different attributes of its member profiles and suggest matches. As its user base scaled to tens of millions of members, eHarmony turned to Hadoop, an open source technology that allows many small independent servers to work together. Hadoop enables applications to work with thousands of compute nodes and petabytes of data."

eHarmony relies on IT capabilities to run its business. Without being able to perform analytics on member profiles and suggest appropriate matches, it has no differentiable business proposition.

It might be tempting to portray eHarmony as a different kind of animal-an online business that relies on IT-but that would be a mistake. Every company is becoming that kind of animal, no matter what business it is in.

And that's the crux of the matter. IT is becoming more important, not less important. Consequently, IT organizations have to change to perform in that central role. That's what last week's piece was really about. Not the threat of job loss due to IT dwindling into irrelevance and becoming nothing more than a contract management outfit; rather, the threat of job loss due to not getting ready to assume a much more important position in the firm.

If you accept last week's blog statement that IT is becoming an information factory, the logic that it is more important than ever should be obvious. Do you think that manufacturing companies treat the head of operations as a contract administrator? Not a chance. Does Intel consider its chip foundries ghettos that high-fliers pass through on the way to somewhere important? No way.

The real theme of last week's post was that IT is too important to continue business as usual. A revolution in the role of IT is in the making, and CIOs need to prepare for it. The first order of business is to re-examine all established modes of operations and costs. Plainly stated, the traditional patterns of investment have to be radically rethought in light of the changing role of IT. Budgets have to be shifted from maintaining high-cost legacy applications to supporting new business initiatives that require scale and elasticity. CIOs have to ensure that every deployment decision is the most cost-effective alternative possible and not just assume that internal deployment is the least expensive option.

Which brings us to the other part of the eHarmony story-the cost of running the application internally or externally. As I mentioned in my recent post, How IT Can Become a Cloud Service Provider, many IT shops assume they can run an internal cloud less expensively than a public option. However, for most of these IT shops, the basis for this assumption is little more than wishful thinking seemingly made real by virtue of being instantiated in spreadsheet form. The fact is, most IT organizations are woefully unprepared to operate as an information factory because they have no real grasp of the marginal cost of providing resources and services-and until they do, assertions regarding lower costs than public providers are nothing more than that-assertions.


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