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Cloud Computing: Optimizing the New IT Supply Chain

Chris OMalley | July 9, 2010
2008 was a dismal year in many markets. But it was a great year for cloud computing and thats no coincidence.

The  market downturn gave impetus to cloud computing by forcing  organizations to find new ways to press forward with IT innovation despite their constrained resourcesso they could continue  to improve their competitive position, boost productivity and gain actionable market insight.

In other words, after years of talk about aligning IT and business, alignment has quickly become life and death. If IT cant reduce costs while keeping a step ahead of an increasingly dynamic business climate, everyone loses.  

This alignment was not possible with traditional ITwhich only gives companies a fairly binary choice to either in-source or outsource entire IT functions and/or projects, based on factors such as economics and quality.

Cloud computing, on the other hand, gives companies unprecedented flexibility to tap into whatever application and infrastructure services they need, when they need them, from any one of several competing vendors. In fact, its so easy to engage cloud vendors that business decision-makers can do so without ITs involvement at all.  

If a department manager wants to implement a cloud-based email marketing tool or a CRM system, they simply order it and activate it.  They dont need to add machines or install any software. They just solve their business problem with a rapidly and easily-deployable technology solution.

So, with the advent of the cloud, businesses have a broad set of high-value choices that fundamentally disrupt traditional IT.

Avoiding cloud chaos

While the cloud model offers a rapid time-to-value and a highly adaptable cost structure, it also has a downside:  a potentially fragmented enterprise computing environment, where nobody knows what anyone else is doing. This can result in inefficient and/or poorly informed purchasing. The cloud also raises serious questions about who is ultimately responsible for traditional IT functions such as service level management, IT security and compliance with information governance policies.

In fact, a recent CA Technologies/ Ponemon Institute survey found that IT is often unaware of cloud services being used in their enterprise and that less than half of cloud services are appropriately vetted by IT for possible security issues.

IT therefore faces a rather stark choice if it does not learn how to add value to the use  of cloud services by the business, it will quickly  become  less relevantand the business will become exposed to a new set of IT-related risks. 

ITs new role as a manager of a cloud-based supply chain boils down to several relevant questions, including:

•    How can IT best help the business understand, choose and exploit available cloud resources?

•    How can IT help the business optimize its mix of internal and cloud resources?

 

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